Week in review: dying for a living wage

Every week, NPRI President Andy Matthews writes a column for NPRI's week-in-review email. If you are not getting our emails, which contain our latest commentaries and news stories, you can sign up here to receive them.


Last August, I had some fun in this space responding to a recently released video of actress/singer Kristen Bell, who had parodied the Mary Poppins tune “A Spoonful of Sugar” in calling for a three-dollar increase in the federal minimum wage.

Her video was indeed humorous (if economically incoherent), and I’ll admit to taking a lot of enjoyment from writing my rebuttal column. But you know what they say — it’s all fun and games until someone loses a job.

Or, as in a recent example, an entire business.

The Daily Signal reports on Borderlands Books, a San Francisco bookstore that announced it will shut its doors next month “despite having its ‘best year’ in 2014.” How could a business coming off a banner year suddenly find itself closing up shop? “According to the bookstore,” writes the Signal’s Kate Scanlon, “it’s because of San Francisco’s upcoming minimum wage hike.”

Last year, San Francisco voters approved raising the city’s minimum wage to $15 an hour by 2018, a wage Borderlands can’t afford to pay. …

… [Store owner Alan] Beatts writes that a $15 wage would result in a 39 percent increase in wages — an expense he would have to make up elsewhere.

But he can’t. Unlike other businesses that can raise the prices of their goods and services in the face of a higher wage, bookstores have to grapple with the fact that books have a fixed price.

One is inclined, of course, to feel sympathy for Mr. Beatts over his store’s pending death — that is, until one reads this delicious nugget from the story, quoting a Borderlands-issued statement: “Although all of us at Borderlands support the concept of a living wage in [principle] and we believe that it’s possible that the new law will be good for San Francisco — Borderlands Books as it exists is not a financially viable business if subject to that minimum wage. Consequently we will be closing our doors no later than March 31.”      

I know schadenfreude can be a bit off-putting, but come on. Here we’ve got a proponent of a minimum-wage increase (or, as progressives have taken to calling it, a “living wage”) seeing his own beloved idea come back to bite him, and hard. And in San Francisco, no less. OK, suddenly this is back to being fun again.

I have to admit to feeling at least a certain level of admiration for Mr. Beatts. After all, he’s doggedly sticking to his principles, misguided as they may be, even as those principles hurt him personally when put into action. It’s certainly a welcome departure from the popular progressive two-step of waging rhetorical class warfare while pushing the bounds of the ethical in order to amass enormous personal wealth (I’m looking at you, Hillary Clinton).

But the problem is, it’s not just the noble Mr. Beatts who will be harmed by San Francisco’s new policy. When Borderlands closes, the people who work there will lose their jobs, and those workers’ families will suffer as well. And that’s to say nothing of the unknown number of other businesses that are similarly situated. (The latest development in this story is that Borderlands may be able to survive at least a bit longer thanks to sponsorships and donations. That seems unlikely to last — and even if it does, it’s hardly a business model that can be replicated easily by many other companies.)

As is the case with so many progressive policy ideas, it is those they are designed to help who will end up hurting the most. And Scanlon misses something when she distinguishes bookstores from other businesses that, in her words, “can raise the prices of their goods and services in the face of a higher wage.” The implication is that those businesses can simply do so without consequences. But of course, assuming those businesses can indeed find a way to raise prices without incurring some harm to their bottom line (a highly dubious assumption in its own right), those higher prices will have a direct and negative impact on the customers that pay them. Anywhere you look, someone’s losing.

There are countless examples of government busybodies paving roads with seemingly good intentions, only to end up making life hell for those who are forced to live under the resulting rules. Yet no example serves to juxtapose and illuminate the competing philosophies of governance as well as the debate over minimum-wage laws. And none better clarifies the tragic human toll that results when the state unduly interferes in the marketplace.

Hollywood socialites like Kristen Bell may never understand that truth — but Mr. Beatts’ soon-to-be former employees certainly will.

Thanks for reading, and I’ll see you next time.

