Unintended consequences difficult to predict

One doesn’t have to study a lot of history to learn about unintended consequences.  We know the British certainly didn’t get the revenue they were hoping for when they put a tax on tea going to the American colonies. And 20 years ago, Americans set out to end Taliban rule in  Afghanistan and to bring democracy to Iraq.

Last week Idahoans were concerned about the unintended consequences of two programs–the state’s cap on districts’ property tax revenue and the federal $300 stipend for unemployed workers.

Recently the legislature placed an 8% cap on increased property tax revenue for all local taxing entities, regardless of the amount of new construction or annexations. It doesn’t apply to urban renewal properties being returned to tax rolls, but only 80% of that value may be taxed. In the fiscal note for HB 389, sponsors point out that the law may curb district budget growth by up to 23%.

Less spending by local districts is clearly the intended consequence. House Majority Leader Mike Moyle has criticized local districts for their “bloated” budgets and their unending efforts to raise taxes.

The first effect, however, has been confusion. The legislators declared HB 389 an emergency retroactive to January 1, 2021. Now, intense number crunching is necessary as districts work to assess how numerous property tax changes will affect budgets that start Oct. 1.

The fast growing cities in our area fear cuts in plans for police and fire departments. Already Meridian and Caldwell have enacted moratoriums on new construction until they can gauge what changes are needed.

Moratoriums could bring unintended consequences like fewer available homes and fewer construction jobs. The first could drive up prices–and property taxes–for homes already worth twice what they were three years ago. The second could mean skilled workers find jobs in Oregon.

Or, as the pandemic wanes, migration to this valley may taper off and little will change.

The future is as uncertain for the consequences of the federal unemployment subsidies. This past week Gov. Little joined 20 other Republican governors in scheduling an early stop to the stipends. They felt that many workers found the extra dollars made unemployment more attractive than jobs.

I can imagine how members of Congress chose to create stipends of $300 a week. They looked at the average weekly unemployment paid by the states–$378–and then at the cost of living. They figured if those not working had the equivalent of a living wage, consumer spending would keep most businesses afloat.

But many jobs here don’t pay a living wage. A full-time minimum wage job in Idaho pays only $290 a week, minus $70 for social security and taxes and the added expenses of transportation, clothing, and childcare.

For many, collecting unemployment was the practical choice–if one had a choice. Thousands whose jobs were considered ‘essential’–grocery store clerks, hospital aides, agricultural workers, etc–were  paid less than neighbors received in unemployment. The stipends minimized the damage to the economy, but they were unfair.

But a second seemingly unintended consequence followed–increased wages. Not long ago, $11 an hour was considered a good wage. Now, some high school graduates are starting at $15.

And there’s little evidence that ending the stipends will change that. Idaho’s unemployment rate is now down to 3.1%. This April total nonfarm employment is up 13% over last year; employment in leisure and hospitality services is up 67%.

Idahoans are already back to work.

Published by Judy Ferro

Judy Ferro is communication director for the 2C Dems and a columnist for the Idaho Press.

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