Budget transparency bill scheduled for hearing

January 21, 2010 in Blog

It looks like the state budget may receive a little more sunlight. The bipartisan 72 hour budget timeout bill is scheduled for a public hearing next Monday and may receive executive action later in the week. Here are additional details:

Sponsors: Representatives Alexander, Seaquist, Bailey, Ericks, Dammeier, Schmick, Wallace, Morrell, Simpson, Smith

    Jan 15  First reading, referred to Ways & Means. (View Original Bill)
    Jan 25  Scheduled for pu!
blic hearing in the House Committee on Ways & Means at 3:30 PM. (Subject to change) (Committee Materials)
    Jan 26  Scheduled for executive session in the House Committee on Ways & Means at 3:30 PM. (Subject to change) (Committee Materials)
    Jan 27  Scheduled for executive ses!
sion in the House Committee on Ways & Means at 3:30 PM. (Subject to!
change) (Committee Materials)

Will sun set on Sunshine Committee?

January 21, 2010 in Blog

The House Committee on State Government & Tribal Affairs heard public testimony this morning on HB 2617: Eliminating certain boards and commissions. Among the boards targeted for elimination is the Public Records Exemptions Accountability Committee (a.k.a. Sunshine Committee).

This is not the first time the Sunshine Committee has been in the legislature's crosshairs. Last year Sen. Darlene Fairley (D-32) introduced SB 5119: Eliminating the public exemptions accountability committee.

The bill was not brought up for a vote.

According to the Attorney General's Office, the cost to operate the Sunshine Committee has been $32,323!
since 2007. The majority of that was during the 2007-09 budget. The cost for the current budget has been $5,563.

Perhaps more troubling than the proposal to eliminate the Sunshine Committee is the fact that none of its recommendations from 2009 have been introduced for consideration this session. This includes the sense of the Committee that the legislature's exemption from the public records act should be repealed.

Although none of the Sunshine Committee's 2009 recommendations have been introduced, lawmakers have found time to propose several c!
hanges to the public records act that concern open government advocates.

Senator wants changes to 17th amendment

January 18, 2010 in Blog

Senator Val Stevens (R-39) has introduced a resolution calling on Congress to initiate a constitutional amendment that would restore the selection of U.S. Senators by state legislatures instead of by direct elections. Here are details from SJM 8020 - Requesting that Congress amend the 17th amendment of the United States Constitution:

Your Memorialists respectfully pray:

(1) That the Legislature of the State of Washington find and declare to be defective the current process of electing United States Senators, which fails to represent the interests of the individual states;

(2) That Congress, in accordance with Article V of the Constitution of the United States, immediately transmit to the several states for ratification an amendment to the 17th amendment of the United States Constitution, as described!
in subsection (3) of this memorial, resolving the procedural problems, particularly the problem of the deadlocked State Legislature, inherent in the original concept; and

(3) That the amendment read as follows: "Section 1. The Senate of the United States shall be composed of two Senators from each State, selected by the legislature of each State. Each Senator shall serve a six-year term and may be reappointed. Each Senator shall have one vote.

Section 2. Senators are subject to removal by the State  Legislature. Removal of a Senator requires a majority of each House of the State Legislature.

Section 3. Congress is precluded from enacting any legislation affecting the senatorial selection process. Each State Legislature shall enact rules and procedures, consistent with this amendment, related to the selection and removal of Senators. A State Legislature may implement a selection procedure whereby the State Legislature selects a !
Senator by a plurality vote rather than a majority. If a State!
Legislature fails to enact a selection procedure, the State Legislature shall sit as a single body and shall select a Senator by a plurality vote. Irrespective of the procedures followed by the State Legislature, if the State Legislature does not choose a Senator within thirty days after a vacancy, the Governor of the State shall select the Senator.

The resolution argues the 17 amendment (ratified in 1913) changed the balance of power envisioned by the founding fathers, stripping state legislatures of their power to control against congressional encroachment of state sovereignty.

Details from liquor privatization hearing

January 15, 2010 in Blog

Yesterday the Senate Labor, Commerce & Consumer Protection Committee heard public testimony on SB 6204 - Privatizing the sale of liquor. Prime sponsor Sen. Tim Sheldon (D-35) said this was the first time one of his proposals to break up the state's liquor monopoly has received a public hearing.

Here is the audio of Sen. Sheldon's testimony:

The Governor's office was skeptical of the proposal and expressed concern about the consequences of increased liquor sales (audio below).

The state Liquor Control Board shared the Governor's concerns (audio below).

The Governor has previously authorized increased liquor sales on multiple occasions since taking office. Here are some examples:

2009-11 state budget
Liquor Control Board Enhancement – $9.1 Million Near General Fund-State Increase
Several revenue-enhancing measures were i!
mplemented in the budget including opening five new state stores and te!
n new contract stores. Additionally, appropriations are provided for new retail strategies, including opening nine state stores on Sunday, opening state liquor stores on seven holidays, and opening six mall locations during the holiday season. Also, included in the total are other minor policy level changes impacting revenues.

2007-09 state budget
Sunday Sales – $3.9 Million General Fund-State Increase
Funds are provided to the Liquor Control Board to open 29 additional stores on Sundays. The Board shall report back to the Legislature in January 2009 on the effect these additional store openings have made on sales. In addition, these activities increase revenues for the Health Services Account and the Violence Reduction and Drug Enforcement (VRDE) Account.

(2005) HB 1379:
Requiring the liquor control board to implement a retail business plan to improve efficiency and increase revenue
The Board is required to expand store operations to include the Sunday opening of at least 20 state-operated liquor stores by September 1, 2005. The Board must select stores expected to gross the most revenues on Sunday. The stores must be open a minimum of five hours on Sundays. Contract liquor stores are permitted, but not required to open on Sunday . . .

The Board must implement an in-store liquor merchandising plan, including point-of-sale advertising and promotional displays. The Board is also directed to implement a plan for instore merchandising of brands, which may not include provisions for selling liquor-related items not previously authorized.

Washington is not alone in looking at privatizing state liquor monopolies. According to !

Eyeing the potential for saving money, officials in North Carolina, Virginia and Washington are considering eliminating state-run liquor stores, turning over the sale of booze to the private sector. Nineteen states control their liquor sales.

Republican Robert McDonnell, who will be sworn in as Virginia’s governor on Saturday (Jan. 16), made privatization of the state’s 300 liquor stores a central theme of his winning campaign last fall. He said it would raise about $500 million in one-time money for transportation, but critics say it will never pass the General Assembly because the state would have to give up about $100 million a year in revenue that helps pay for public schools, human services, prisons and other services.

Washington lawmakers held a hearing Thursday (Jan. 14) on a bipartisan bill privatizing liquor sales. Scrapping the current system would cost the state $322 million a year, !
but the money would be recouped through taxes collected from the privately-run liquor stores. “Is it a core function of the state to be selling alcohol? I don’t think so,” Washington state auditor Brian Sonntag told KING 5 news. Sonntag issued a report in December saying Washington could increase revenue from liquor sales by up to $350 million over five years with a privately operated system.

In North Carolina, privatization is as much a matter of accountability as it is a fiscal issue. Gov. Beverly Perdue (D) named a budget reform panel to examine the state-run liquor system after ordering North Carolina’s 163 local Alcoholic Beverage Control boards to go along with a ban on gifts and other ethics rules she imposed on other state agencies, according to the Charlotte Observer. Of the 19 states that control their liquor sales, North Carolina is the only one with local boards instead of a single state board.

Pennsylvania lawmakers considered priv!
atizing the 619 state-owned liquor stores in 2008, but the legislation !
never came up for a vote.

State government closures proposed

January 15, 2010 in Blog

The Chair of the Senate Ways and Means Committee, Sen. Margarita Prentice (D-11), has introduced a bill to close state government for 16 days over the next two years. Here are details from SB 6503 - Closing state agencies on specified dates:

From the effective date of this section until June 30, 2011, state agencies of the legislative, executive, and judicial branches shall be closed on the following dates in addition to the legal holidays specified in RCW 1.16.050:
(a) Friday, March 12, 2010;
(b) Friday, April 9, 2010;
(c) Friday, May 28, 2010;
(d) Monday, June 14, 2010;
(e) Friday, July 2, 2010;
(f) Friday, August 6, 2010;
(g) Friday, September 3, 2010;
(h) Monday, October 11, 2010;
(i) Friday, November 12, 2010;
(j) Monday, December 27, 2010;
(k) Friday, January 14, 2011;
(l) Friday, February 18, 2011;
(m) Friday, March 11, 2011;
(n) Friday, April 15, 2011;
(o) Friday, May 27, 2011; and
(p) Friday, June 10, 2011.

(2) If the closure of an office of an agency of the state under this section prevents the performance of any action, the action shall be considered timely if performed on the next business day . . .

(4) The closure of an office of a state agency under this section shall result in the temporary layoff of the employees of the agency. The compensation of the employees shall be reduced proportionately to the duration of the temporary layoff. Temporary layoffs under this section shall not affect the employees' vacation leave accrual, seniority, or sick leave credits. For the purposes of chapter 430, Laws of 2009, the compensation reductions under this section are deemed to be an integral part of an employer's exp!
enditure reduction efforts.

Section 3 of the bil!
l lists the exemptions to the ordered closures.

Bipartisan 72-hour budget review bill introduced

January 14, 2010 in Blog

Past efforts to improve the transparency of the state's budget process are gaining bipartisan support. Today Representatives Gary Alexander (R-20), Larry Seaquist (D-26), Barbara Bailey (R-10), Mark Ericks (D-1), Bruce Dammeier (R-25), and Joe Schmick (R-9) introduced HB 2872: Establishing a period of public and legislative review of appropriations legislation.

From the bill:

Section 1 
The legislature finds that approval of the state budget is the most important act of the legislature in any year, having profoun!
d consequences for every resident of the state. The legislature further finds that the public is entitled to a reasonable opportunity to learn how public funds are proposed to be expended before bills making appropriations become law. The legislature further finds that public notice, dissemination of information, and informed analysis of proposed budgets is an essential requisite of transparent, accountable government.

The state Constitution charges the legislature, and only the legislature, with the responsibility to fund the operation of state government through the enactment of appropriations legislation. Yet the abbreviated time frame in which the legislature acts on omnibus operating appropriations legislation permits little opportunity for informed legislative deliberation or public review and discussion, which in turn impairs public trust in government. The legislature finds that many other states, in their Constitu!
tions, statutes, or legislative rules, require a reasonable op!
portunity for public and legislative review of budget legislation.

The legislature therefore finds that it is in the public interest to provide for an appropriate period of public and legislative review of all omnibus appropriations bills before they are acted on by the legislature and submitted to the governor for approval.

Section 2
(1) An omnibus operating, capital, or transportation appropriations bill, may not be voted on by the senate or the house of representatives unless seventy-two hours have elapsed since the bill was last subject to amendment.

(2) For the purposes of this section, "amendment" means any proposed change to a bill and includes executive action by a standing committee of the senate or house of representatives, adoption of a conference report, or vote to concur with!
an opposite house amendment.

Joining with the Evergreen Freedom Foundation, I sponsored model language for the American Legislative Exchange Council back in 2007 based on a proposal by Congressman Brian Baird (D-WA), to create a 72-hour budget review period.

Talking about his effort, Baird said: “This is a common-sense proposal about the fundamental principles of our democracy. Our votes have consequences. My congressional colleagues and I owe it to both our constituents and to this institution to know what it is we are voting for.”  

Bills propose advertising on school buses and commercial business at rest stops

January 14, 2010 in Blog

It looks like lawmakers are starting to get serious about exploring opportunities to partner with the private sector to increase state revenues.

Here are details on two bipartisan bills introduced today.

SB 6465 - Authorizing certain commercial activity at state-owned safety rest areas:

"To the extent permitted under federal programs, rules, or law, the department may enter into a lease with private entities allowing them to operate food or beverage retailers, restaurants, grocery and convenience stores, service station businesses, or other private enterprises that are of benefit to the traveling public at state-owned safety rest areas." (Section 1, 1)

SB 6466 - Authorizing advertising on sch!
ool buses

"The rules of the state superintendent of public instruction under RCW 46.61.380 governing the marking of school buses shall allow school districts to place advertising and educational material on and in school buses if such advertising and education material is approved by the school district board of directors. The advertising and educational material shall not be placed on the front or rear of a school bus." (Section 1,1)

It is encouraging to see lawmakers putting these proposals up for public debate.

Study: Cigarette smuggling will grow with tax increase

January 14, 2010 in Blog

The Michigan-based Mackinac Center issued a warning yesterday that a $1.00 increase in Washington's cigarette tax would "ensure that half of all cigarettes smoked in Washington are smuggled in from other states."

From Mackinac's blog:

In December 2008 we published a study "Cigarette Taxes and Smuggling: A Statistical Analysis and Historical Review." The study reviewed the efforts of states trying to fight the growth of smuggling, documented the history of cigarette taxes in Michigan, New Jersey and California, and modeled the level of illicit tobacco use in states due to cigarette tax rates. We recently updated the model to include changes to the Federal Excise Tax, as well.

The 2008 study already found that Washington has the fourth highest smuggling rate. In applying the model to the proposed tax increases, we found that a $1.00 per pack increase in taxes would jump the state's smuggling rates from 39.3 percent to 51.5 percent.

Legal sales would decrease by at least 20 percent over 12 months. This is evidence not of people quitting smoking due to higher taxes, but of individuals and businesses finding ways to evade cigarette taxes. A 2004 study helps confirm this by finding that up to 85 percent of the sales tax decrease comes from tax avoidance rather than actual declines in smoking.

The bulk of the cigarette smuggling increase comes from commercial smuggling--of organizations that import cigarettes from lower tax areas or through counterfeiting with distribution systems in state. If the tax hike passes, it's expected that 3 out of 10 cigarettes in Washington will be through these me!

The House Committee on Finance heard public!
testimony this morning on HB 2493: Concerning the taxation of cigarettes and other tobacco products.

Among other things the bill would increase the state's cigarette tax by $1.00 per pack.

Should government compete with the private sector?

January 13, 2010 in Blog

The Governor said yesterday in the State of State that "Jobs are the way out of this recession." Based on a bill introduced today, some lawmakers believe that one way to increase private sector jobs is to stop government from providing commercial type activities.

Here are some of the details from HB 2808 - Regarding commercial activities by state government:

Sec. 1. (1) The legislature finds that in the process of governing, the state of Washington should not engage in commercial activity in competition with its citizens. The legislature finds that the competitive enterprise system, characterized by individual freedom and initiative, is the nation's primary source of economic strength, and that the growth of pr!
ivate enterprise is essential to the health, welfare, and prosperity of the citizens of the state of Washington. The legislature further finds that the role of the private sector is to provide commercial products and services for which there is demand in the marketplace, while the role of state agencies is limited to performing functions that are in the public interest and inherently governmental in nature.

(2) The legislature therefore declares it to be the general policy of the state that state agencies are prohibited from providing to the marketplace for a fee those products or services that could be obtained from a private enterprise . . .

Sec. 2. (1) State agencies are prohibited from engaging in commercial activities for a fee, unless they are granted an exception by the office of financial management.

Continuing this theme, Sen. Joe Zarelli (R-18) issued a new "Budget Tidbit"!
today focusing on the need for the state to take advantage of the seldom used competitive contracting reform adopted in 2002. Zarelli recommends that the state enact a Competition Council to determine "the privatization potential of a program or activity and performing a cost-benefit analysis."

We highlighted how other states are utilizing Competition Councils in our recent competitive contracting study.

Public records reform introduced

January 12, 2010 in Blog

The recommendations of State Auditor Brian Sonntag's and Attorney General Rob McKenna's Open Government Task Force have taken bill form. HB 2736 and SB 6383 (Establishing the office of open records) was introduced this afternoon.

According to the bills, a requester seeking relief from a records dispute may either use the new office of open records or the current legal remedies available. The major change, however, is that a requester would not be entitled to penalties for a records violation unless they first sought relief from the office of open records.

;However, in no event may a court award a penalty unless such person received a final order from the office of open records before prevailing against an agency in court pursuant to this subsection." - (Section 4, 4)

We made this recommendation at the October 5 meeting of the Open Government Task Force to help incentivize the use of the new office of open records while not restricting the right of citizens to go directly to court for relief.

Liquor privatization bill to have hearing

January 12, 2010 in Blog

There will be a public hearing on Thursday at 3:30 p.m. to consider SB 6204 - Privatizing the sale of liquor. This reform has surfaced since the end of prohibition but is receiving added attention in light of the state's budget deficit and a favorable report by the State Auditor's Office highlighting the potential savings from ending the state's liquor monopoly.

State Auditor Brian Sonntag was recently interviewed by KING 5 News and said, "Is it a core function of the state to be selling alcohol? I don't think so."

The state's liquor monopoly was also the subject of this editorial today in the Longview Daily News: Don't ignore long-term benefits of privatizing liquor sales.

Here are additional details on Thursday's hearing:

Labor, Commerce & Consumer Protection -  01/14/10  3:30 pm
Full Committee
Senate Hearing Rm 4
J.A. Cherberg Building
Olympia, WA

REVISED 1/11/2010 4:10 PM

Public Hearing: 

   1. SB 6239 - Making technical corrections to gender-based terms.
   2. Exempting pipe tobacco from restrictions on shipping tobacco to consumers in Washington [S-3480.1].
   3. An act relating to creating a beer and wine tasting endorsement to the grocery store liquor license [S-3579!
   4. Concerning beer and wine tasting a!
t farmers markets [S-3563.1].
   5. SB 6204 - Privatizing the sale of liquor.

