Where Did The Money Go? We Spent It.

... it is reasonable to expect virtually no revenue growth for FY 09.

... since the last recession ... revenues grew strongly .... posting gains in excess of 7% in three of the five years [FY 03 through FY07]

What happened to these revenues?  The legislature spent them ...
        The Vermont Economy Newsletter; February, 2008

Just about everyone in the Vermont legislature -- in the administration, too, for that matter -- is old enough to remember the last recession and even the one before that.  But perhaps they thought there would never be another; that the good times were here to stay.  On the other hand, they may have realized that we'd see hard times again but decided, "the hell with it, let's spend it now; we'll figure something out when the time comes."

So, as Art Woolf and Dick Heaps point out in their indispensable newsletter (go here to subscribe and while you are at it, subscribe for your rep in Montpelier who needs it a lot more than you):

"More prudent spending would have left sufficient revenues for the state to weather the FY09 budget problems."

Yes.  And if a frog had wings, he wouldn't bump his butt on the ground.  But the money is gone and the roads are in terrible shape.  So what is Montpelier to do?

Raise taxes, of course. 

"If we have $20 million a year we'll be in great shape," said [house transportation] committee Chairman Richard Mazza, D-Grand Isle/Chittenden.

Great shape.  Absolutely. 

Some people never learn.

Comments

[Edward Charles Ponzi Jr]

As I am not a current subscriber to the VT Econ Newsletter -- my question is:

Did Art & Co observe/predict the current inflationary recession at anytime in 2007? Lots of people did.

How are their predictions working out? If lawmakers were listening to mainstream & official economists for all of 2007 -- why would they be concerned?

What are Vermont's official, academic and newsletter publishing economists predicting for 2008 and 2009?

Let's see how their predictions match up against the likes of:

Stephen Roach, Doug Noland, John Williams, Bill Gross, Peter Schiff, Mike Shedlock, Paul Kasriel, Antal E. Fekete, Dr Michael Husdon, Ambrose Evans-Pritchard, David Tice, Dr. John P. Hussman, etc.