Leon Gaumond Jr, the Town Administrator of (my hometown) West Boylston, MA, passed along a brief article from the Massachusetts Municipal Association (MMA) about expected Massachusetts budget deficits in 2008:

… she [Massachusett’s Governer’s Budget Chief Leslie Kirwan] is pegging the state’s structural shortfall for next year at $1.3 billion, and possibly higher.

At the Nov. 13 meeting of the Local Government Advisory Commission, local officials told Gov. Deval Patrick that structural budget shortfalls are expected to be widespread in municipalities again next year, leaving cities and towns with few options other than cutting services or asking voters to approve property tax increases.

Why the budget shortfall despite projected 3.8% “revenue growth” (tax collection)?  Predictably:

Growth in basic government costs, mainly related to health care and other uncontrollable fixed costs, are expected to outpace revenue by a wide margin next year, leaving hard-to-close shortfalls.

None of the above even makes me blink.  Of course cost increases are “uncontrollable.” (State-regulated healthcare hasn’t kicked in yet?)  Of course local property taxes will go up.  Of course.

Of course we will continue to have problems as we continue to do the following:

The biggest challenge to state and local officials for fiscal 2009 is fixing the Lottery-funded municipal aid program (Additional Assistance and Lottery distributions) that provides $1.3 billion to help balance local budgets and ease over-reliance on the property tax. The Lottery shortfall for fiscal 2008 is expected to exceed $100 million, with little hope for recovery in fiscal 2009.

What’s wrong with using lottery proceeds to fund municipal aid?  It’s not sustainable.  You’re funding a government service from the tax proceeds of something completely unrelated.  Government services don’t work unless you fund them from taxes on the beneficiaries.  We should not “ease an over-reliance on the property tax” by digging up tax revenue from something else;  those local property taxes — or local sales tax or local-whatever taxes — need to be adequate to cover whatever services the citizens request.  If those local taxes aren’t enough, don’t tax something else.  Crazy idea that the government needs to charge you for the benefits you receive.

And: even if you call the Lottery a ’sin tax’ or say that a state-run, legalized monopoly on the Lottery system helps ‘protect’ the poor-that-use-it from sleazy(er) gambling operators … using the lottery proceeds to do anything but promote-gambling is unsustainable.  Does MA really want to be in that business?

And: even given such fiscal mismanagement, municipal bonds - even those just above junk - are still far more secure than Aaa corporate bonds.

The MMA article is a fun, quick read.  How do you fix this?

So I finally watched Inconvenient Truth.   I have avoided the Global Warming issue for awhile so I’ll be upfront that I haven’t read much and haven’t consulted enough sources.  But here are some knee-jerk thoughts:

1. I’m glad I watched it and wish I had sooner.  I haven’t quite been “Gored“; I am too skeptical a person to completely believe any politician … but the movie certainly encouraged me to learn more.  Further — even without considering global warming — humanity certainly does affect its natural surroundings in many ways, and the movie is a good starting point for discussing how humanity should handle its interactions with the world.  I most agree with the ole’ boy scout adage “leave no trace“, but what is humanity to do if the natural ecosystem “turns” on us? For example, what if we were heading into a natural ice-age …  should we create global warming to stop earth’s regular pattern?  Lots of species would die … but who are we to mess with Mother Nature?  Seems like we view the present as the way it always was and always should be … but change happens.  Do we let it?  Who decides?

2. The morning after I watched the film, there was an editorial in the WSJ entitled “Global Warming, Inc.” that discussed Al Gore’s appointment as a partner at the prestigious Kleiner Perkins venture capital firm.  The editorial finds the appointment a convenient time to bash on subsidies from the government to alternative fuels that are not actually price competitive in the market.   I don’t doubt Kleiner is motivated to bring Gore on board so that Gore can get the government to fund alt-energy … (I also don’t doubt they brought him on to rally consumers around their investment’s alt-energy products) …  and that’s generally just profit-drivin motive, which is fine.  My one complaint with the Gore appointment and subsequent subsidies is simply that the government provides subsidies at all to make uneconomical energies competitive rather than appropriately tax the externalities of dirtier fuels. 

