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Monday, May 1, 2017

Laramie County Tax Vote: Why It Matters

Tomorrow, Laramie County voters go to the polls over that extra one-percent sales tax. The vote, which normally would fly under the radar in view of our state's far more serious economic problems, actually presents a good case study of a serious question we ought to discuss far more often:

What is the real role of government?
The answer to this question is relevant not only to Laramie County residents, but to all of us here in Wyoming. However, the vote is a good place to exemplify how an answer to this question affects our decisions as to how we turn theoretical and principled arguments into practical, legislative decisions. 

Many have campaigned against the Laramie County one-percent tax, and done so both on principle and on good economic arguments. I want to especially recognize Moses Hasenauer, whose tireless arguments against the one-percent tax have forced its proponents to sharpen their arguments, and given many voters a reason to think twice before deciding how to vote.

By default, it is a good idea to approach any proposal for tax increases with a "no", and let the tax hikers present their arguments. At the state level, there is no doubt that we simply cannot afford any new taxes; the same is largely true at the county level as well.

There is, however, a very small wiggle room here, within which proponents of the one-percent tax may have an argument worth considering. Do not take that as an endorsement of the one-percent tax, but as an opening for a fair discussion.  

The wiggle room for debate over the one-percent tax is defined by the answer to the question of what the role of government really is. To see how they are connected, let us review the  Laramie County tax ballot, which offers an interesting menu of projects (and if you don't live in Laramie County, keep reading - there is an important principled point in this that applies to all of us):

Proposition 1 - Remodel and construct new court houses
Proposition 2 - Expand County Detention Center
Proposition 3 - A new railroad overpass and road extension connecting Exit 367 on I-80 to eastern Cheyenne
Proposition 4 - Construction of a "multi-purpose" facility near Laramie county Archer Complex
Proposition 5 - housing, infrastructure and power supply projects in several towns around the county
Proposition 6 - more local projects, including a "multipurpose indoor turf facility" in Cheyenne
Proposition 7 - even more local project, including a new dump truck for Burns and a new sports facility attached to the Ice and Events Center on West Lincolnway in Cheyenne
Proposition 8 - another stack of local projects, including paying off a $1m debt for Pine Bluffs
Proposition 9 - Improvements to solid-waste disposal, a new fire station for Fire District 2, and a new 911 computer system

In other words, when it comes to spending other people's money, there is no end to what human imagination can produce in terms of good ideas. To sort between all these good ideas, let us return to that irritating question again: what is the real role of government?

From a philosophical viewpoint - and, fortunate as we all are to live in the United States, a constitutional viewpoint - government should be limited to the protection of life, liberty and property. If we accept this as the founding principle for our constitutional republic, it is rather simple to sort between the nine propositions above: only Propositions 1 and 2 qualify.

That does not mean we should automatically accept the one-percent sales tax for those projects; all it means is that if we think we need the one-percent tax, then Propositions 1 or 2 would be the only ones that would be morally, and constitutionally, valid. 

There is, however, one more dimension to the role of government. The General Welfare Clause of the Constitution opens for more functions of government than those of protecting life, liberty and property. I would be happy to have a debate over the exact meaning of this clause; apparently, the Founding Fathers forsightedly opened the door for a limited role of government in helping our economy grow. This limited role has nothing to do with economic redistribution or "stimulus bills", but would consist strictly of providing such facilities that the private sector cannot provide at a profit (we call them "public goods" in economics, though they are public in a different sense than just being provided by government) or where the investment costs are so high that the market always gravitates toward a monopoly.

If we include these functions of government in our consideration of the one-percent tax, we could make an argument for Proposition 3 to be added to the list of valid government projects. In theory, the private sector can handle infrastructure; in practice, it is easy to run into monopoly situations where competition is impossible without monumental waste of resources. 

In other words, it is in theory possible to ask a private entrepreneur to construct the connection from I-80 over the railroad to Christensen Road. The problem is how to put a fair price on its usage so that the private entrepreneur can recover his costs. One could imagine a toll on the bridge - we would all have to stop and pay a quarter or a dollar or some other fee for using the bridge - but how many people would really use it if you can drive another three miles to Exit 364 and cross the railroad for free?

Proposition 3 brings important theory about the role of government into a reality that is far more complicated than the theory often suggests. Moral and constitutional reasoning, as well as economic theory, can help us find our default position on the role of government, but in a world where government is already far bigger than it should be, that intellectual basis must never become a straitjacket that prevents us from finding practical solutions. Otherwise, those who have no principled skepticism toward government will always win the day.

There is one more aspect on the one-percent tax that we need to consider, but before we get there, let us summarize:
  • From a moral and constitutional viewpoint, only Propositions 1 and 2 qualify as valid government projects;
  • From an economic and "general welfare" viewpoint, Proposition 3 can also qualify.
This means that housing in Albin is not a government duty. As much as my Swedish background makes my heart beat for Albin, housing - like food, clothes, cars, gasoline, cell phones, health care and education - is best provided by the private sector. I am sure that Burns residents can collect the money for a dump truck within the confines of their town; and unless the cause is a natural disaster, the people of Pine Bluffs will have to pick up the tab for their own debt.

As mentioned, there is one more aspect on this sales-tax vote that has not been brought into the debate. The county council seems to have approached the issue as if it was a given that they can collect that one-percent tax - and not even consider what cost savings they could do to free up funds in their regular operations. Fremont County, which is struggling economically and fiscally just like almost every other county here in Wyoming, has executed a ten-percent cost reduction plan that will largely leave county operations intact from the taxpayer's viewpoint. Best of all: they made sound priorities and spared the Sheriff's Department. 

The real role of government at work again. 

The question, of course, is: can Laramie County cut ten percent out of functions that are not related to the protection of life, liberty and property? Beyond that, there is the question why the county will not pursue other forms of financing its projects. For example, if we disregard legal aspects, from a fiscal and economic viewpoint it is far better to fund projects such as a court house, a county jail or a railroad overpass with borrowed money. By asking county residents to buy bonds for those projects, the county would get a real referendum on to what extent we really feel those projects are worth the money. A tax vote is a different animal, as the majority thereby forces the minority to fund a project they disagree with. 

Again, these are not entirely simple issues. The point here is to never allow any government activity to start, continue or end without asking that principled question: is this really what government should be doing? A vote such as the one tomorrow, here in Laramie County, is a great opportunity to connect principles to reality. 

In fact, it is necessary to do so. It is necessary to use these opportunities, because if we do not, we disconnect principles from practice - and thereby we let "practice", in other words government, continue to grow habitually over time.

And that's not what we want, is it?

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