Jmercier

Governor not familiar with tax lawsuit

August 25, 2008 in Blog

Apparently the Senate Majority Leader's lawsuit to make it easier to raise taxes has been flying below the Governor's radar. The Spokesman Review asked the Governor about the case yesterday. According to the article:

"Gov. Chris Gregoire, locked in a close race for re-election, has repeatedly declined to say if she supports Brown's case. She says she's not familiar with the specifics.

'I know that everybody thinks that's surprising. I have not studied it,' Gregoire said in a recent interview."

With the State Supreme Court set to hear arguments about the case on September 9, there is still time for the Governor to study this issue and form an opinion.

This morning I asked spokespeople for both Governor Gregoire and Senator Rossi if they support a 2/3 vote requirement for tax increases and if yes, would they support placing them in the constitution like was done with the rainy day reserve from I-601. I'll post any responses I receive.

Perhaps this is a question that should also be asked at one of the upcoming gubernatorial debates.

State employee pay raises agreed to?

August 22, 2008 in Blog

The Olympian is reporting that the first of the state employment contracts being negotiated has been agreed to. According to the article:

The Washington Public Employees Association has reached an agreement with Gov. Chris Gregoire's bargaining team for a 1.6 percent general pay raise in 2009, followed by 1.7 percent in 2010. Union members must approve the deal.

The union closed bargaining on the contract primary election night, Aug. 19, said Diane Leigh, Gregoire's lead negotiator.

It's news to me. I didn't hear from the WPEA about it (no news on their Website, either), and hadn’t been able to connect with Leigh until today. The largest general government union, the Washington Federation of State Employees, is still at the bargaining table, but if past experience is any indication, all pay raises will follow a very similar scale.

I called the Senate Ways and Means Committee to see what impact, if any, this news has on its projection of a $2.7 billion budget deficit.

Although the committee didn’t breakdown its projection based on a particular COLA assumption (instead used functional areas – page 3), I was told today's news shouldn’t make a big change one way or another on the budget outlook. 

DOR supports searchable tax transparency website reform

August 20, 2008 in Blog

The Department of Revenue (DOR) has responded favorably to our proposal for creation of an online searchable database of all tax rates in the state. According to a spokesperson for DOR (in-part):

"The Department of Revenue considers the web to be a great way to communicate with taxpayers and the public, and it supports the concept of a searchable database of state and local taxes by location. In fact, it already has been moving toward that goal as resources permit."

Along with DOR, we've already heard from other state policymakers interested in moving forward with this reform. Hopefully understanding your state and local tax burden will soon be a click away.

Additional Information
DOR's full response to our proposal
Seattle PI editorial in support
Washington Policy Center Proposes Tax Transparency Website
Taxation Disclosure Act

Seattle PI endorses WPC Tax Transparency proposal

August 18, 2008 in Blog

The Seattle PI this morning offers an endorsement of our proposal for creation of a tax transparency website. From the article (in-part):

"The Legislature and the governor recently moved the state into a new era of budget transparency with a law creating a searchable Web site detailing state spending. The state should advance its impressive digital empowerment of the public by giving everyone access to the same type of information about his or her state and local taxes.

The Washington Policy Center last week unveiled a proposal to create 'a tax transparency Web site' allowing individuals and businesses to figure out just how much they are paying in all local and state taxes . . .

The center's Jason Mercier, who wrote the new proposal and helped inspire the spending Web site, called complete, searchable online taxing a 'natural next step' for the state in its efforts to be more transparent about financial issues. Like the spending idea, this plan ought to have bipartisan appeal. Whether one tends to think we have too few services or too many taxes, there is broad common ground on the value of accurate information for making good decisions . . .

Lawmakers and the governor should move quickly next year to take another big step forward in our high-tech state's use of technology to improve public understanding of the public's business."

1,783 taxing districts in Washington

August 15, 2008 in Blog

Many thanks to the Department of Revenue for sending over a table categorizing the state's 1,783 taxing districts. Want to know which ones you owe taxes to and how much that means to your total tax burden?

Yesterday we proposed the creation of an online searchable database of all tax rates for each taxing district to help citizens and business-owners answer this question.

Details here.

How much do you pay in taxes?

August 14, 2008 in Blog

Have you ever wondered what your total state and local tax bill is but struggled to calculate government’s take of your income?

So have we.

This is why we think it is time for creation of an online searchable database of all tax rates for each taxing district to help citizens and business-owners answer this question. To help facilitate this reform we've drafted model language for what we call the "Taxation Disclosure Act."

