“IT’S LIKE DÉJÀ
VU ALL OVER AGAIN”
(WHERE IS THE INCOME GROWTH IN ARKANSAS?)
(Gov.) Clinton said
his proposed higher sales tax “is not just a tax increase that’s a tax
increase. It’s an investment in the future of our children and in the
economic development of our state.”
‘Clinton Asks 1 Cent Sales Tax Rise,’ Arkansas Gazette, Sept. 20,
‘Arkansas Ranks 49th
In Income,’ Arkansas Gazette, Sept. 6, 1983
Arkansas Ranks 49th In Per Capita Income In The U.S., BEA, 2002 data
Little Rock (Oct. 31, 2003) Two decades ago Arkansas Gov. Bill Clinton
promoted a 33 percent sales tax hike to fund public education, linking
it to economic development and income growth. Today, tax increase supporters
are again claiming higher taxes and more spending on public education
will lead to economic development and its corollary: income growth (Arkansas
ranked 49th in the U.S. in 1983 and 2002). Surveying this policy landscape
one is reminded of the immortal words of New York Yankees Hall of Fame
catcher Yogi Berra: “It’s like déjà vu all over again.”
There are many similarities
between what occurred in 1983 and recent events. The 1983 tax increase—the
largest in Arkansas history—was Gov. Clinton’s response to a state Supreme
Court decision upholding a lower court ruling that found the state formula
for distributing aid within the K-12 system unconstitutional (Alma v Dupree).
The proposed 2003 tax increase—potentially the largest in Arkansas history—is
the response of Gov. Mike Huckabee and some Democratic lawmakers’ to another
Supreme Court decision upholding a lower court ruling that found the K-12
system “inadequate” and “inequitable.” (Lake View v Huckabee) The Court
set a Jan. 1, 2004 deadline for the state to address these problems.
Gov. Mr. Clinton proposed
a sales tax hike from three to four cents that was approved by the legislature
and signed into law. Mr. Huckabee has proposed a sales tax increase from
from 5.125 to 6.125 cents. Some Democratic lawmakers are proposing hikes
in sales and income taxes. One of the proposals is likely to be considered
by the legislature if the governor schedules a special session in December
to address Lake View.
The most striking, if unchallenged, claim made in 1983 and by some today
is that increased spending on K-12 public education—not tax rates, infrastructure,
access to markets, labor force competitiveness, natural resources or other
factors—is the key to Arkansas’ economic development and income growth.
Gov. Clinton linked his tax increase for public education to the state’s
economy. By doing nothing, he said in an August 1983 speech, Arkansas
would be ensuring that it would remain in the “economic backwater” of
the country. Nothing is more closely tied to the state’s chances for economic
development, Gov. Clinton claimed, than a better-funded K-12 system.
Gov. Clinton tied
Arkansas’ economic future to “investing” in public education, warning
Arkansans would no longer say. ‘Thank God for Mississippi’ if taxes were
not raised and spent on the K-12 system. “To put it bluntly and get right
to the point,” Gov. Clinton declared, “we’ve got to raise taxes to make
Arkansas competitive with the nation and the world economically.” Some
at the state Capitol are making similar claims today.
Proponents of this viewpoint will have a difficult time defending their
position. Income growth is a corollary of economic growth. Arkansas ranked
49th in per capita income in 1983, according to the U.S. Bureau of Economic
Analysis, and remained 49th in 2002. Nor has Arkansas’ median family income
rank, compiled by the U.S. Census Bureau, improved in the interim. Education
is a factor of economic development but by no means the only one in Arkansas.
After reviewing the lack of income growth since the 1983 tax increase
some public officials may be thinking of another Yogi Berra-ism: “I didn't
really say everything I said."
‘AEA Wants Legislature Recalled To Pass Sales Tax Increase,’ Arkansas
Gazette, April 12, 1983;
‘State Supreme Court Rules State Aid Formula Unconstitutional,’ Arkansas
Gazette, June 1, 1983;
‘Arkansas Will Fall Behind Mississippi, Gov. Clinton Warns,’ Arkansas
Gazette, Aug. 25, 1983;
‘Clinton Offers Details Of His Plan,’ Arkansas Gazette, Sept. 21, 1983;
‘Clinton Offers More Details,’ Arkansas Gazette, Oct. 14, 1983.