On September 9, 2008, the State Supreme Court will consider Senate Majority Leader Lisa Brown's lawsuit seeking to have the 2/3 vote requirement for tax increases ruled unconstitutional to make it easier for state officials to raise taxes.
Last week 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.
Here are the official responses:
Gregoire* - “I think it’s a moot issue because I think it [tax increases] ought to go to a vote of the people.”
Rossi spokesperson - "Dino believes in upholding the will of the people and does support I-601’s 2/3 vote requirement. He would be supportive of a constitutional amendment to require a 2/3 vote for tax increases."
Based on these responses, it appears that both Governor Gregoire and Senator Rossi support WPC's recommendation to amend the Constitution to require either a 2/3 vote of the legislature or voter approval for tax increases.
*These comments were made on 8/27 during a KIRO 710 radio interview. On 8/29 a spokesperson for Gregoire said to refer to this interview in response to my question for an official position.
"After much thought and in light of our nation's economic struggles, I have decided the cost of living raise, which you were scheduled to receive on September 1, 2008, is not appropriate at this time. My decision affects all agency directors under my control in addition to the Senior Staff of the Governor's Office . . . I take this step because I believe you and I should make a clear statement to the people of Washington: we understand that many families are not rece!
iving pay raises while coping with high food and fuel prices, and other financial challenges."
So what "statement" are Bellevue teachers sending taxpayers and students by breaking the law?
Earlier this week 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.
Though I haven't received an official response yet from the candidates, Governor Gregoire was on the Dori Monson show today (KIRO 710) and was asked the same question.
Here was the tail end of their exchange on this issue:
Dori: "Yes or no, do you support the 2/3 legislative majority for tax increases?"
Gregoire: “I think it’s a moot issue because I think it [tax increases] ought to go to a vote of the people.”
The full interview is worth listening to. Discussion about the budget deficit starts at 12:50 of the interview (audio here). The exchange on the 2/3 requirement for tax increases starts at 21:22 on the audio link.
I'll post the official responses from Governor Gregoire and Senator Rossi once I receive them.
The State Auditor's recent performance audit of state debt collection practices received numerous kudos today at a public hearing. Along with receiving congratulations from legislative members of the Joint Legislative Audit and Review Committee, the Director of the Office of Financial Management also thanked the auditors for their work.
". . . eight programs that need to improve their collection practices. If the eight programs reduce their delinquent account balances by a modest 5 percent, the state will collect approximately $15.6 million more per year. If they reduce delinquent account balances by 50 percent, they can collect an additional $159.7 million."
Rep. Gary Alexander and Sen. Phil Rockefeller encouraged the State Auditor's Office to expand this effort to review the practices of the state's higher education schools. The auditors agreed to look in that direction.
The Department of Revenue (DOR) received special recognition for not have any findings in the audit. It looks like DOR is really on the ball. Last year it received its 15th straight clean state audit.
"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.
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.
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.
"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."
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.
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."
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 Olympianquotes 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!"
"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."
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 isThe Everett Herald editorial from last week.
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:
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.
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):
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.
"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.'"
Jason Mercier is Director of the Center for Government Reform at Washington Policy Center and is based in the Tri-Cities. He serves on the boards of the Washington Coalition for Open Government and CandidateVerification, and was an advisor to the 2002 Washington State Tax Structure Committee. Jason is an ex-officio for the Tri-City Regional Chamber of Commerce. In June 2010, former Governor Gregoire appointed Jason as WPC’s representative on her Fiscal Responsibility and Reform Panel.