The language is modeled after this year's successful adoption of Washington Policy Center’s recommendation for the state to adopt a searchable budget website.

We are hopeful that policy makers will see this proposal as an opportunity to make taxation more transparent and help citizens learn more about what government decisions mean to their pocket books.

Click here to view WPC's "Taxation Disclosure Act."

OFM launches government performance website

August 13, 2008 in Blog

The Office of Financial Management (OFM) launched its "State Government Performance and Results" website today. We've been working with OFM and the Evergreen Freedom Foundation the past few years to bring this resource to the public.

The new tool provides citizens with a one stop resource for information on an agency's:

  • Strategic plan;
  • Inventory of activities;
  • Performance progress reports;
  • Performance assessments;
  • Expenditures to date; and
  • Links to other resources such as performance audit reports.

Here is an example of the information available for the Department of Transportation. By viewing the expenditure report for DOT we learn that the agency is currently $10.4 million over budget.

When coupled with the new searchable budget website set to go live later this year, taxpayers will have the ability to keep a closer eye on the performance of government.

When you have time, Jeffrey [dot] Showman [at] OFM [dot] WA [dot] GOV (give a shout out to OFM) for its work on bringing this resource to the public.   

State unions demand pay raises

August 12, 2008 in Blog

State union members took to the streets today in Olympia to demand a pay raise. The unions are currently in negotiations with Governor Gregoire on the state's 2009-11 collective bargaining agreement. Oddly enough, The Olympian quotes some of the union members chanting: "Dino Rossi has got to go!"

Last week the unions were encouraging members to "tell the Governor State Employees are hurting and need a fair contract!"

Watching this development unfold reminded me of a section from our just released Policy Guide for Washington State, 3rd Edition:

"Resist political pressure from public sector unions
Public sector unions occupy a unique position within our governing system. They represent one part of government (public employees) which is organized to lobby another part of government (the legislature).

Employers and unions in the private sector operate under the unyielding discipline of the market. Union leaders know that if their demands cause the company to go under, everybody loses. Government, however, cannot go out of business. There is no natural limit to the demands that public union leaders can make on the treasury, especially since each expansion of government spending generally increases the amount of monthly dues paid to the union.

In the private sector, unions negotiate directly with the owners and managers of a company. If company stockholders are unhappy, they can take their investment elsewhere. In government, the “owners” are the taxpayers. They have no involvement in negotiating with public sector unions, and they also have no choice about paying for whatever conditions, salary or benefits the legislature has agreed to provide.

Public employees should receive fair compensation for the work they do, and it is in the public interest to attract hard working, talented people to public service. But government is about more than providing high paying jobs and generous benefits. If a government program or service no longer makes sense, policymakers who respect taxpayers should end it, and devote the savings to effective programs, or to reducing the tax burden on citizens."

I'll have to wait to read the press coverage tomorrow to see how much attention was paid at the union rally to the lawsuits filed against involuntary union members and the $2.7 billion budget deficit.

Papers weigh in on ballot reform

August 11, 2008 in Blog

The Yakima Herald has joined with The Everett Herald in endorsing our recommendations to restructure statewide elected policy offices. From Sunday's Yakima Herald (in-part):

"It was a timely coincidence that on the same day Gregoire issued her freeze order, the Washington Policy Center released a policy brief touting the advantages of electing fewer state agency heads. In the place of nine separate elections, the center advocates electing the governor and lieutenant governor as a team and also leaving attorney general, state treasurer and state auditor on the ballot. The rest would become Cabinet positions appointed by the governor.

There are a couple of good arguments advanced for such reorganization. The most visible in this election year is that a cluttered statewide ballot would be shortened in the future.

Take a look at this year's primary election. The gubernatorial election aside, the other eight statewide elected positions on the ballot feature a total of 28 candidates in the Aug. 19 primary. They will be winnowed to 16 for the Nov. 4 general election, but that's still a lot of people to get to know in casting an informed ballot for someone who will head a state agency.

The other advantage of making more of them appointive Cabinet positions, the policy center notes, is that there is actually more accountability when agency heads are changed with election of a new governor."

Here is The Everett Herald editorial from last week.

The Olympian also has a short write up here.

Click here to read our full report recommending the changes.

Wake up, America!

August 11, 2008 in Blog

On April 15, 2008, former Comptroller General of the U.S., David M. Walker, provided the keynote address at our Government Reform Conference. The title of his presentation was "Learning from the Past and Creating our Future."

