A sustainable budget is the ability of a government to sustain its current spending, tax and other policies in the long run without threatening government solvency or defaulting on some of its liabilities or promised expenditures.
Traditionally, all governments and government entities spend as much as they can so they can ask for “more” which must come from you and me. And expenses will always rise to meet income. When governments cannot easily increase “more,” they find creative ways to extract “more” from you via laws, rules, regulations, stamps, fees, fear, etc. And let’s not forget disasters and emergencies.
Rahm Emanuel (President Obama’s former Chief of Staff) said:
You never let a serious crisis go to waste. And what I mean by that it’s an opportunity to do things you think you could not do before.
What a Sustainable Budget is NOT
Fiscal sustainability is not living beyond your means without a plan. Spending more than you take in and having to use savings or acquire debt to make up the difference without a plan is like the slow-motion train crash that we have been watching in Juneau over the last number of years.
A Sustainable Budget is not a “Balanced Budget,” which is simply spending what you take in. If governments want to spend more they will just tax more.
This produces the “fill the gap” philosophy that is prevailing from the Governor’s office right now. The Institute of Social and Economic Research (ISER)/Dr. Scott Goldsmith Economic Model produces a spending target that, if met, avoids an income tax, sales tax or a slice of your PFD. To find out more, download this report.