Andy Matthews
NPRI President


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Testimony on SB119: NPRI-proposed compromise would eliminate prevailing wage on school construction, limit bond rollover to 2 years

Submitted by Victor Joecks, Nevada Policy Research Institute

Hello, my name is Victor Joecks, and I’m with the Nevada Policy Research Institute. While this bill is currently not a good deal for taxpayers, the removal of the prevailing wage is very praiseworthy.

Prevailing wage requirements in Nevada add a 45 percent premium to labor costs and removing this requirement saves 10 to 15 percent on construction.  And to clarify, this bill would lower wage rates from $35 to $55 an hour to $25 to $40 an hour, which is a wage rate that would put construction workers above the median household income.

The problems with SB119 though involve the bond rollover. The biggest problem is that authorizing 10 additional years of bonding without voter approval is different than what voters were told when they voted for property tax increases in 1998 or 2002.

This is why we have proposed an amendment to authorize two years of additional bonding. This would allow the district to build immediately – their stated priority – while also making school districts return to voters in 2016 for longer approval.

One reason to return to voters is because the needs identified by the Clark County School District keep changing. In 2012, CCSD asked voters for a property tax increase. They identified 41 schools as needing repairs, at a cost of $669 million. Voters rejected that plan 2 to 1. Now, just  three years later, CCSD has a list of 45 schools to receive $286 million in funding.

Just six schools are on both lists. In 2012, five of those schools were scheduled to receive $700,000 for electrical system upgrades. Now, those five schools are scheduled to receive $4 million additions. Only one school, Boulder High School, is on both lists for the same project.

Also, CCSD has spent $338 million in previous bond funds on the 45 schools now scheduled to receive $286 million.

For our other amendment, I would like to propose a conceptual amendment to address the problem referred to by Sen. Settelmeyer. This concept would prevent other jurisdictions from taking property tax streams previously used by school districts without approval by the debt management commission and a popular vote. 

 

Testimony on SB94: making transferable film tax credit handouts permanent a loser for taxpayers

Submitted by Victor Joecks, Nevada Policy Research Institute

Hello my name is Victor Joecks, and I’m the Executive Vice President of the Nevada Policy Research Institute.

I’m here today to detail some of the negative impacts similar transferable film tax credit programs have had in states around the country.

First, it’s great to hear so many elected officials acknowledge that lower taxes help entrepreneurs create jobs and grow the economy. I hope you acknowledge that reality when considering whether or not to impose the largest tax increase in Nevada history on the rest of Nevada.

There are numerous structural problems with transferable tax credits. Instead of just being a reduction or abatement of taxes paid, these tax credits can exceed the actual amount of taxes paid by film companies. The film companies then sell these credits to other private businesses in Nevada – reducing taxes collected by the state.

In other words, government is picking winners and losers in the economy. The losers are the taxpayers and the vast majority of businesses in the state who have to pay more or receive reduced government services.

In Louisiana, the Legislative Fiscal Office found that transferable tax credits reduced taxes collected by $59 million a year, but only generated $10 million a year in additional state tax dollars. In other words, for every $5 Louisiana spent, they gained back just $1 in new tax money.

In North Carolina, legislative fiscal staff found that film producers claimed $30.3 million in film-tax credits in 2011.

Under the most plausible assumptions the Film Credit likely attracted 55 to 70 new jobs to North Carolina in 2011 … The Film Credit created 290 to 350 fewer jobs than would have been created through an across-the-board tax reduction of the same magnitude.

While film tax credits experienced enormous popularity in the 2000s, many states have trimmed back their film tax credit programs, because of problems detailed above.

Since 2010, eight states – Arizona, Arkansas, Idaho, Iowa, Kansas, Maine, New Jersey and Washington – have ended their film tax subsidy programs. Other states, including Alaska, Connecticut, Georgia, Hawaii, Michigan, Missouri, Rhode Island, Wisconsin and New Mexico. have scaled back their programs or placed limits on their use. 

 

Testimony on SB94: Making transferable film tax credit handouts permanent a loser for taxpayers

Hello my name is Victor Joecks, and I’m the Executive Vice President of the Nevada Policy Research Institute.

I’m here today to detail some of the negative impacts similar transferable film tax credit programs have had in states around the country.

First, it’s great to hear so many elected officials acknowledge that lower taxes help entrepreneurs create jobs and grow the economy. I hope you acknowledge that reality when considering whether or not to impose the largest tax increase in Nevada history on the rest of Nevada.

There are numerous structural problems with transferable tax credits. Instead of just being a reduction or abatement of taxes paid, these tax credits can exceed the actual amount of taxes paid by film companies. The film companies then sell these credits to other private businesses in Nevada – reducing taxes collected by the state.

In other words, government is picking winners and losers in the economy. The losers are the taxpayers and the vast majority of businesses in the state who have to pay more or receive reduced government services.

In Louisiana, the Legislative Fiscal Office found that transferable tax credits reduced taxes collected by $59 million a year, but only generated $10 million a year in additional state tax dollars. In other words, for every $5 Louisiana spent, they gained back just $1 in new tax money.

In North Carolina, legislative fiscal staff found that film producers claimed $30.3 million in film-tax credits in 2011.

Under the most plausible assumptions the Film Credit likely attracted 55 to 70 new jobs to North Carolina in 2011 … The Film Credit created 290 to 350 fewer jobs than would have been created through an across-the-board tax reduction of the same magnitude.

While film tax credits experienced enormous popularity in the 2000s, many states have trimmed back their film tax credit programs, because of problems detailed above.

Since 2010, eight states, Arizona, Arkansas, Idaho, Iowa, Kansas, Maine, New Jersey and Washington, have ended their film tax subsidy programs. Other states, including Alaska, Connecticut, Georgia, Hawaii, Michigan, Missouri, Rhode Island, Wisconsin and New Mexico. have scaled back their programs or placed limits on their use. 

 

Week in Review: spin

Every week, NPRI President Andy Matthews writes a column for NPRI's week-in-review email. If you are not getting our emails, which contain our latest commentaries and news stories, you can sign up here to receive them.


The Nevada Policy Research Institute made headlines recently when we revealed that individuals’ government pensions in Nevada are often higher than their paychecks.

Predictably, our analysis drew a critical response from PERS officials, who took exception to our findings. Yet just as predictable was that nowhere in their response did those PERS officials point to even a single error in our study’s findings. Instead, PERS and its defenders have resorted to furious attempts at spin.

On the other hand, it’s easy to identify an error made by state Sen. Tick Segerblom in his recent letter to the editor published by the Las Vegas Review-Journal, through which the senator enlists himself in PERS’ spin campaign. To wit, Sen. Segerblom writes that the study “offers no information about the methodology used in generating its numbers.”

Of course, anyone who so much as skimmed the analysis would have found the methodology clearly outlined, beginning on page 3.

Sen. Segerblom and PERS officials’ main beef with this study was that the analysis looked just at those government workers who retired from 2011 to 2013 and had at least 30 years of service credit. For those retiring from local government, the average pension was over 100 percent of their final base pay. School district retirees collect 89 percent of their base pay. Police and fire employees rake in over 114 percent of their final base pay as retirement payouts. 

What the critics are ignoring is that NPRI limited the study to recent retirees in order not to inflate those percentages. Had NPRI analyzed the pensions of all 30-plus-year retirees in the system, the average pension would have been far greater than their final salary due to the numerous COLA increases older retirees have received. The pensions of 2011-2013 retirees — those included in the study — have yet to be inflated by such cost-of-living increases.

NPRI’s findings echo what a national expert has found as well. The former principal deputy commissioner of the Social Security Administration, Andrew Biggs — a resident scholar at the American Enterprise Institute — found in 2011 that the average Nevada PERS retiree can expect to receive a pension benefit 55 percent greater than his comparable private-sector counterpart.

Last year, comparing pension benefits in Nevada to those offered in the 49 other states, Biggs found that Nevada PERS leads the nation with the highest average pension benefit for full-career retirees: $64,008 a year. And keep in mind, a full career in government means working just 30 years, not the 45 years or so needed in the private sector.

The reason NPRI’s study looked at just those with 30 years or more of service credit was to discover how pension benefits are distributed among its members.

According to its just-released 2014 PERS actuarial data report, PERS’ 48,729 retirees had an average of 20 years of service and a pension of $35,598, which is more than the maximum Social Security benefit available with 35 years of work at 67 years old.

There’s a reason PERS doesn’t want NPRI pointing out how unevenly that average is distributed.

PERS’ 10,357 full-career retirees now have pensions of $64,913 and begin collecting their income-replacement-level pensions immediately, even if they “retired” in their 40s. Those with less time in service have to wait until their 60s.

What those two statistics and the findings of NPRI’s recent study reveal is the inequity in the current system. PERS provides a windfall for those who make it to the 30-year mark at the expense of the vast majority of PERS retirees who work fewer than 30 years and receive disproportionally smaller benefits than their full-career counterparts. Indeed, local government employees who work for less than five years receive nothing at all. They can’t even roll over their “share” of retirement contributions.

Sen. Segerblom and PERS officials are defending a politically favored elite — the less than 1 percent of Nevadans who will work for government for 30 years and receive those exorbitant pensions.

NPRI, on the other hand, favors pension reform, like moving to a hybrid system, which would help the people — the 99 percent, if you will, including teachers, police officers and nurses — who won’t make it to 30 years of service. And it would protect taxpayers, too.

(By the way, for a few more great additions to this debate, see here and here, as well as a piece our own Chantal Lovell wrote on this yesterday.)

As always, thanks for reading, and I’ll see you next time.

Andy Matthews
NPRI President


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Testimony on SB 165: School choice would benefit Nevada students

Submitted by Victor Joecks, Nevada Policy Research Institute

Hello, my name is Victor Joecks, and I’m with the Nevada Policy Research Institute.

Twenty-four states around the country and Washington D.C. currently have some program of school choice. This includes 14 states that run 18 opportunity scholarship programs, similar to AB165, which you’re considering here today.

School choice is a great way to increase student achievement. The Friedman Foundation has found that:

Twelve empirical studies have examined academic outcomes for school choice participants using random assignment, the “gold standard” of social science. Of these, 11 find that choice improves student outcomes — six that all students benefit and five that some benefit and some are not affected. One study finds no visible impact. No empirical study has found a negative impact.

School choice isn’t just beneficial for students who use the program, but for students who remain in public schools as well.

Again the Friedman Foundation finds:

Twenty-three empirical studies (including all methods) have examined school choice’s impact on academic outcomes in public schools. Of these, 22 find that choice improves public schools and one finds no visible impact. No empirical study has found that choice harms public schools.

School choice works. Opportunity scholarships are benefiting students in 14 states, including Alabama, Arizona, Florida, and Rhode Island. AB 165 would benefit Nevada students as well.

 

Week in review: further review

Every week, NPRI President Andy Matthews writes a column for NPRI's week-in-review email. If you are not getting our emails, which contain our latest commentaries and news stories, you can sign up here to receive them.


Back in August of 2013, we at NPRI went before Eighth Judicial District Court Judge Douglas Smith in our lawsuit against the Clark County School District, which we filed after CCSD refused to provide us with its directory of government-issued email addresses for the school district’s 17,000 teachers.

It seemed about as open-and-shut a case as one could imagine — what we were seeking clearly constituted a “public record” under Nevada law, and we were hard-pressed to imagine a scenario under which any judge could rule otherwise. Yet Judge Smith, in a decision that drew widespread condemnation from across the ideological spectrum, granted CCSD’s motion to dismiss the case — meaning he ruled in CCSD’s favor without even allowing for an evidentiary hearing on the pertinent facts of the case. Judge Smith would later admit that he based his decision not on the law but rather on his personal feelings regarding NPRI’s (legally irrelevant) motives for wanting the records.

I thought it was about as bad a call as I’d ever see in my life — that is, of course, until Seahawks coach Pete Carroll called that slant on second and goal from the one yard line with time ticking down in this year’s Super Bowl.*

Unfortunately for Carroll — and for millions of heartbroken Seahawks fans — in sports there is no do-over, at least not when it comes to an on-field decision a coach makes. But fortunately for us, in our system of justice, when one judge gets it wrong, there’s a way to make it right.

