MA: Regional Budget (In the works)
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California8429
A-Bob
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« Reply #50 on: January 08, 2011, 08:16:02 PM »


$4.99 billion ..... Other Corporate Tax Breaks (No Change)


Is this going to be defined by statute, because it is worryingly nonspecific....

Feel free to look up every law pretaining to corporate taxes in the multiple Mideast states if you so choose to do so Smiley

This is based off of Atlasia's budget btw so they have the same thing going on. Obviously this game/simulation is never going to be as hard core as actual government where we spend our entire lives devoted to this budget.
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Badger
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« Reply #51 on: January 11, 2011, 03:35:03 PM »


$4.99 billion ..... Other Corporate Tax Breaks (No Change)


Is this going to be defined by statute, because it is worryingly nonspecific....

Feel free to look up every law pretaining to corporate taxes in the multiple Mideast states if you so choose to do so Smiley

This is based off of Atlasia's budget btw so they have the same thing going on. Obviously this game/simulation is never going to be as hard core as actual government where we spend our entire lives devoted to this budget.

Actually, I think you guys are going to be pleasantly surprised about that section, but I have to finalize some details in a conference call with a forum tax expert. Wink
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California8429
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« Reply #52 on: January 11, 2011, 05:57:13 PM »

Thank you for your work, and hopefully finished soon? So the nightmere can end for you
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Badger
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« Reply #53 on: January 12, 2011, 11:19:46 PM »

OK, another piece of the puzzle falls into place. Good news for the region actually.

My thanks to Torie for his help in analyzing the tax proposal (being a lawyer with significant tax background). Please review the section of spending entitled "Tax expenditures and Tax Cuts" totaling $163.75 Billion in "spending" (an odd use of the term based on the NathanNewman budget sim's terminology, but whatever).

Upon consultation with wise graybeards Wink, it would appear that these deductions are already included in state taxes the same as federal taxes. As I am calculating regional revenues based on comparing regional tax rates to RL tax rates and the revenue it produces--which, again, are already subject to these same tax deductions--these deductions have no effect on regional revenues for the starting budget as the current deduction level is not being changed in any category.

Bottom Line: We can remove the $163.75 Bil in "spending" from the budget as the deductions will already be included in the calculation of regional revenues. That should give some serious breathing room. Cheesy

But before we celebrate too much, please note there's still some serious red ink I predict. Sad I hope to have an analysis of income tax revenue done before the weekend.
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California8429
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« Reply #54 on: January 13, 2011, 05:30:38 PM »

Wouldn't the tax cuts be subject to the current budget though? As in here's the 10% rate say for something, but you only have to pay 8% this year?

Still, I'm win with save $163.75 billion Cheesy
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Badger
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« Reply #55 on: January 14, 2011, 07:09:18 PM »

Wouldn't the tax cuts be subject to the current budget though? As in here's the 10% rate say for something, but you only have to pay 8% this year?

Still, I'm win with save $163.75 billion Cheesy

Sorry, I'm not sure I understand your question, A-Bob. In a nutshell the above listed tax deductions are included in the upcoming budget to the same extent as allowed in RL (which according to Torie most states will allow deductions to the same extent as the federal government does). As there is currently no proposed change to the level of such tax deductions, they will already be included in the final calculation of revenue collected and therefore don't impact "spending" levels at all. If such deductions are to be expanded or reduced from present levels in the future, however, that will then obviously affect revenue levels.

BTW: IF they are well-behaved tomorrow (the big key being whether our 5 month old demands to be held for hours straight or if he'll nap), then I MAY actually have close to a final analysis for the budget by Tuesday. Keep fingers crossed.
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« Reply #56 on: January 14, 2011, 11:01:59 PM »

Okay, after talks with Tmth, I'm attempting to get more involved here.

