Commentary: Steele: Link between taxes, spending, is broken

Illinois Gov. Pat Quinn’s recent veto of legislation that would have allowed new casinos in his state is seen as a victory for Indiana, but one wonders for how long.

There’s money to be had, and it’s rarely the case that politicians can leave it on the table indefinitely. That’s especially true once the first step has been taken — it’s not a question of whether the state has casinos, they already do. It’s simply a question of how many and where.

The opening of new casinos in the city of Chicago or the south suburbs would certainly impact Northwest Indiana’s, especially those in Lake County. It’s not entirely clear by how much — a casino in the city would likely have a different customer base than one in the suburbs — but certainly attendance here would be down.

Casino gambling is growing elsewhere, too. The arrival of casinos in Ohio is expected to have significant impact on Indiana’s tax revenue. Indiana was an early implementer, and the tendency is to think that situation will remain, but it won’t. State officials will need to address the loss of revenue and the uncertainty about the future sooner rather than later.

The biggest problem with taxation at every level of government is the divorce of government revenue from government expenditure. If you go out for a night of gambling, for example, some of the money you spend at the door or lose at the table is paying the salary of teachers. The proper financial calculation — How much money do you believe should be collected to pay teachers, and how should that money be raised? — is no longer part of most political calculations voters make.

The money trail in public finance is far too difficult for anyone but an expert to understand.

Schools are actually the one bit of relief we’ve seen in the ceaselessly growing complexity of public finance. But the recent Crown Point school referendum (and others like it across the state) is an exception that helps prove the point. That was a blessedly simple instance of voters having the ability to make a clear and specific calculation.

Alas, this took a special referendum, something relatively rare, and arguably inconsistent with a representative form of government.

We’ve created a rickety structure of public finance that can only be understood by experts, and that is impossible to translate meaningfully into election campaigns. We’ve been left with no ground to make a decision in the voting booth, so we’re left accepting the base proposition that taxes are bad and spending is good.

The questions of how much in taxes it’s appropriate to pay, and how much spending the government should do, have become distinct. In regard to both, there are vague and difficult-to-assess arguments about fairness, and the impact on economic growth, of taxes and spending.

But rarely are voters presented with a “what do you want to pay for, and how do you want to pay it?” set of questions.

Local officials have less and less control over their own jurisdictions, with revenue sources more and more managed and constrained, and often dependent on the vagaries of events and decisions made elsewhere.

There will always be a balancing act between spending and taxing, and there should be some restriction on each by the other. But there should also be a structure that provides a clear link between the two.

We’re moving far away from that. Casino taxes are an obvious example, and one that will need to be addressed very soon.

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