Free market transportation solutions
Nevadans have been inundated with talk of high-density urban living, high speed rail and government taxes on the number of vehicle miles you drive, but are these the right solutions?
Randal O'Toole, senior fellow with the Cato Institute and author of the book "Gridlock: Why Were Stuck in Traffic and What To Do About It" will be in Las Vegas May 5th for an NPRI Policy Luncheon to discuss traffic and transportation issues. The event will start at 11:30 am at the Las Vegas Country Club on May 5th. Tickets are just $30, but seating is limited. Please call NPRI at 702-222-0642 to reserve your seat.
Until then, satisfy your curiosity with another video of O'Toole discussing his new book on Fox News.
Read moreAffordable health care not affordable?
Americans will be shocked, shocked! to discover that experts at the Health and Human Services Department have concluded that ObamaCare will NOT lower health care costs.
The New York Times reports,
Economic experts at the Health and Human Services Department concluded in a report issued Thursday that the health care remake will achieve Obama's aim of expanding health insurance -- adding 34 million to the coverage rolls.
But the analysis also found that the law falls short of the president's twin goal of controlling runaway costs, raising projected spending by about 1 percent over 10 years. That increase could get bigger, since Medicare cuts in the law may be unrealistic and unsustainable, the report warned.
Now the real question is whether or not this report was suppressed until Congress could take a vote on ObamaCare. That wouldn't be surprising, after all, the report supporting the DC voucher program was suppressed last year until AFTER congressional Democrats all but killed the program.
Why isn't the private sector creating jobs?
Michael Ramirez has the answer:
(h/t Hotair)
Shortfalls and bad math
By Geoffrey Lawrence and Patrick Gibbons
The Las Vegas Sun now reports that Nevada is facing a $2.5 billion shortfall that could slash state budgets in half. Previous estimates in the newspaper (and elsewhere) put the shortfall around $3 billion. If you've been following Geoff Lawrence recently you'd know that was a bunch of nonsense.
The latest attempt simply sums up all the previous gimmicks from tax increases, budget cuts, fund sweeps and other short term band-aide fixes. It adds up to $2.5 billion - but this is bad budgetary math.
This estimate is calculated by state Budget Director Andrew Clinger using a patchwork of assumptions about the 2011-2013 budget cycle. Clinger's major assumption is that adjustment decisions in the 2009-2011 state budget should be applied automatically to the ensuing 2011-2013 budget. Thus, he has attributed all of those adjustments (including expiring tax hikes and furlough programs) to come up with a $2.4 billion estimate.
This approach, of course, assumes that 2009-2011 spending levels are necessarily appropriate for the 2011-2013 cycle. In truth, any "shortfall" projection is the result of a flawed budgeting process that assumes that the state should spend more money than it has.
Even so, assuming the baseline approach is appropriate, Clinger's current calculation does not conform to that approach. Instead of subtracting expected revenues from the desired spending amount, he is making assumptions about the adjustments made in the current cycle. For instance, there is no reason to believe that a furlough program for state workers would not be continued into the next cycle.
In fairness, Clinger is likely using this patchwork of assumptions because no official estimate for state revenues yet exists. However, it is reasonable to assume that revenues would be in the $5.0 - $5.5 billion range. Assuming a $6.4 billion budget (about what we spend now), therefore, a simple subtraction would yield far less than a $3 billion shortfall.
It also looks like there is some double-counting within Clinger's reported calculation. The Sun reports that $939 million in new revenues from the 2009 tax hikes will expire in addition to $220 million in revenues from the room tax hike being moved out of the General Fund. However, the $939 million number should include the $220 million in room taxes. Moreover, the room tax revenues will be moved out of the General Fund and serve as a dedicated revenue stream for K-12 education. This should partially offset the need for General Fund dollars to supplement local K-12 spending, meaning that the $220 million is unaccounted for.
If you recall, the last billion-dollar "shortfall" brought the legislature together for the last special session and that only resulted in a General Fund spending reduction of around $300 million. Meanwhile, the billion-dollar "shortfall" prior to that resulted in no General Fund reduction at all.
The key lesson here is that budget shortfall calculations frequently amount to little more than an intellectually dishonest endeavor.
As Geoff Lawrence has shown, current iterations of this flawed exercise are not in sync with reality. Even if one buys into the cost-plus, baseline process and the resultant "shortfall" scenario, it is highly dubious whether the size of that shortfall would approach $3 billion.
Instead of trying to calculate these budgetary shortfalls we should prioritize spending and fund what works, rather than continue this outdated, backward and dishonest budget process that has laid the state into an unsustainable quagmire.
RTTT fears founded?
Teacher union and stakeholder support is worth 70 out of 500 points in Obama's "Race to the Top" application. A lack of support from the local teachers union in Florida cost the state enough points to place second - and win hundreds of millions of dollars.
