The Seattle Timesran a report yesterday titled "How state spending rose $8 billion under Gregoire." The in-depth article provides a nice background on what has happened with the state budget under Governor Gregoire. One thing not discussed, however, is the impact of the voter-enacted tax and spending limit, Initiative 601, adopted in 1993. For example, the article says:
"Gregoire, though, certainly isn't the biggest spender in recent history. The budget grew 36 percent from 1981-84 under Republican Gov. John Spellman. And it soared 45 percent during Democratic Gov. Booth Gardner's second term, from 1989-92."
The context for state spending since 1993 is the fact I-601 has restricted how fast the budget could grow and limited the ability of lawmakers to increase taxes. At least until 2005.
There was a significant drop in the percentage increase in state spending after Initiative 601 took effect during the 1993-95 biennium. Up until the major changes to the law by the legislature and governor in 2005, these percentage increases were relatively stable. After 2005, the rate of spending increase rose sharply.
The other thing about the article worth noting is the selective respect paid by the governor to the will of the voters. Talking about I-728 and I-732 (education spending), the governor is quoted as saying, "I'm not one who disregards the voice of the people."
While a commendable position, the problem with this statement is that to fund I-728 and I-732 the governor and the legislature overrode, using an emergency clause, I-601 and I-402 (estate tax reduction). Further complicating this is the fact that both I-728 and I-732 were advertised to the people as not requiring tax increases.
" Without raising taxes, I-728 lets schools reduce class sizes, expand learning opportunities, increase teacher training, invest in early childhood education, and build classrooms for K-12 and higher education."
"We can afford to invest in our schools and our future without raising taxes or taking money away from other programs. I-728 is funded by lottery proceeds, surplus state revenues and by returning a portion of state property taxes to local school districts."
"I-728 is both necessary and fiscally sound. It invests surplus revenues in education without hurting the state budget."
"I-728 does not raise taxes. I-728 maintains ample reserves and funding for other state services."
"With a $1.1 billion surplus, let's use existing resources for more competitive salaries."
Statements opposing I-728 and I-732:
"I-732 adds no state revenue – it only consumes more of existing resources."
"I-728 would remove $2 billion from the state's general fund over the next six years."
"The governor's budget office projects basic expenditure needs will exceed state revenues in the next biennium. I-728 takes a bad budget outlook and makes it much worse, requiring cuts in services or tax increases to meet basic needs."
What's left of I-601 is now being challenged by the Senate Majority Leader in court.
The Department of Information Services (DIS) put out a Request For Proposal (RFP) on July 14 to provide the state with "a web search tool that assists with strengthening the relationship between lawmakers and their constituents by maximizing transparency of the work of government."
This positive development seeks to implement the recommendations we made to the Director of DIS and the Governor's Chief of Staff at an April 23 meeting this year.
In a meeting with DIS last week to review the draft RFP, Director Gary Robinson indicated DIS hopes to re-design the state's web portal (Access Washington) and improve the search functions on state agency websites. The goal is to have this reform done by November.
"DIS is now soliciting Proposals from interested, best-in-class Search Tool vendors to update the tool which supports the Ask George search. DIS is seeking an offering that can improve the success and effectiveness of the Ask George search both on Access Washington and in the individual agency specific tailored searches. DIS is committed to providing a web search tool that assists with strengthening the relationship between lawmakers and their constituents by maximizing transparency of the work of government. The ideal solution is one that enables citizens’ access to government data in a manner that is straightforward and easy to use.
DIS will continue offering Ask George as a service offering to Washington state agencies, boards and commissions, local governments, tribal organizations and qualifying non-profits. Therefore, DIS intends to solicit qualified vendors to provide a licensed search application for a search tool that can quickly initially collect up to 3 million documents, and can easily be segmented into the agency specific tailored searches . . .
DIS is seeking an updated Search tool to provide a toolset to assist in the transparency of government. Search tools can provide assistance to constituents to be able to 'search' government information on web sites. Transparency will improve citizen access to information in government. The search tool function that DIS is seeking to acquire is a tool to assist in providing transparency."
This encouraging development builds on the successful adoption of WPC’s recommendation to create a searchable budget website earlier this year (SB 6818).
Kudos to DIS for moving forward with this effort to improve government transparency!
Earlier this year we pointed out a disagreement between the Governor's budget office (OFM) and the legislative committee tasked with keeping track of state spending (LEAP) on just how much the state is spending. LEAP maintained the state is spending $33.7 billion during the 2007-09 budget. OFM said it was actually $32.5 billion - a $1.2 billion difference.
Based on an article in the Spokesman Review this morning, it looks like OFM and LEAP are in agreement now:
"Spending: The main state two-year budget has risen 31 percent in four years, according to Gregoire's budget office, from $25.6 billion to $33.65 billion."
It looks like the new area of disagreement now centers on just how bad the state's budget outlook is. The nonpartisan staff of the Senate Ways and Means Committee say the state is facing a $2.7 billion spending deficit. While OFM isn't saying what its forecast shows, the Governor believes the Senate Ways and Means Committee is "overin!
flating" its deficit forecast.
Looks like the only way to resolve this new controversy is for OFM to put its numbers on the table.
Yesterday Governor Christine Gregoire called in unexpectedly to the Dori Monson show on KIRO 710. The 16 minute interview is very enlightening. The first half deals with the gaming compact she signed with the Spokane Indian Tribe. The rest deals with the projected $2.7 billion spending deficit. Discussion about the budget deficit starts at 16:00 on this audio link.
The Governor did not think highly of the non-partisan Senate Ways and Means Committee staff's deficit projections:
“We have no idea whether it’s right or wrong right now based on the assumptions we think they used. We think they are overinflating.”
As to whether she would raise taxes if the deficit projections proved to be true:
“You don’t increase the taxes based on the initiative that was passed by the people without a 2/3 majority vote of both the House and the Senate or a vote of the people. So, I cannot raise taxes, period. Secondly, let me just be clear how we do the budget. We do it based on what we call priorities, priority setting, and we spend whatever money we have budgeted to spend based on those priorities. So that means those that are lesser priority don’t get funded. Programs that aren’t working or aren’t working as well as they should, don’t get!
funded. That’s the right way in my opinion to set a budget.”
That's a good answer.
What wasn't answered is whether or not the Governor supports the Senate Majority Leader's lawsuit to invalidate that initiative passed by the people (I-601) and if she is planning to sign legislation again like she did in 2005 (with an emergency clause) to suspend those taxpayer protections.
She also made the curious comment that she hasn't raised taxes. Even if we give her a pass on the gas tax increase she approved since the voters ultimately upheld that increase, it's hard to overlook the hundreds of millions in taxes raised in 2005, like the death tax, that led to a lawsuit being filed against the Governor and Legislature for violating I-601.
". . . is a reference guide to the state Declaration of Rights, found in the Washington Constitution. The authors review the state’s 1889 constitutional debates, newspaper accounts of the convention, and significant cases that have dealt with the rights guaranteed in the state constitution.
The message of the book is that when citizens are educated in the sources of their freedoms, and familiar with attempts in history to limit these freedoms, they are better equipped to recognize new encroachments."
It is an easy read and worth taking the time to look through.
Washington State Supreme Court Justice Charles W. Johnson provided the foreword for the book and noted, "I know and appreciate the incredible amount of thought, research and work necessary to produce this citizen’s guide. The authors are to be commended for their efforts in putting this work together. Those who read and use this guide can be thankful for the time and energy spent on organizing and publishing it."
The full text of the state constitution can be found here.