First off, I'm a bit confused as to how this works, as it seems that Badger, instead of calculating the tax rates of the Mid-East region, it seems you are calculating the real life tax rates/spending of the states that the Mid-East region would occupy if in real life. Is this true? I'm trying to understand how this works.
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California8429
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« Reply #57 on: January 14, 2011, 11:17:36 PM »

Okay, after talks with Tmth, I'm attempting to get more involved here.

First off, I'm a bit confused as to how this works, as it seems that Badger, instead of calculating the tax rates of the Mid-East region, it seems you are calculating the real life tax rates/spending of the states that the Mid-East region would occupy if in real life. Is this true? I'm trying to understand how this works.

RL numbers is the only way we can make this somewhat realistic. Otherwise Badger would be pulling numbers out of thin air which is more or less what has happened with the GM position before governments started to actually create deatiled budgets.
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Badger
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« Reply #58 on: January 14, 2011, 11:23:22 PM »

Okay, after talks with Tmth, I'm attempting to get more involved here.

First off, I'm a bit confused as to how this works, as it seems that Badger, instead of calculating the tax rates of the Mid-East region, it seems you are calculating the real life tax rates/spending of the states that the Mid-East region would occupy if in real life. Is this true? I'm trying to understand how this works.

RL numbers is the only way we can make this somewhat realistic. Otherwise Badger would be pulling numbers out of thin air which is more or less what has happened with the GM position before governments started to actually create deatiled budgets.

Right. I'm comparing the amount of revenue raised by RL states with their RL tax rates, and using that as a basis to calculate how much revenue the tax rates set by the Assembly and Governor would raise.
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« Reply #59 on: January 15, 2011, 08:30:17 AM »

So, looking over the thread, it seems that the number that we have is either 76.4 billion, or 163.75 billion. However, the second numer is the number you mentioned that we'd save. I'm trying to figure out from what the rest of you are saying, how much we have to spend here.
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California8429
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« Reply #60 on: January 15, 2011, 11:59:37 AM »

So, looking over the thread, it seems that the number that we have is either 76.4 billion, or 163.75 billion. However, the second numer is the number you mentioned that we'd save. I'm trying to figure out from what the rest of you are saying, how much we have to spend here.

no..... We have $163.75 billion in tax credits which we can subtract now and $76.4 billion of revenue from the sales tax to be at that 5.6% rate was it?
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Badger
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« Reply #61 on: January 19, 2011, 03:04:00 PM »

So, looking over the thread, it seems that the number that we have is either 76.4 billion, or 163.75 billion. However, the second numer is the number you mentioned that we'd save. I'm trying to figure out from what the rest of you are saying, how much we have to spend here.

no..... We have $163.75 billion in tax credits which we can subtract now and $76.4 billion of revenue from the sales tax to be at that 5.6% rate was it?

Close. The budget currently has $196.4 Bil allocated for spending, and a 5.7% regional tax rate (with groceries and prescription meds exempt) will raise $76.4 Billion in revenue.

Income tax analysis being typed up now.
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Badger
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« Reply #62 on: January 19, 2011, 05:10:05 PM »

Here's the Office of the GM's analysis of revenue produced by the proposed income tax rates. At this time I've only done an analysis of the original proposal (see crossed out list of income tax brackets on page 1 of thread: "0% for income up to $13k; 1% for $13k-$40k", etc.). For reasons soon to be apparent, I don't think the Assembly will want an assessment of the revised proposed rates.