Now Walker is taking his message of fiscal reform to a big screen near you. Here is an email he sent last week about this effort:

Dear Friends,

Some of you have heard me mention our forthcoming feature documentary, "I.O.U.S.A."  A few of you may have even had the chance to see an early version of it.  The film tells the story of America's large and growing fiscal challenge, how the richest country in the world came to be in the position we are in today, and what could happen to us if we don't do something about it soon.  It covers our nation's four key deficits: budget, savings, balance of payments/trade, and worst of all, our leadership deficit.

The film is fact-based, nonpartisan and nonideological, and it features a number of candid appearances, including by Warren Buffett, Alan Greenspan, Paul Volcker, my Foundation's chairman Pete Peterson, Sens. Kent Conrad and Judd Gregg, former Treasury Secretaries Paul O'Neill and Robert Rubin, former CBO chief Alice Rivlin, Rep. Ron Paul, my Fiscal Wake-Up Tour colleague Bob Bixby, and myself.

For one night, August 21, the film will show in about 400 theaters around the country -- with our own special version of a "bonus track!"  Immediately following the movie itself, audience members everywhere will be treated to a 45-minute town meeting on the US economy with Buffett, Bill Novelli of AARP, Bill Niskanen of the CATO Institute, Pete and I.  We'll be coming to you live by satellite from Omaha.  You can find out more about this very special town meeting, submit your own question to the participants, and locate the showing in a theater near you at www.IOUSAtheMovie.com.

Starting on August 22, the film will run in 10 cities for at least one week.  Those cities also are listed on the movie's website: www.IOUSAtheMovie.com.

I hope you will take the time -- and take your family and friends! -- to see the film.  It's as clear an explanation of the four deficits threatening our economic future as you'll find anywhere.  Nothing is more important than educating the public about this looming crisis and building the political will in Washington to enact change.

Anything that you're willing to do to spread the word about the film would be greatly appreciated.

All the best,

Dave

State budget increases 2003-2007 (UPDATED)

August 8, 2008 in Blog

UPDATED (10:32 a.m. 8/11): After consulting with OFM, $356 million has been added to Washington's FY 2007 expenditures.

After scouring through financial reports for all 50 states, it's painfully clear why no one else has attempted to do a side by side comparison of spending increases for each state - it's like trying to compare the DNA of siblings. You'd think they'd be comparable but they aren't even close.

That said, I think I've put together the closest thing possible to an apples to apples comparison of each states' total budget growth (all expenditures). Unfortunately, this means I had to stop with FY 2007 since that is the last year available for state Comprehensive Annual Financial Reports (CAFR).

Using the "Total Primary Government Expenses" line item from each state's FY 2007 CAFR, here is the table I came up with (dollars in thousands):