[I’m no economist, but my quick take on subsidies: with subsidies, taxpayers pay for the subsidies AND indirectly experience the cost of the harmful externalities.  If we tax the externalities, we pay more for the taxed product, but it is an overall lower amount since we wouldn’t have the externality AND the subsidy.  As an example: let’s say oil costs $10 and the externality-cost (air-quality effects, CO2 emissions into atmosphere) is an additional $10, while solar power costs $15 and has $0 externality costs.  Without a subsidy, everyone buys $10 oil b/c they don’t care about the externalities.  The total consumer cost, though, is $20 since they pay the $10 oil cost plus the indirect-costs of the $10 externalities. With an equalizing subsidy of $5 (the government gives $5 to the solar companies from general consumer taxes),  solar now costs $10 and oil costs $10, so people buy 50% oil and 50% solar.  Their total cost would be 50% * ($10 oil cost + $10 externality-borne-by-consumers) + 50% * ($15 solar cost + $5 tax-subsidy-paid-for-by-consumers) = $20.  So we’re really no better off with a subsidy.  Yet … if the government taxed the oil companies $10 to account for the externality (so the consumer cost of oil is now the real $20), the consumer would only buy $15 solar rather than $20 oil, and the total cost would be $15.  Oh … and what if the government charged a $6 subsidy so that people were compelled to only used the “$9″ solar power?  We wouldn’t have any externalities, but we’d also be paying $21 for solar.  Of course, figuring out what an externality costs is another matter … but at least the most-efficient solution is a possibility … ]

3.  Gore said that we need the ‘political will’ to fix global warming.  He also said (paraphrasing) that people need to care about the issue.  I agree much more strongly with the latter since it’s necessary before the former will matter.  And although Gore spent most of the movie on-topic, I felt the movie too often annoyingly diverted into Gore’s life and political efforts.  I came into the movie expecting charts and graphs and was actually a little disappointed that there weren’t more.  I wanted more data, less boo-hoo about the 2000 presidential election.  If he’s trying to get a favorable opinion from the watcher, he should make me care about the issue first; I’ll care about the messenger afterwards.

4. I thought it was interesting that Gore didn’t explicitly credit Simpsons creator Matt Groening for the little animated featurette about global warming near the beginning of the film (and here’s another related Groening created trailer/commercial).  The only explanation I can come up with is that anyone who would recognize the animation style (teens- to middle-aged) wouldn’t need the hint, and anyone that wouldn’t recognize the animation style (seniors) would probably have an unfavorable opinion of the The Simpsons anyway, so no need associate Gore with it.   If that sort of thought went into editing out a Groening reference … that’s slimy.  If you don’t think a constituency likes The Simpsons and you do … you alienate both in the long-term by trying to cater to both deceptively.  (sorry in advance if I missed Gore giving Groening credit in the movie!)

5. Somewhat related to the image issue above, I also got tired of all the ’subtle’ stuff put into the movie to ’show’ a trait of Gore.  Seemed like Gore was toting/working-on his Powerbook just about every time he wasn’t presenting … they should have just had a subtitle that said: “Gore made the entire presentation himself using the hippest Apple technology!”  (It’s not that I don’t like macs … the product placement was just over-the-top.)  Another subtitle suggestion: “Gore is a just a regular guy like you!” should be flashed when the movie — for no good reason — showed Gore going though airport security, boarding a commercial passenger plane, and then getting out of an NYC taxi.  My god, was he even born out of a womb like you and me?  Even if its all true — if he slaved over every pixel of every slide in his presentation — it was just too much, and too off-target (see #3).  Lest you think I’m anti-Gore … I’m not: I’m just anti-fake.  I get annoyed with just about anything that’s scripted-to-look-unscripted, tries-to-be-subtle-and-fails, or appeals-to-emotions-rather-than-reason-when-the-issue-is-rational.  In logos/ethos/pathos terminology: establish ethos, sway me with logos, don’t try pathos (or do at your own risk).

6. Watching Inconvienent Truth just as I was finishing re-reading Ayn Rand’s Atlas Shrugged was an interesting experience.  (You can probably see the influence at the end of the paragraph above…)  I’m still sorting it out.

7. I checked out climatecrisis.net, the homepage for the movie, and was appalled by the horrible-ness of “The Science” page there.  Where are are the links to the hundreds of journal articles that support the statement at the top of the page saying “the evidence is overwhelming and undeniable.”  The facts on that page are ’shockers’: they sound Big and Dangerous but there’s few reference points for comparison data or long-time-span historical relevance.  Is this “the science” needed to convince average Americans these days?  I hope not.

11/30/07 update: I fixed several grammatical mistakes and misspellings.  I should write posts in Word and copy/paste to the blog rather than trying to write posts directly in Wordpress. Still learning.

Today’s WSJ has a great behind-the-scenes-style look at the the Federal Reserve’s reaction to the subprime crisis over the past couple months.  The timeline reminded me to re-watch Jim Cramer’s well publicized rant from a couple months back to see how it looks in retrospective.

My scoring:
+1 Jim: Jim’s call to Bernanke to “open the darn discount window(!)” was heeded two weeks after the episode aired
+1 Jim / +1 Bernanke: Jim’s accusation that Bernanke “has no idea” about what was happening and wasn’t on the phone talking to the Street seems only partially true after reading the WSJ article.  Bernanke may not have been as close as Jim was to the street on August 3rd, but he was on the phone and gauging the market soon afterwords.

Check out the WSJ’s Bernanke, in First Crisis, Rewrites Fed Playbook and check out the video below: