States governments are in as much need of reform as the Federal Government, just different areas. The fundamentals are are the essentially the same.
Solution: Create a Budget
The first step for any state is to create a budget based upon the tax revenue. For 2011 the percentage of Sales and Use tax receipts were 48.3% of the total taxes collected, where Individual income taxes were 34.2% and Corporate taxes were 5.3%.
Solution: Find areas of waste and eliminate them from the budget
There are many areas of waste in state governments. We will list some that are unneeded, but the overriding number that states need to get to is to have the whole government funded by the current sales tax revenues. Both small states and large states are unable to maintain their thirst for more taxes and are not able for fiscal constraint. For example, Texas (the second largest state by population), is unable to fund the state government for $33.8 Billion; and North Dakota, one of the smallest states by population is unable to keep their spending under $1.2 Billion.
Where it all goes
Nearly 80% of all state spending goes to Health Care, Education, Transportation, and Public Safety, and so below we will outline the changes needed:
Health Care Reform
The health care expenses are the highest as a percentage of states budget. The problem here is that it is not the states’ responsibility to provide health care. This, plus the high costs of administration need to be cut to zero.
Education Reform
States have proven that they are unable to manage education, both financially as scholastically. As such, all state colleges and universities need to be sold to private entities. This would enable greater competition on pricing as well as quality of education. The funds collected by selling the higher education institutions would cover the lump sum payout of the benefits for current and former educators. (Primary and Secondary education is covered in the “County/Local government” Section.
Transportation/Public Safety
There are some structural changes needed at the state level for the Department of Transportation and State Public Safety. The first change is that all state police need to be combined with the county police departments, thus moving to the County/Local budgets. The state Department of Transportation will be larger as they will essentially be receiving twice the budget (State Fuel Tax, plus Federal Fuel tax which will be repealed and added to the state fuel tax); and they will be in charge of all projects. Giving the states this additional revenue, and the requirement that all projects be fully funded with taxes (not debt) prior to starting the projects will ensure the they don’t get out of control.
Department of Motor Vehicles
The Department of Motor vehicles needs major reformation. The fact that vehicles have to be registered each year is unneeded. Registration should only be needed when there is a transfer of ownership. This will cut the need for taxes and the number of people needed significantly. Additionally, the transfer of ownership should be done online through a state system that police can verify ownership.
The License Plate division is also in need of elimination. Based on our technological advances, a license plate could be replaced by a simple GPS or similar device attached under the hood of the car. This would both eliminate costs of printing license plates as well as give the data collected by the GPS to the State to help determine where changes are needed in our transportation system. Using this data our roads could be made safer and provide drivers with important information, such as accidents ahead.
Department of Corrections
The department of corrections needs to be outsourced. Keeping the budget amount the same would give the entity that has it the ability to maintain a high level of security and safety.
Courts
The court system need to be overhauled and edited to be processed online. Nearly all of the court cases can be handled through a website where judges can review the cases and make rulings. By doing the cases online, it allows both the plaintiffs and defendants the time they need to file their case as well as upload all the documents that support the individuals. It would also be a good use of serving papers to people where the plaintiffs can upload the documents. It would also provide a logical flow for the type of case being filed, helping the plaintiffs make sure that they are following the steps needed to get the case completed.
State Bonds
Bonding on the state level needs to be repealed. Politicians will always find ways to say that they can’t get something done without going into debt. This only hurts the taxpayers and does not encourage fiscal responsibility by the politicians. Repealing the ability for states to go into debt will ensure their financial stability.
State Taxes and Surpluses
The states will be able to repeal all the taxes except the Motor Fuel tax, and the State Sales tax. States additionally need to have a full years’ worth of budget in cash for the upcoming years budget. So while they are repealing the taxes and selling off the Colleges/Universities, the monies should go into the state budget fund for the upcoming years budget. This will help the departments to know how much they need for their upcoming budget.
State Budget Examples (before and after)
Below is a sample of how the financials would look for the State of Utah.
Current Tax Receipts
| Tax Revenue | $Billions | Percentage |
|---|---|---|
| Sales Tax | 2.54 | .41 |
| Individual Income | 2.3 | .37 |
| Motor Fuels | 0.37 | .06 |
| Corporate Income | 0.25 | .04 |
| Motor Vehicle | 0.19 | .03 |
| Tabacco Products | 0.12 | .02 |
| Insurance Premiums | 0.1 | .02 |
| Oil/Gas Production | 0.1 | .02 |
| Occupation and Busines | 0.05 | .01 |
| Alcoholic Beverages | 0.04 | .01 |
| Other Selective Sales | 0.04 | .01 |
| Public Utilities | 0.03 | .01 |
| Motor Vehicle Operators | 0.01 | .01 |
| Total | 6.14 | 1 |
Tax After
| Tax Revenue | $Billions | Percentage |
|---|---|---|
| Sales Tax | 2.54 | 0.775 |
| Motor Fuels | 0.37 | 0.225 |
| Total | 2.91 | 1 |
Current Tax Spend
| Spend | $Billions | Percentage |
|---|---|---|
| Public Education | 1.55 | 0.28 |
| Medicaid & CHIP | 0.98 | 0.18 |
| Other Social Services | 0.89 | 0.16 |
| Higher Education | 0.59 | 0.11 |
| Transportation | 0.52 | 0.09 |
| Other | 0.51 | 0.09 |
| Corrections/Public Safety | 0.25 | 0.05 |
| Debt Service | 0.2 | 0.04 |
| Total | 5.49 | 1 |
Spend After
| Spend | $Billions | Percentage |
|---|---|---|
| Public Education | 1.5 | 0.46 |
| Other Social Services | 0.05 | 0.01 |
| Transportation | 1.23 | 0.38 |
| Other | 0.25 | 0.07 |
| Corrections/Public Safety | 0.25 | 0.08 |
| Total | 3.28 | 1 |
The intent is to demonstrate a solution to repeal and reverse all State taxes, fines, penalties, and replace them with with a fixed 7.5% Sales Tax.
Just to name a few samples:
Use Tax
Hotel/Tourism taxes
Airport Taxes
Vehicle Registration
Moving Fines (police tickets)
State Gasoline Tax
State Income Tax
Corporate Income Tax
Personal Property Tax
Boat Registration/Tourism taxes