David Stockman famously called it the magic asterisk, a budget writer's tool for procrastination and a politician's trick for avoiding a hard decision.
Stockman was director of the federal Office of Management and Budget under President Ronald Reagan when tax-cutting and generous federal spending quadrupled the national debt. Stockman's memoir The Triumph of Politics: Why the Reagan Revolution Failed detailed the administration's inability to match spending priorities with accompanying revenue. To compensate, they created the illusion of a more balanced budget with the so-called magic asterisk in the ledger. It was a substitute for "future savings to be identified.''
Except the savings were never identified, Reagan made tax increases out of the question and deficit spending continued.
President George W. Bush returned to the economic strategy his own father once dubbed voodoo economics with increased spending coming simultaneously with tax cuts. The gross national debt is now more than $9.3-trillion.
I've watched and reported on this phenomenon on the local level as well. The county's Metropolitan Planning Organization — county commissioners and municipal representatives — once hesitated over a long-term road plan because consultants included a nickle-per-gallon gasoline tax increase to balance construction spending with revenue.
Just approve the list of road improvements, a county staffer told the MPO, the consultant doesn't need to know how you'll pay for it and you don't need to tell him.
So much for leadership. Just add *
These spending machinations came to mind this week as Florida's Taxation and Budget Reform Commission voted to ask voters to consider replacing most school property taxes with a higher sales tax.
Let's see, property tax generates $9.3-billion for education. A penny-on-the-dollar sales tax increase will generate less than $4-billion a year. That leaves $5-billion for which there is no accounting.
Enter the magic asterisk.
Future state lawmakers are looking at a $5-billion asterisk if education is indeed to be held harmless. Either that, or future savings must be identified.
Reagan to Bush to Crist. Maybe that is why they call it trickle-down economics.
Tallahassee, however, doesn't have the federal luxury of approving deficits. Unlike budgets produced in Washington, D.C., the state budget must be balanced. Any asterisks will need to be replaced with actual cash or programs to be slashed.
School superintendent Heather Fiorentino expressed these reservations during the public debate leading to the Jan. 29 voter approval of Amendment 1, which primarily cut real estate taxes for homesteaded property.
"While I believe our Legislature, particularly our local delegation members who have been strong advocates for education, will make a good-faith effort to hold education harmless, I understand they must pass a balanced budget,'' she wrote in a Jan. 17 letter to the Times. "It concerns me that a stable funding source for replacing the revenue that our district would lose if this amendment passes has not yet been identified.''
Even without the amendment, the School District must operate with $7.7-million less than expected because of Legislature-ordered cuts in the current budget attributed to falling state revenue projections.
The School District isn't the only one fretting its financial future. Local governments have begun budget preparations (with less money available) for the fiscal year beginning Oct. 1. Pasco County must compensate for a projected $16-million cut because of Amendment 1. Its library system, for instance, will have a smaller staff, trim operating hours and reduce services including a popular summer reading program. New fees and deeper cuts are looming elsewhere.
Then there is the city of New Port Richey, which produced an asterisk of its own. The city stands to lose at least $431,500, a 7 percent decrease in revenue, from its general and redevelopment funds because of the changes in the property tax collections from Amendment 1. There is a hiring freeze, but no significant changes in service are projected.
However, the council responded shortly afterward by approving a 4.5 percent raise for its police officers and firefighters, plus an additional paid holiday — Good Friday, or spring day as the city labeled it. Estimated cost was $143,000. It comes from reserves, but the financial burden isn't a one-time expense, and now carries over into next year's budget.
Not to play favorites, the council spread its generosity to the rest of the city staff, closing government operations and giving everyone an extra paid holiday on Good Friday.
Sizable salary increases and more paid time off for government workers. So much for fiscal restraint. In New Port Richey, it looks like the magic asterisk carries another connotation:
Future spending to be identified.