On Wednesday, a three-judge panel of the Nevada Supreme Court heard our appeal of the district court judge’s decision in our case against CCSD, and while the Court declined to issue an immediate ruling at the conclusion of the arguments, I thought Joe Becker, who leads NPRI’s litigation center and is representing us in this case, did a superb job of laying out the arguments as to why the lower-court decision was erroneous.

In particular, Joe stressed that the statutory language relevant in this case — found under Nevada’s Public Record Act — starts with the assumption that all government records are public records available for inspection unless a record is explicitly exempted from the Act — which the teacher email addresses we’re requesting are not.

He also cited multiple decisions by the Nevada Supreme Court itself that have reinforced NPRI’s plain reading of the Act, decisions in which these same justices held that government’s obligation to disclose information under the Act is to be “construed liberally,” while any limits on disclosure are to be “construed narrowly.”

As Francis McCabe of the Las Vegas Review-Journal reports, the justices on Wednesday seemed “perplexed” by CCSD counsel’s arguments as to why they ought to abandon the Court’s long-standing precedent on this issue.

While we won’t know the outcome of this case for some time, what we do know is this: The need for open, accountable government is one of the most important principles guaranteeing the rights and liberties of citizens, and that’s what this case is about.

And, win or lose, our fight to uphold that principle will continue.

*****

*Feel free to skip this section if you have no interest whatsoever, but a surprising number of you have written to ask me what I thought about that controversial play call at the end of the Super Bowl. (Though maybe it shouldn’t be so surprising, given how often I’ve noted my love for sports in this space.) So for whatever it’s worth, here’s my take.

The conventional wisdom is that Carroll committed an epic blunder by not simply giving the ball to running back Marshawn Lynch on what turned out to be that fateful play. I don’t quite see it that way. I’m fine with calling a pass play in that situation, but my beef is with the type of pass Seattle called. If you’re going to pass, then have quarterback Russell Wilson roll out, which not only would have played to his strengths but also would have given him options — he could run it in, pass it if someone was open, or throw it away if there was nothing there (and then let Lynch run it on third down).

By calling a quick throw on a slant, Carroll basically took all that decision-making away from Wilson. That play has Wilson take the snap, drop back, and throw immediately to a spot without taking any time to see how the play develops. Which means that if the defensive back happens to jump the route (as New England’s Malcolm Butler did), you’re out of luck, because the decision on where the ball is going is already made. Butler still had to make a great play to pick it off, but Wilson never should have been put in a situation where so much was left to chance.

Thanks for reading — and be sure to check back next week for my thoughts on Deflate-gate. (No, not really.)

Regards,

Andy Matthews
NPRI President


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Week in Review: We're watching

Every week, NPRI President Andy Matthews writes a column for NPRI's week-in-review email. If you are not getting our emails, which contain our latest commentaries and news stories, you can sign up here to receive them.


While reading a Los Angeles Times article this week on Gov. Sandoval’s “tax-hike surprise,” I couldn’t help but think of the Legislative Review & Report Card that NPRI publishes at the end of every Legislative Session.

The Report Card grades each legislator and the governor on his or her performance in Carson City, taking into account votes on the matters that affect you and your family most, such as education and taxes. For the vast majority of Nevadans not entrenched in Silver State policymaking and politics on a daily basis, it’s a highly useful tool to gauge the performance of their elected officials.

As you may know, NPRI Executive Vice President Victor Joecks has relocated to the capital, not only to provide regular updates on important hearings and votes, and to offer a free-market perspective to lawmakers, but also to be a watchdog.

In the coming months, we’ll be watching how our elected officials stand up against new and extended taxes; support giving students the educational freedom they need to succeed; promote crucial reforms to Nevada PERS; and work to loosen public-sector unions’ hold on taxpayers’ wallets. We’ll be watching them when it comes to attempts to raise the minimum wage, expand ineffective programs like full-day kindergarten, and plenty more.

