It’s as depressingly predictable as death: Bold election-season rhetoric gives way to the same old fiscal reality. Politicians in love with education just last Tuesday go absent without leave on Friday, when it’s time to pay the piper. Unlike education funding, though, you never have to worry about a shortage of excuses.
This time around a domino effect seems to be in play. First federal surpluses turn into deficits, then full employment begins to fray, then policy priorities at the federal level pinch off funding for promised education programs, then tax-enforcement budgets are under-funded, then tax revenues decline, then state budgets shrink, then the whole complicated edifice topples over and leaves education back where it started, out in the cold with nothing much to show for the entire exercise except a satchel full of shiny, new “unfunded mandates,” once anathema to Washington conservatives.
Stories throughout this issue of eSchool News tell the tale as it stands right now. Because the lion’s share of funding for education comes from state and local governments, the clearest present danger is funding shortfalls in the states (see “States’ budget crises threaten school tech plans,” Page 16.)
According to the National Governors’ Association, rising health care costs and plunging tax collections are behind the worst fiscal crisis states have faced since World War II. Health care costs rose 13 percent, and total state tax collections fell by 6 percent in 2002 and declined in every quarter.
State tax collections came in far below the states’ original estimates in the most recent fiscal year, which ended on June 30 for most states. Sales tax revenues ($147.6 billion) were 3.2 percent lower than expected, while personal income tax revenues ($187.7 billion) were down 12.8 percent, and corporate income tax receipts ($21.6 billion) were down 21.5 percent. That adds up to a shortfall of $33.3 billion.
Last summer, the United States Senate overwhelmingly approved a proposal to provide fiscal relief to states through a temporary increase in federal grants for Medicaid and social services, but that legislation died aborning. The Bush administration and Senator Don Nickles, the Oklahoma Republican in line to become chairman of the Budget Committee in the new Congress, opposed the increase.
Federal officials said they have no money to spare at a time when the federal government faces growing deficits, after four years of surpluses.
If a shortage of tax revenue is to blame, you might expect government officials to do everything possible to increase it. No such thing is happening at the federal level, of course, where tax cuts are the mantra of the administration.
Even so, might we at least try to collect the taxes on the books right now? Not by a long shot.
Tax cheating is on the rise, and the IRS has identified more than 82,000 individuals, trusts, and corporations who evade taxes through offshore accounts. The loss to the government from offshore evasion alone was pegged at $70 billion annually by the outgoing director of the IRS.
Enron, the now-bankrupt Texas energy company, might have been the champion of such expatriate dodges. In its heyday, Enron established 900 subsidiaries overseas to avoid taxes. Between 1996 and 2000, it paid taxes only one year and qualified for hundreds of millions of dollars in refunds from the government. But it was not alone. At least 24 other Fortune 500 companies reportedly have managed to attain Enron’s tax-free status in recent years.
Before it adjourned, the lame duck Congress voted to leave in place Republican-authored provisions of the Homeland Security Act allowing U.S. corporations employing offshore tax dodges to qualify for federal contractsnot from the governments of Barbados or Bermuda, mind you, where the companies allegedly have headquarters, but from the government of the United States. President Bush signed the measure.
Repatriating that $70 billion from U.S. tax dodgers would solve the state budget crisis and maybe even make a dent in the new federal deficits. But will that happen? Not in your lifetime.
Commenting on the new cuts in education funding looming in his state, Wayne Johnson, president of the California Teachers Association, said school buildings would continue to crumble and class sizes would continue to expand.
Education-loving rhetoric notwithstanding, our political leaders’ genuine attitude toward teaching and learning might be summed in a single turn of phrase, as Johnson put it: “Stack them deep, and teach them cheap.”