As always, PLEASE double check the math and underlying calculations here, and raise any objection if you believe the figures are misplaced. I emphasize this particularly here as, in summary, the prognosis is grim. Sad

The calculations were made based on RL state income tax rates in "Mideastern" states. Here's an overview of RL tax rates compiled by the resolute SoIA, Dr. Cynic. Thanks again, Doc! Cheesy


IL - 3% (flat)

IN - 4% (flat)

VA - 2% (low rate)  &  6% (high rate)

WVA - 3% (low rate) &  7% (high rate)

MD - 2% (low rate)  &  6% (high rate)

DE - 2% (low rate)  &  7% (high rate)

KY - 2% (low rate)  &  6% (high rate)

OH - 1% (low rate)  &  6% (high rate)

MI - 4% (flat)

MO - 2% (low rate)  &  6% (high rate)

WI - 5% (low rate)  &  8% (high rate)

Further details of the non-flat tax state's tax brackets were found in the websites linked at this post (or links to state tax agencies provided therein):

https://uselectionatlas.org/FORUM/index.php?topic=128143.msg2774577#msg2774577

Interestingly, many of the graduated tax states have a couple brackets covering very very low incomes, and then only 1 or two tax brackets covering the vast majority of incomes from working class to the uber-wealthy. Ohio is one of the exceptions.

Anyways, based on this link:
http://www.usgovernmentrevenue.com/#usgs302a

I added up the FY2010 RL income tax revenue in Mideastern states to total: $62.8 Bil.

Compared to RL, the proposed regional income tax rates are quite low. The closest RL state's rates was Illinois' flat 3% rate (recently raised to 5%) which according to the "us government revenue" link above produced $10.7 Bil in revenue. I really tried to give the region the benefit of the doubt considering the increased tax rates of 3.5% and 4.5% the noteworthy number of multi-millionaires living on the Gold Coast would pay, not to mention Chicago's population of billionaires, but even then I felt compelled to determine that cutting the middle class's tax rates by half to two-thirds would still result in overall reduced tax revenues. I accordingly spitballed painstakingly calculated the proposed regional income tax rates would only produce $9.3 Bil in IL.

I use IL as an example as it is actually the best state in terms of coming close to matching RL revenue. Many other states have income tax rates that were roughly double, or even close to triple the proposed RL rates. Not that they have top tax rates of over 13%, but most have rates of over 5% or 6% which kick in at lower middle class income rates, whereas the proposed regional rates don't even hit 2% until income over $100k.

All told, the GM's Office determines this proposed regional income tax rates would produce total revenue of: $32.7 Bil. This is nearly a 50% decrease Shocked from RL state income tax revenue.

Please note that this is NOT a judgment of the proposal, but rather simply an economic measure of its likely revenue based as close as possible on real world models. If the region wishes to keep these rates, or even reduce them, it is free to do so. The result, however, is that in addition to an already significant budget deficit if RL spending levels are merely maintained, these rates will add an additional approximately $30 Bil that must either also be cut from spending and/or incurring debt.

An analysis of the spending is coming soon. Preview: Remember that $160+ Bil in tax breaks the region recently got to take off its spending ledger? You'll need every penny and much, much more. Sad
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California8429
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« Reply #63 on: January 19, 2011, 06:32:48 PM »

Thank you for the report.

I'm going to hold off on deciding to raise the taxes or what to cut in the budget until we get that spending report and have all our total tax revenue added together to see the overall deficit (most likely).
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Badger
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« Reply #64 on: January 19, 2011, 10:57:42 PM »

Here's the GM Office's analysis of the proposed budget spending.

I used much the same websites as before in reviewing spending by comparing the proposed budget to RL state spending: I've broken down the proposed budget into the same categories the website uses: As always, please aggressively check my work and hollar if I got something wrong---not just math errors, but fundamental reasoning errors as well.

                                   Mideast                        RL

Pensions:                   $10.05 B                  $42.7 B

Health Care:              $58.85 B                  $99.7 B

Education:                 $35.12 B                  $67.9 B

Welfare:                    $31.39 B                  $36.5 B

Protection:                $12.45 B                  $19.2 B

Transportation:         $14.72 B                  $25.8 B

Other:                       $33.8 B                    $35.0 B


TOTAL:                  $196.4 B                  $325.8 B

(For anyone wanting more details on how the RL spending is allocated, go to the gov spending site, hit spending, then at the bottom where it lists actual and guesstimated spending over several fiscal years click on 2010. This will open an option to open these several spending categories into more specific subcategories.)

As we can see, in every category except "Other" and "Welfare" is funding not even remotely close to current real life funding levels. Again, this is NOT a judgment on the proposal. Nevertheless, the fact remains that cuts in spending on these services will reduce services/effectiveness from present real world levels to a degree directly related to the level of funding cuts, be it education, health care, transportation, etc.

The one exception to this rule--I think--is pensions. I'm not certain of this, but I believe that, unlike Social Security where the amount of benefits is discretionary with the government, I believe pensions are contractual in nature and spending on retirement benefits can no more be reduced by the state once earned than a private company can do. I'm exactly 51% sure of this so anyone please correct me if I'm wrong, but until when and if that happens the GM's Office rules that pension spending must be increased to RL levels or darned close. (Again, anyone please correct me if I've got this wrong).

Otherwise, you're free to make whatever decisions you wish.

The last part of the budget still to come is an assessment of other taxes including estate, excise and other. I'm going to give the Assembly a heads up so they can start the hard work now, though: I do NOT expect these taxes to materially change the final situation of the regional budget, as they are a relatively small part of state's revenue sources.

Here's an overview: In RL the 10 states of the Mideast Region will spend in FY 2010 approximately $325.8 Bil. Conversely, those states will raise only $248.7 Bil in revenue That leaves a deficit of $77 Bil, and that's with RL tax rates as opposed to the much reduced income tax rate proposed.. The proposed income tax rates would increase the deficit an additional $30 Bil.

There are a few glimmers of hope, though. First off, gambling was legalized in the region some years ago so there will be increased tax revenue from RL compared to states that still largely prohibit gambling (e.g. OH). The extra tax revenue here, however, will likely only total in the single digit billions. Undecided

More importantly, though, is the stimulus funding package passed by the Senate which allocates money to the states for various projects. I STRONGLY urge the Assembly to factor in these federal appropriations into its regional spending budget ASAP. You WILL need that cash.

There you go. I bet you all wish I would have held off even longer now. Tongue Sorry to be the bearer of bad lousy craptastic tidings. Sad

But hey, at least you're not the Pacific. Those guys are really screwed. Grin
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California8429
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« Reply #65 on: January 19, 2011, 11:10:44 PM »

So if we kept this unrealistic numbers, we'd be fine on spending, however with the necessary even minimal budget increases in areas, we'd be short correct.
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Badger
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« Reply #66 on: January 19, 2011, 11:31:20 PM »
« Edited: January 20, 2011, 12:05:50 AM by Badger »

So if we kept this unrealistic numbers, we'd be fine on spending, however with the necessary even minimal budget increases in areas, we'd be short correct.

Well, lets see: Assuming all other taxes except income tax raise the same revenue as in RL, the region will raise about $218.8 Bil ($248.8 Bil raised in RL -$30 Bil for the reduced income tax rates proposed). If pension funding is raised $32.6 Bil to match RL levels, that would raise overall regional spending from $196.4 Bil as proposed to about $229 Bil, leaving a deficit of just over $10 Bil. Most, if not all, of that however would be made up by additional gambling tax revenue.

So, yes: The Mideast probably could adopt the proposed tax and spending levels and also fully fund state pensions, AND maintain a balanced budget with only nominal cuts to "other" miscellaneous government funding.

However, the down side is doing so would require cutting welfare services by almost 15%, cutting law enforcement and protection funding by over a third, and cutting funding for transportation/road and bridge repair, education, and health care all by almost half.

The one upside, again, is that none of these calculations currently factor in federal stimulus spending.
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Badger
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« Reply #67 on: January 19, 2011, 11:41:50 PM »

BTW: I'm not aware of any Mideastern law requiring a balanced budget, so the government could choose to incur deficits in the long range plan of paying them off later. Interest costs will of course be added to subsequent budgets, but the choice is yours.