State

FY 2003

FY 2007

Change

West Virginia

9,717,217

9,773,625

1%

Iowa

13,157,017

14,123,676

7%

Kansas

10,293,914

11,034,666

7%

Michigan

42,858,249

46,061,725

8%

New Hampshire

4,633,006

5,006,818

8%

Wisconsin

25,146,777

27,407,830

9%

Minnesota

24,678,835

27,105,515

10%

Missouri

18,809,307

20,931,686

11%

Oregon

15,572,468

17,324,041

11%

Nebraska

5,728,401

6,475,828

13%

Ohio

44,407,432

49,987,486

13%

Washington

30,907,800

35,349,800

14%

Massachusetts

35,879,475

40,863,818

14%

North Dakota

3,127,641

3,632,017

16%

Tennessee

18,517,504

21,446,295

16%

Georgia

31,380,621

36,774,840

17%

Illinois

47,768,657

56,076,410

17%

Indiana

20,826,487

24,274,801

17%

New Jersey

42,219,700

49,409,300

17%

Maine

5,579,817

6,573,374

18%

Pennsylvania

47,657,852

56,289,093

18%

Connecticut

18,435,349

22,022,037

20%

Montana

3,328,411

3,989,936

20%

New York

104,215,000

124,784,000

20%

Rhode Island

6,070,245

7,310,857

20%

Alabama

14,881,879

17,990,071

21%

South Dakota

2,397,326

2,908,940

21%

South Carolina

16,819,053

20,568,337

22%

California

148,287,363

182,163,593

23%

Hawaii

6,492,652

8,008,390

23%

Texas

73,924,359

90,524,963

23%

Arkansas

9,017,879

11,135,487

24%

Colorado

10,692,149

13,295,502

24%

Maryland

21,779,728

26,895,928

24%

Delaware

4,811,072

5,987,596

25%

Alaska

5,639,501

7,130,889

26%

Utah

6,709,630

8,480,169

26%

Idaho

5,071,697

6,423,167

27%

Virginia

22,923,000

29,381,000

28%

Arizona

19,613,134

25,759,623

31%

Florida

49,721,332

65,217,092

31%

Oklahoma

10,703,138

14,033,925

31%

North Carolina

27,633,284

36,855,746

33%

Kentucky

15,044,341

20,162,065

34%

Vermont

3,148,340

4,205,912

34%

Louisiana

17,577,900

24,537,990

40%

Mississippi

10,798,245

15,163,485

40%

Nevada

5,128,073

7,152,989

40%

New Mexico

10,035,422

14,150,639

41%

Wyoming

2,246,030

3,547,045

58%

I called West Virginia to see how they were able to stay essentially flat in spending. The answer: In 2005 they fully privatized their Workers Compensation program.

One of the reasons why the spending increase percentage was so high for Louisiana and Mississippi is related to Hurricane Katrina relief.

A caution for Washington, for 2007 there is a disclaimer that says "health insurance programs is zero starting in 2007 due to fund reclassifications." In 2006, that spending was estimated at $1.2 billion. I’m waiting to hear back from OFM to learn if that spending has been captured elsewhere to see if the comparison with 2003's spending is apples to apples. I'll update the table if necessary.

Judging from the budget outlooks for the states, spending has been outpacing revenue resulting in the current spending deficits being reported.

Richard Davis writing for AWB identifies this problem for Washington:

"Make no mistake; red ink stained the budget long before the economy slowed. In March 2007, the members of the Coalition of Washington Business Organizations (COWBO) wrote to state senators:

' ... the state cannot continue to spend more than it takes in. Increasing spending 15 percent while revenues grow 7.5 percent is not responsible. Coming on the heels of a 2005-2007 budget that increased Near General Fund State spending 13 percent, this budget virtually guarantees substantial shortfalls in the foreseeable future.'"

That overspending is projected to be a $2.7 billion problem.

Everett Herald endorses WPC ballot reform recommendations

August 7, 2008 in Blog

The Everett Herald this morning opines that our proposal to restructure statewide elected policy offices is "A sensible solution to an overcrowded ballot." The paper notes:

"The WPC suggests lightening voters' load by reducing the number of statewide elected policy posts to five, and having candidates for governor and lieutenant governor run jointly, just as those who run for president and vice president do. Voters would also still elect the attorney general, treasurer and auditor, "watchdog" offices that should be made nonpartisan, because voters don't expect politics to influence how they're run. (Voters would also still elect judges.)

The other currently elected offices would be appointed by the governor, just as the heads of Cabinet-level offices are now.

Generally, we like the idea. Why, for instance, does it make sense to elect the lands commissioner, but not the secretary of transportation? Why elect a state schools superintendent when key policy issues regarding education are decided in the legislative process?"

Click here to read our full report recommending the changes.

I-601's impact on state spending increases

August 5, 2008 in Blog

In response to unsustainable budget increases and the then largest tax increase in state history, voters in 1993 adopted Initiative 601 (I-601) to restrict the growth of the budget and place restrictions on tax increases.

Reviewing state spending increases before and after I-601 took effect, it is clear the measure was successful in limiting the size of state spending increases. This is true at least until the law was amended by the legislature in recent years, changing the calculation of the spending limit established by the voters in 1993. The table below shows a 30-year trend in state spending increases.                                     

                          State Spending Increases 1979-81 to 2007-09
                General Fund State (GFS) and Near General Fund State (NGFS)

(Source: Based on data from the Legislative Evaluation and Accountability Program)

Biennium /span>

GFS Expenditures

% Increase

NGFS
Expenditures

% Increase

1979-81

$5,775,901,000

N/A

$5,775,901,000

N/A

1981-83

$6,539,951,000

13.2%

$6,539,951,000

13.2%

1983-85

$7,957,920,000

21.7%

$7,957,920,000

21.7%

1985-87

$9,184,246,000

15.4%

$9,230,046,000

16.0%

1987-89      

$10,404,193,000

13.3%

$10,484,133,000

13.6%

1989-91      

$12,844,273,000

23.5%

$13,056,989,000

24.5%

1991-93

$14,982,598,000

16.6%

$15,294,588,000

17.1%

1993-95*

$16,314,035,000

8.9%

$16,722,260,000

9.3%

1995-97

$17,732,644,000

8.7%

$18,527,285,000

10.8%

1997-99

$19,158,884,000

8.0%

$20,082,207,000

8.4%

1999-01**

$21,046,741,000

9.9%

$22,352,753,000

11.3%

2001-03

$22,548,787,000

7.1%

$24,545,518,000

9.8%

2003-05

$23,671,703,000

5.0%

$25,607,496,000

4.3%

2005-07**

$27,766,066,000

17.3%

$30,171,238,000

17.8%

2007-09

$29,838,204,000

7.5%

$33,655,219,000

11.5%

*Initiative 601 takes effect
**Major legislative changes to Initiative 601 spending limit calculation

Here's another way to look at state spending increases since 1980.