Education reformers feared that RTTT scoring gave a lot of veto power to local unions that would result in watered down - if not meaningless - reforms. Those fears may be founded as Indiana and Kansas have dropped from the race - citing a lack of local union support (they now join Alaska and Texas which refused to participate in Round 1).
The teachers union in Massachusetts withdrew its support of the state's RTTT application citing disagreements over how to turn around low performing schools. Pending Legislation in Colorado will change how the state evaluates teachers, but this has caused the teacher unions in Colorado to withdraw support from the state's application as well. Additionally, the teachers union in Florida pressured the Governor into vetoing legislation that would have tied teacher evaluations to student test scores - before this, Florida had the support of less than 10 percent of the unions in their RTTT application.
Union support isn't the only factor for winning RTTT - but it is an important one.
The Cartel
It is time to end the governments monopoly on K-12 education.
Nevada needs education reform, but you don't have to take our word for it
Whitney Tilson from Democrats for Education Reform has produced a 240-page presentation outlining the problems with public education and some sensible solutions to improve quality and help students achieve.
So what's going on?
1) We spend a lot of money.
2) We don't get a good return on our education investment.
3) Education results have stagnated for decades.
4) We are falling further behind our global competitors.
5) Our racial achievement gap is widening.
6) Public education is unaccountable, inflexible and uncompetitive.
7) Wealthy, entrenched special interests defend the status quo out of self-interest and self-preservation, not to help the children.
Read "A Right Denied: The Critical Need for Genuine School Reform."
Stanford's charter shcool
Stanford University's sponsored charter school is being shut down for consistently poor performance. Not surprising, since Stanford's ed school hates standardized testing and is more concerned about students feeling good. It's nice to see the Ivory Tower actually test theories in the real world. Of course, to many in the education establishment, falling on your face is always someone else's fault.
The end is near
The perfect storm of big government and out of control and unsustainable entitlements is set to bankrupt our country in 10 to 20 years if nothing is done to rein in government spending.
About the budget "shortfall"
The size of Nevada's budgetary "shortfall" heading into the 2011 regular session is highly disputable. First, a budget is simply a plan to spend money and any "shortfall" is, therefore, the result of a plan to spend more money than is available. The most appropriate way of addressing any such "shortfall" is to adjust the spending plan so that funds are allocated to their most cost-effective uses.
Unfortunately, Nevada's budget process does not offer a lot of flexibility for doing this, as I note in today's commentary at npri.org. Over the next few days, I will outline an alternative budgeting process known as Budgeting for Outcomes and detail how that approach can be used to address the state's fiscal position in the 2011 session. This is a "How-to Guide for Budget Reform" that will lay out the principles of rational budgeting for lawmakers.
However, lawmakers should also be aware as they head toward the 2011 session that the typical media claims of a "$3 billion shortfall" are completely counter-factual. These claims rely on the inaccurate presumption that state General Fund spending for the current budget cycle would amount to $7.9 billion. This is simply not true. This assumption is based on the idea that the "baseline" originally approved by the 2007 legislature should be carried over into the next budget cycle instead of the current baseline.
Not only is this counter to standard baseline budgeting practice, but the 2007 baseline was never actually realized. Two special sessions during that budget cycle were called in order to reduce General Fund spending. By consequence, the "$3 billion shortfall" estimate is not only based on something that does not currently exist - it is based on something that has never existed.
If lawmakers are to continue under the broken baseline budgeting process, they should at least acknowledge that the baseline has changed through the past three special sessions and one regular session. In fact, General Fund spending during fiscal year 2011 is scheduled to be about $3.1 billion. If the same level of spending were carried over into the 2011-2013 budget cycle, that would amount to $6.2 billion while revenues are likely to be in the $5.5 billion range. (No revenue estimates are official until the December meeting of the Nevada Economic Forum.) Allow me to demonstrate this mathematically:
$6.2 - $5.5 ≠$3.0
Even if spending programs formerly existed within the General Fund that are no longer present, it is inappropriate under baseline budgeting policies to incorporate programs into the baseline which do not currently exist. That effectively amounts to the inclusion of new spending into the baseline.
Likewise, so-called "roll-up costs" that have routinely added upwards of $1 billion to the baseline in recent years are not justified under present conditions going into the 2011-2013 budget cycle. The most significant components of these "roll-up costs" are for caseload adjustments and annual employee pay raises. In many areas, caseloads in Nevada are in decline for the first time in decades. Similarly, given the current deflationary trend that has seen historic declines in private sector personal income, there is little rationale for extravagant, across-the-board, public sector pay raises - especially when a portion of those pay raises are for a purported "cost-of-living adjustment." Instead, lawmakers should recognize that public sector employees in Nevada already are paid 28.1 percent more, on average, than their private sector counterparts in similar job classifications, and that this disparity is increasing.
The lesson to be taken out of all this is that claims of a "$3 billion shortfall" are unfounded and fallacious. However, the Silver State is capable of getting much more for the money that it does spend but this will not happen until the state adopts a more rational budget process such as Budgeting for Outcomes.
