Wednesday, December 26, 2012
SMALL BEER: Giving the incoming governor some cover, Governor Christine Gregoire proposed a more generous gambit to state revenues in her recommended budget for Jay Inslee’s administration than she ever recommended for her own administration. In her final budget proposal before leaving office, Gregoire last week proposed a creative mix of spending cuts, reform savings, fund shifts and revenue adjustments to balance the state’s nearly $1 billion 2013–15 budget shortfall.
The governor released her plan for making a $1 billion down payment toward meeting the court-mandated increase in basic education funding. She laid out capital and transportation proposals to meet critical infrastructure needs in communities across the state.
“My goal with this budget was to give our incoming governor and the Legislature a balanced and sustainable plan that addresses our fiscal problem and preserves services that are pivotal to our future prosperity,” Gregoire said.
Gregoire noted that a budget based only on spending cuts would force the closure of a number of state parks, eliminate food assistance programs for vulnerable citizens, and impose cuts on the order of $152 million on public schools and higher education. She also recommended continuing to suspend voter-approved salary increases for teachers.
“We have cut billions of dollars in spending and made major reforms since the start of the Great Recession,” Gregoire said. “A budget that relies only on existing revenue would not only jeopardize essential services—I’m convinced it would also hinder our economic recovery.”
“The governor’s budget is a stark example of how to fail at meeting Washington state’s needs,” commented Remy Trupin, executive director of the Washington State Budget & Policy Center. “If adopted, this budget would keep our state mired in a recession. It is clear that a budget without revenue is unsustainable and it is dangerous to our economy and our future.”
Perhaps it goes without saying, but spending cuts that inflict harm on large numbers of people and teeter the state economy are not addressing “waste” and “inefficiency.” They are scraping at the bottom of a bankrupt cask, threatening to tear out the bottom.
The easy cuts—the easy efficiencies, the recovery of meaningful public monies—were made long ago, budget analysts agree. Now the cuts themselves become inefficient. They no longer recover meaningful amounts of public monies. They no longer prioritize public policy. They just hurt.
New revenues are required but, in our dysfunctional adversarial political system, those revenues can only be acquired by equally inefficient means and in non-meaningful amounts—taxes on soda and chewing gum, while prosperous companies and individuals pay at (by far) the most regressive tax rates in the nation.
In her budget, the governor proposed $131 million in new revenue from the repeal of sales tax breaks on purchases of candy and gum, and eliminating a tax break on fuel used by oil refineries and lumber mills, with additional marginal consumption taxes on soda and beer. Sources of significant revenues remain unmentioned.
Jay Inslee declined to directly comment on Gregoire’s proposed budget, issuing instead a brief statement that thanked her administration and her commitment.
Inslee indicated his office would lay out his own budget priorities; however, we might predict they’ll be no more bold or transformative than Gregoire’s.
“Without revenue, policymakers will be faced with making new deep cuts to all other areas of state spending. If it comes to that, the scope of these cuts will be unlike anything we have seen and would result in a systematic dismantling of vital structures built up over the years that ensure the success of our kids and our state’s shared prosperity,” Remy said.
Gregoire had a brief window following the collapse of Republican fortunes in the wane of the Bush years, 2007-2009, in which to propose a substantial reworking of the state’s tax code, to reorganize the way the state spends through the tax code, to close down certain loopholes that were producing negligible benefit for the state, and to rethink the way the precarious over-reliance on sales tax. The last item, in particular, keenly fails to capture changes in the economy over the last 75 years. Since the tax was enacted in 1935, the role of goods versus services have swapped places in the state’s economic profile, and little of that change is captured through the tax code.
Modernizing the sales tax could immediately raise $1.2 billion in resources, according to the Budget & Policy Center.
Note that none of the rejiggering noted in the preceding paragraphs represents a tax increase, but increased efficiency in the manner we collect taxes and distribute the tax burden. For all the hair pulling and howling about inefficiency in state spending, virtually no time is invested in increasing efficiency of collection.
Alas, Gregoire did not do the work when she had opportunity, and that window has now closed for that critical work, with Republican ranks swelling in Olympia.
The predicament was worsened earlier this month when two Democrats in the state senate—Rodney Tom (Bellevue) and Tim Sheldon (Potlatch)—announced they would caucus with Senate Republicans, flipping the chamber’s 26-23 Democratic majority to a 25-24 Republican coalition majority. Senate Republicans last year used a procedural trick in the minority to drive the state budget at speed into a brick wall, so we might only imagine where they’ll steer the jalopy in majority. Nowhere sensible or equitable, we might certainly predict.
Roadmarker on the roadkill highway, Senate Republicans have promised another procedural trick to rewrite the senate rules from the floor when the new legislature convenes in January, making Tom the Senate Leader, his payoff for selling out the voters and caucus that elected him.