Ngfspending_2

Unfortunately, little is left of I-601's original taxpayer protections. In fact, the Senate Majority Leader is currently suing to have the tax restrictions on the books since 1993 thrown out by the State Supreme Court.

Since state officials have shown little desire to leave I-601 in place, it may be time to push for a constitutional amendment to limit the growth of spending to inflation and population growth. Reasonable budget limits similar to those of Initiative 601, but as part of the state constitution, would protect taxpayers and bring greater discipline to public finances. The recent adoption of the constitutional rainy-day amendment could serve as the model for putting I-601 into the constitution.

Back to state spending increases, how does Washington compare nationally? Great question.

In the coming days we'll post a blog comparing Washington's spending increases since 2003 with the rest of the nation to see how we rank.

Governor asks agencies to freeze hiring

August 4, 2008 in Blog

It looks like Governor Christine Gregoire is getting closer to acknowledging the projected $2.7 billion budget deficit. In a memo to state agency directors today she asked that they:

  1. Reduce fuel consumption by five percent;
  2. Freeze hiring for new staff vacancies;
  3. Freeze non-emergency state travel;
  4. Freeze discretionary purchases of equipment; and
  5. Freeze signing of non-emergency personal service contracts.

As noted by USAToday this past Friday, current state budget problems have been self-inflicted by overspending.

Our just released Policy Guide For Washington State: 3rd Edition has some helpful suggestions for reforming the state budget process.

Here is a copy of the Governor's memo.

Time to restructure statewide elected policy offices

August 4, 2008 in Blog

Just in time for the 2008 Primary we've released a report recommending a change in the number of statewide elected policy offices.

On August 19, 2008, Washingtonians will vote in the state’s first top-two primary election. Not counting local races, voters will be asked to decide which candidates will advance to the November ballot for nine separate statewide offices. These offices are:

            1.  Governor;
            2.  Lieutenant Governor;
            3.  Secretary of State;
            4.  Treasurer;
            5.  State Auditor;
            6.  Attorney General;
            7.  Superintendent of Public Instruction;
            8.  Commissioner of Public Lands and;
            9.  Insurance Commissioner.

Other than the nine elected positions, all other senior officials in the executive branch are appointed by the governor. They make up the governor’s cabinet and include many key positions, many as important as some elected offices.

The Secretary of State, Superintendent of Public Instruction, Commissioner of Public Lands and Insurance Commissioner are policy offices, much like those currently in the governor’s appointed cabinet. Direct election of these offices does not necessarily create greater public accountability, because most Washingtonians don’t know the names of these officials.

The Treasurer, Auditor and Attorney General, however, carry out an oversight role, working to ensure government agencies are following the law. It is because of this distinction that independent election of these offices makes sense.

As “watchdog officials,” it makes sense for the Treasurer, Auditor and Attorney General (if provided enforcement power) to function as nonpartisan offices as is the case for State Supreme Court Justices. In fact, bills have been introduced over the past few years at the request of the State Treasurer to make that office subject to nonpartisan elections.

According to State Auditor Brian Sonntag: “Citizens certainly don’t expect partisanship in an office like this. The work of the State Auditor is about government accountability and transparency, not politics. Our audits are – and should be – independent and fair without even a hint of bias.”

With fewer statewide elected offices, voters would choose the five highest state officials in four elections, as follows:

            1.  Governor and Lieutenant Governor
            2.  Attorney General
            3.  State Treasurer
            4.  State Auditor

If problems arise with public education, insurance regulation, or management of public lands, voters would know that the solution lies with the governor, who could change the top managers of these policy areas at any time. If the governor fails to use his or her appointment powers to improve the management of these departments, voters could take that failure into account at election time.

Reducing the number of statewide elected offices would shorten the length of the ballot and more importantly, focus public accountability in a way that people can understand and remember. This would increase accountability both during a governor’s term and in election years when voters are assessing candidates for the state’s top offices.

Click here to read our full report.