OPINION

Yes, check taxes, but check spending, too

Our View

Delaware is inching toward an important debate. Whether it will be a full-throated one or a limited back-and-forth between insiders will say a lot about who runs our government.

The surface debate will be over how we will pay for the services the state delivers. An aspect of the debate that should be included is whether the state should deliver some of those services.

Delaware’s long-term revenues are not tracking with its long-term expenses. For decades, the booming American and Delaware economies allowed the state government to expand and the boom absorbed the costs. Now the economy has slowed – the industrial muscle has moved elsewhere or has been replaced by a machine – and the costs have risen.

For example, Delaware’s share of the Medicaid program rose 120 percent over a 12-year period. That money did not disappear. It came from the taxpayers and went into the health industry. That does not have the same multiplier effect as building a car in Delaware and selling it in Georgia does, but people live off it. One reason for the growing cost is that more people are getting medical coverage through Medicaid. That includes older people as well as poorer people. The policy alternative is not to give them health care. Are we ready to do that? Probably not.

Before globalization and automation, rising wages helped boost state income tax revenues. Wages have been slowing for most people for decades. Good-paying middle-skilled jobs, such as an auto assembly line, disappeared. Today most of the headlines about wages are about raising the minimum wage for fast-food workers. However, the middle class is also struggling to hold on as wages shrink.

Now Delaware faces slowing revenues from gambling, and the state’s income from corporate taxes is not keeping pace with the cost of government.

Therefore, the state has formed a panel of private and public experts to re-examine revenue sources. This is politically sensitive, so we should not expect radical suggestions. However, members are dutifully saying nothing is off limits.

This is a good idea. The state needs to modernize its revenue sources and adjust to the new economy.

Yet the state should go the other way as well. Why isn’t there a panel of private and public experts to examine the reach of government? Why aren’t panel members stating that nothing will be off limits as they examine ways to permanently cut costs?

“Waste, fraud and abuse” are the easy catchwords governmental critics come up with when they want cutbacks. That has been tried repeatedly and failed. Why not take a structural look? Do we need so many levels of school administration? Is every state program working? We probably do not know.

The point is this: If Delaware is going to have a panel to examine the state’s revenue, why not have a panel look at its spending?

If we do that, we then can have a real debate about what we want and what we can pay for.