I don't think I need to spell out to anyone here the downsides of deficit spending in opposition to this idea, or the gospel of Keynesian economics in favor of it. Wink
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California8429
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« Reply #68 on: January 20, 2011, 05:25:54 PM »

Well I'm in favor of a balanced budget so we don't screw ourselves in the long run (Especially since the tax credits now have no effect this first time).

The final budget should be smaller than RL. I know we have some breathing room with the stimulus for health care as well as transportation.

Obviously to make sure we don't have significant cuts, we're going to need to bring the income tax levels much closer to RL.

How much are corporate taxes going to bring in for revenue (we still have the ability to create higher brackets for those making hundreds of millions of dollars, I mean even a 0.5% increase will generate a decent amount)
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Badger
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« Reply #69 on: January 20, 2011, 06:59:35 PM »

Well I'm in favor of a balanced budget so we don't screw ourselves in the long run (Especially since the tax credits now have no effect this first time).

The final budget should be smaller than RL. I know we have some breathing room with the stimulus for health care as well as transportation.

Obviously to make sure we don't have significant cuts, we're going to need to bring the income tax levels much closer to RL.

How much are corporate taxes going to bring in for revenue (we still have the ability to create higher brackets for those making hundreds of millions of dollars, I mean even a 0.5% increase will generate a decent amount)

Honestly, Mr. Speaker, from what I saw those real life income tax revenue figures appeared to include corporate income taxes as well. (Sorry, forgot to mention that before.) If anything, the difference between RL corporate tax rates and those proposed were probably worse than the approximately 50%  reduction in personal income tax revenue raised. Based on the fact that corporation taxes are generally a rather small share of overall income tax receipts, I did only a rough estimate rather than exact math for corporate income, and that's undoubtedly to the region's benefit as frankly strict application would probably only increase that $30 Bil shortfall in income tax revenue from RL figures. Sorry. Sad

Like I said, the remaining excise and estate taxes are a very small portion of overall revenues. Even IF the proposed rates are higher than RL, the resulting increased revenue would be relatively small and do little to address the region's budget crisis.
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« Reply #70 on: January 21, 2011, 09:24:30 PM »

This is a quote from my re-election thread where A-Bob asked about ideas for balancing the budget. I'm no expert on what's expected where, but there were things that I had questions on or believed un-necessary.

What specific cuts would you make in the budget and/or tax increases to make up for our projected budget shortfall?

I decided to go over the budget and see what was going on. I came up with two categories for the things I wrote down: "What is this?", and "What is oure role in this?" I'd appreciate an amount of explanation for category one, and an a reason why we're funding category two.

What is this?
Updating Energy Infrastructure
I'm wondering what that means and how it translates into action.

What is oure role in this?
Mental health and substance abuse (Is the reason we're paying for this crime control, or general humanitarianism?)
Agricultural research (It's probably normal for a government to fund research, but why?)
Crop Insurance (Are there private agencies for this? Do people pay, or do they get it for free?)
Fund for alternative energy (Again, I know most government fund this, but why? I'd at least consider leaving it up to private enterprise to research)
Vocational Education (Is this like trade school? I can understand K-12, but please explain this)

I'd like these questions answered.
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Badger
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« Reply #71 on: January 22, 2011, 11:51:36 PM »

This is a quote from my re-election thread where A-Bob asked about ideas for balancing the budget. I'm no expert on what's expected where, but there were things that I had questions on or believed un-necessary.

What specific cuts would you make in the budget and/or tax increases to make up for our projected budget shortfall?

I decided to go over the budget and see what was going on. I came up with two categories for the things I wrote down: "What is this?", and "What is oure role in this?" I'd appreciate an amount of explanation for category one, and an a reason why we're funding category two.

What is this?
Updating Energy Infrastructure
I'm wondering what that means and how it translates into action.

What is oure role in this?
Mental health and substance abuse (Is the reason we're paying for this crime control, or general humanitarianism?)
Agricultural research (It's probably normal for a government to fund research, but why?)
Crop Insurance (Are there private agencies for this? Do people pay, or do they get it for free?)
Fund for alternative energy (Again, I know most government fund this, but why? I'd at least consider leaving it up to private enterprise to research)
Vocational Education (Is this like trade school? I can understand K-12, but please explain this)

I'd like these questions answered.

Its A-Bob's proposal, so ask him. Tongue
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California8429
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« Reply #72 on: January 23, 2011, 11:47:02 AM »

This is a quote from my re-election thread where A-Bob asked about ideas for balancing the budget. I'm no expert on what's expected where, but there were things that I had questions on or believed un-necessary.

What specific cuts would you make in the budget and/or tax increases to make up for our projected budget shortfall?

I decided to go over the budget and see what was going on. I came up with two categories for the things I wrote down: "What is this?", and "What is oure role in this?" I'd appreciate an amount of explanation for category one, and an a reason why we're funding category two.

What is this?
Updating Energy Infrastructure
I'm wondering what that means and how it translates into action.

What is oure role in this?
Mental health and substance abuse (Is the reason we're paying for this crime control, or general humanitarianism?)
Agricultural research (It's probably normal for a government to fund research, but why?)
Crop Insurance (Are there private agencies for this? Do people pay, or do they get it for free?)
Fund for alternative energy (Again, I know most government fund this, but why? I'd at least consider leaving it up to private enterprise to research)
Vocational Education (Is this like trade school? I can understand K-12, but please explain this)

I'd like these questions answered.
Everthing related to energy is best answered by Governor tmth as he's the one pushing for a large economy economy. For mental health and abuse, that helps overall with not just criminals, but potential would be dangerous people, it would help reform criminals as well as stop certain people from continuing a destructive path. Governments have always given out grants for research, agriculture as well in order to improve effiency, reduce costs, and create healthier crops. With alternative energy research, again, government's give out grants to those that can show promising results.
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tmthforu94
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« Reply #73 on: January 23, 2011, 12:34:40 PM »

This is a quote from my re-election thread where A-Bob asked about ideas for balancing the budget. I'm no expert on what's expected where, but there were things that I had questions on or believed un-necessary.

What specific cuts would you make in the budget and/or tax increases to make up for our projected budget shortfall?

I decided to go over the budget and see what was going on. I came up with two categories for the things I wrote down: "What is this?", and "What is oure role in this?" I'd appreciate an amount of explanation for category one, and an a reason why we're funding category two.

What is this?
Updating Energy Infrastructure
I'm wondering what that means and how it translates into action.

What is oure role in this?
Mental health and substance abuse (Is the reason we're paying for this crime control, or general humanitarianism?)
Agricultural research (It's probably normal for a government to fund research, but why?)
Crop Insurance (Are there private agencies for this? Do people pay, or do they get it for free?)
Fund for alternative energy (Again, I know most government fund this, but why? I'd at least consider leaving it up to private enterprise to research)
Vocational Education (Is this like trade school? I can understand K-12, but please explain this)

I'd like these questions answered.
Everthing related to energy is best answered by Governor tmth as he's the one pushing for a large economy economy. For mental health and abuse, that helps overall with not just criminals, but potential would be dangerous people, it would help reform criminals as well as stop certain people from continuing a destructive path. Governments have always given out grants for research, agriculture as well in order to improve effiency, reduce costs, and create healthier crops. With alternative energy research, again, government's give out grants to those that can show promising results.
You're correct, I'm pushing for a large economy economy. Tongue
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« Reply #74 on: January 23, 2011, 12:51:12 PM »

I'd favor some sort of tax credit system rather than the state handing out money, but I'm not sure about the nuances of that, and one of you will most likely explain why that's flawed.

I'd still like an answer to "energy infrastructure" and "vocational education".
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