As that LA Times article I mentioned accurately suggests, politicians try a lot of things after an election. Despite Nevada voters’ overwhelming rejection of the margin tax  — which Sandoval himself opposed — the governor and some legislators are now pushing a modified version of that same tax that voters just shot down by a 4-1 gap. Others want to circumvent taxpayers by allowing school boards to raise property taxes without their consent, despite voters’ repeated rejection of such increases.

We know the vast majority of Nevadans don’t have the time to follow every development from Carson City, and that many more are precluded from following their legislators’ actions closely by the vast distance that separates them from our state’s capitol.

So NPRI will again spend the next few months watching on your behalf — and reporting on how your lawmakers perform — so you can make the most informed decisions possible come next election.

***

On another front, we’ve had a significant development in one of our legal efforts to defend the Nevada Constitution. As you’re aware, we’re currently in a lawsuit against the Governor’s Office of Economic Development over its administration of the unconstitutional Catalyst Fund, through which state government gives taxpayer money to private companies.

Last Thursday, the district court judge in that case heard oral argument on both parties’ cross motions for summary judgment and denied both, holding that factual issues raised by the case precluded the grant of summary judgment for either party. This represents an important step forward, because it opens the door to the trial phase of this case, during which we’ll have an opportunity to make the argument as to why our client, an alternative-energy entrepreneur named Michael Little, has suffered direct harm as a result of his competitor, SolarCity, receiving a government subsidy.

We’ll be sure to keep you posted as this case continues to unfold, but in the meantime, please accept my sincerest thanks for all you do to help us fight this important battle, among many others.

Until next time,

Andy Matthews
NPRI President


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Testimony on SB 119

Submitted by Victor Joecks, Nevada Policy Research Institute

SB 119 contains two separate provisions: An excellent repeal of prevailing wage requirements for school and university construction and a massive property tax increase without voter approval.

Repealing prevailing wage requirements would save Nevada governments significantly on construction projects.  An NPRI study found that prevailing wage requirements boost the costs of construction project labor by around 45 percent in both Northern and Southern Nevada. Overall, prevailing wage requirements cost Nevada taxpayers around $1 billion in excessive labor costs in just 2009 and 2010.

A study in Michigan found that eliminating prevailing wage requirements there would reduce overall construction costs by 10 percent.

Eliminating the prevailing wage is a great example of how government can make taxpayer money more go further.

On the other hand, attempts to circumvent voters and pass a property tax increase without their approval should be rejected.

First, voters have clearly spoken on this issue.  In 2012, Clark County voters rejected a more modest property tax increase 2 to 1, despite there not being a formal “no” campaign. In 2013, Washoe County residents spoke out against a property and sales tax increase for school construction, forcing the County Council to reject those tax increases.

This bill would circumvent the will of the people, because voters overwhelmingly oppose this plan.

Next, here are a few important pieces of context on calls for capital improvements.

1. In 1999, the average US school building was built in 1959, or 40 years old. In 2012, the average CCSD school building was just  22 years old. Nevada’s schools are comparatively new.

2. I have personally called Clark County School District and Washoe County School District officials and asked if their heating and A/C systems are working. Officials from both school districts have reported that while occasional breakdowns happen and are fixed immediately, their students have working heat and A/C, contrary to some claims

3. With its $4.9 billion 1998 bond, CCSD accommodated a 50 percent increase in student growth. Now CCSD claims it needs $5.3 billion to accommodate just 1 or 2 percent student growth per year.

4. CCSD has also been extremely wasteful with its past bond money. It gave $5 million to the Smith Center for Performing Arts. It gave $2 million to the City of Henderson for a swimming pool.

At the same time, CCSD was bemoaning the need to build new school buildings, it spent the last of its 1998 bond money on a gym for a rural high school.

5. In its 2012 property tax increase request, CCSD said identified 42 schools it would have spent the funds on. Those 42 schools had received more than $470 million from previous bond campaigns, an average of $11.7 million a school.

6. In 2012, CCSD said ten schools desperately needed electrical system upgrades. Those electrical upgrades would have cost just $9.8 million, or 1.5 percent of what CCSD was asking for.

Lastly, the best way to deal with claims of overcrowded schools is to pass school choice legislation that allows parents to choose to remove their students from public schools.

Thank you. 

 

Week in Review: Federal aid

Every week, NPRI President Andy Matthews writes a column for NPRI's week-in-review email. If you are not getting our emails, which contain our latest commentaries and news stories, you can sign up here to receive them.


It’s not often that I defend Harry Reid, but I remember an occasion a few years ago when I found myself doing just that.

A report had come out — I don’t recall who produced it — showing that Nevada ranked near the bottom of the 50 states in terms of the amount of aid received from the federal government. Reid was criticized for not doing more to “bring home the bacon,” as the expression goes, and if I recall correctly, the list of those who called him out included a number of self-professed fiscal conservatives. I understand the temptation to take aim at one’s political rivals anytime an opportunity presents itself. But I also felt that in this case, the criticism was misguided.

Whatever we may want from our national representatives, adeptness in steering federal pork back home should not be among our wishes. I’ll grant an obvious point here: Nevada’s low ranking almost certainly did not result from any principled opposition on Reid’s part to doling out federal aid. More likely is that he simply proved less proficient at it than his colleagues. So in truth, I wasn’t defending Reid so much as I was wishing his detractors would recognize that this was the wrong fight to pick.

What caused me to think back to that debate was the release recently of a new study from the Tax Foundation, which finds that Nevada continues to lag most of the other states when it comes to reeling in federal dollars. For fiscal year 2012, the Silver State ranked 44th in the nation in federal aid as a percentage of state general revenue.

A few observations in looking at that map: First, there doesn’t appear to be any really obvious red-state/blue-state pattern when it comes to receiving federal aid. While the states that bring in the most (Mississippi, Louisiana, Tennessee and South Dakota take up the top four spots, in that order) tend to vote Republican at the national level, the states that receive the least federal aid (Alaska is No. 50 and North Dakota is No. 49) do as well. Being a “conservative” state, in other words, doesn’t necessarily mean you’re more likely to eschew federal money. But nor are you any less likely to do so.

Second, the geographical distribution of federal aid doesn’t show a whole lot of consistency, either, with the exception that a majority of the Southeastern states fall in the top half of recipients (with South Carolina, Florida and Virginia the exceptions). One can find lots of examples of bordering states that are on opposite ends of the scale. The Dakotas (already noted above) provide one such example, as do Missouri and Kansas (Nos. 5 and 41, respectively), Oregon and Washington (12 and 37) and Arizona and Nevada (10 and 44).

But the most important takeaway from the study is this: There is way too much money being thrown around by our politicians in Washington, D.C. Mississippi, the state that topped the Tax Foundation’s list, receives a whopping 45.3 percent of its state general revenues from the federal government. That’s alarming, to be sure. But what I found even more notable was that Alaska, which ranked last, still gets 20 percent of its revenue from the feds. Think about that — even in the state least dependent on the national government for aid, one in every five dollars still comes from our nation’s capital. (The percentage for Nevada is 25.5.)

As noted above, this is very much a bi-partisan problem. Politicians of both parties regularly run for office on the promise that, “If elected, I will deliver for our state.” And by “deliver,” of course, they mean they’ll pack federal legislation with as many giveaways to their constituents as possible, never mind that we’ve long since passed the point where our country can afford it.

What’s needed from our nationally elected officials today, more than ever, is the courage to say "no." They need to look at the voters in their districts and say, “If elected, I’m going to work as hard as I can to limit our state’s dependence on federal money, and to stop the gravy train from running to all the other states, too. I’ll protect and defend our Constitution, and I’ll work to advance national policies that keep you free. Beyond that, I’m not going to promise you a thing.”

Of course, we don’t often hear this from our political class. The incentives to promise the moon are usually far too great, and the rewards for showing genuine fiscal responsibility far too small by comparison.

And so every day, the crisis continues to grow more severe.

Last year’s elections swept into office a whole lot of candidates who call themselves fiscal conservatives. No doubt their principles and ideological instincts point that way. But talk is cheap. And the citizens of our nation deserve serious action that leads to the implementation of fiscally responsible policies.

Cutting federal aid to the states — ours included — would be a great place to start.

Thanks for reading, and take care.

Andy Matthews
NPRI President


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