Lawmaker wants Legislature to meet every other year

January 12, 2010 in Blog

Do you think the Legislature meets too often? At least one state lawmaker thinks so. Rep. Bill Hinkle (R-13) has introduced a bill to end the annual sessions of the Legislature. HB 2656 would set up regular sessions of the Legislature only in odd numbered years. The bill is accompanied by a constitutional amendment HJR 4217 to implement the provisions. The proposal makes no changes to procedures for special sessions.

According to the National Conference of State Legislatures:

"Legislatures continually look for ways to improve their effectiveness.  One reform frequently debated is annual versus!
biennial sessions.

In the early 1960s, only 19 state legislatures met annually.  The remaining 31 held biennial regular sessions.  All but three (Kentucky, Mississippi and Virginia) held their biennial session in the odd-numbered year.  By the mid-1970s, the number of states meeting annually grew tremendously—up from 19 to 41.  However, several of these states used a 'flexible' session format in which the total days of session time was divided between two years; these states included Minnesota, North Carolina, Tennessee and Vermont.  Today, 45 state legislatures meet annually.  The remaining five states—Montana, Nevada, North Dakota, Oregon and Texas—hold session every other year.  All of the biennial legislatures hold their regular sessions in the odd year.  Arkansas, Kentucky, New Hampshire and Washington were the last states to change from biennial to annual regular sessions; these states held the!
ir first annual sessions in 2009, 2001, 1985 and 1981, respect!

There are several basic arguments used by the respective proponents of annual or biennial sessions.  Listed below are the ones set out by political scientists, William Keefe and Morris Ogul."


Tax increases will cost even more Washingtonians their jobs

January 11, 2010 in Blog

A new study by the Washington Research Council shows that tax increases will cost thousands of Washingtonians their jobs. According to the study, increasing the state Business and Occupation tax (B&O) by $1 billion would eliminate up to 15,072 jobs. A $2.6 billion B&O tax increase would cost 38,968 Washingtonian’s their jobs. A $1 billion sales tax increase would eliminate 14,759 jobs. A $2.6 billion sales tax increase would eliminate 38,024 jobs. The study shows jobs losses by 2013. 

Today the Washington Policy Center is running a full-page ad in The Olympian warning lawmakers about the impact of tax increases. The ad focuses on the job loss f!
indings from the study.

Since it is impossible to forecast how the legislature would spend the money collected from tax increases, the ad highlights the impact of just the tax increases. The study shows job losses could be mitigated depending on how lawmakers chose to spend the new tax revenue.

To put the state on firm fiscal footing, any budget adopted must not raise taxes during a recession, or result in a projected deficit in the next biennium. This will mean that some of the programs we’ve grown accustomed to during good times must be eliminated. Taking more money from businesses and cutting people’s take-home pay through higher taxes is not the solution.

Additional Information
The Economic Impact of Hiking Taxes to Close the Budget Gap
Full-page newspaper advertisement !
in The Olympian

Budget solutions will require tough decisions and real reforms
Economists Warn Tax Increases Will Hurt Our State’s Economy
Resources for Building the State Budget
Principles of Taxation for Elected Officials

Washington's credit rating outlook: "Negative"

January 7, 2010 in Blog

One of the state's credit raters has downgraded Washington's credit outlook from stable to negative. In its December 31, 2009 report, Moody's Investors Service said:


Last month the State Treasurer warned that Washington would run out of money by September if immediate action was not taken to balance the state budget.

The 2010 Legislative Session starts next Monday, January 11.

Let's hope balancing the budget in a sustainable manner without job-killing tax increases is the first order of business.

Income tax bills introduced

January 4, 2010 in Blog

No session would be complete without the obligatory income tax proposal. Senators Rosa Franklin (D-29) and Joe McDermott (D-34) have introduced SB 6250 and SJR 8219 to fulfill this annual session prerequisite. Here is the intent section for SB 6250:

"It is the intent of the legislature in adopting this title to provide the necessary revenues for the support of vital state services on a more stable and equitable basis."

It will be interesting to hear how this income tax proposal will be able to fulfill this intent and succeed where other income taxes have failed. I'm sure other income !
tax states such as California will be eager to learn how to make income tax revenue recession proof.