The nonpartisan Senate Ways and Means Committee staff have updated their six-year budget outlook to reflect the recent state revenue forecast. As expected the previous $2.5 billion deficit forecast has increased to $2.7 billion. Of particular note is the carry forward cost of the recent 2008 supplemental budget increase. Though projected to cost $209 million in the current budget, this new spending is forecasted to cost $609 million in the next budget. The paid family leave program is projected to cost an additional $72 million in 09-11 and $89 million in 11-13. Too bad for taxpayers our elected officials didn't take the opportunity to restrain spending this past session in light of a tight economy. Any guess how they'll try to fix this sel!
f-inflicted spending problem next year?
Earlier this year Senate Majority Leader Lisa Brown filed a lawsuit to make it easier to raise taxes by challenging I-601's requirement for 2/3 vote of the legislature in order to raise taxes. Brown believes this supermajority requirement is unconstitutional, a claim opponents of I-601 have made since it was adopted in 1993.
Defending the law the Attorney General argues the 2/3 vote requirement is just fine.
"[I-601] neither amends nor purports to amend article II, section 22, and accordingly, it is not infirm on that basis, as Petitioner suggests. By its plain language, article II, section 22 establishes only the minimum number of votes constitutionally required to enact bills. It does not prohibit the Legislature or the people from enacting statutes that require a larger majority when they deem greater legislative consensus advisable. Indeed, the framers’ recognition of the value of supermajority requirements as part of Washington’s fundamental law supports the conclusion that the framers did not foreclose enactment of such requirements as a matter of statute." (page 9)
"In the 14 years since RCW 43.135.035(1) was enacted, the Legislature has not chosen to repeal the statute or permanently amend its two-thirds vote provision, although it could have. Notably, the Legislature has amended the two-thirds vote requirement of RCW 43.135.035(1) on two occasions to substitute a majority vote requirement for designated periods. See Laws of 2002, ch. 33, § 1, amending RCW 43.135.035(1) to substitute a majority vote requirement for the 2001-2003 biennium; and Laws of 2005, ch. 72, § 2, amending RCW 43.135.035(1) to substitute a majority vote requirement from the effective date of the 2005 act through June 30, 2007. For these reasons, this case presents neither an actual existing controversy, nor the mature seeds of one, and rather posits a speculative hypothetical issue for academic debate." (page 31)
"Article II, section 22 provides, '[n]o bill shall become a law unless . . . a majority of the members elected to each house be recorded thereon as voting in its favor.' Article II, section 22 establishes a constitutional minimum number of votes for a bill to become law. It only describes the circumstances under which a bill does not pass. In other words, article II, section 22 does not prohibit statutes by which the legislature (or the people) express their legislative policy judgment that certain types of bills warrant greater than simple majority consensus for passage. RCW 43.135.035(1) expresses such a legislative policy judgment—that a two-thirds majority vote of each house should be required for passage of bills raising taxes. The statute hardly conflicts with the constitutional floor set by article II, section 22, as any bill receiving its supermajority support has met the requirement of article II, section 22.
A California court construed its essentially identical constitutional provision in just this way. People v. Cortez, 6 Cal. App. 4th 1202, 8 Cal. Rptr. 2d 580 (Cal. Ct. App. 1992). The constitutional provision at issue in Cortez provided in relevant part, 'No bill may be passed unless . . . a majority of the membership of each house concurs.' Cortez correctly reasoned that a requirement for a legislative supermajority did not conflict with the passage of bills clause of the California Constitution because, 'Clearly a bill which obtains the approval of two-thirds of the membership of each house has also obtained the approval of a majority of the legislators in each house.' The constitution merely restricts the passage of bills to those that obtain at least majority approval, rather than establishing an affirmative rule that all bills receiving a majority must be deemed passed.
Petitioner essentially asks this Court to amend article II, section 22, to treat it as if it read (in common bill drafting format to show changes): '((No)) Every bill shall become a law ((unless)) if . . . a majority of the members elected to each house be recorded thereon as voting in its favor.' This reading would transform the phrasing from a 'negative' minimum requirement to a 'positive' universal standard. The court should reject the Petitioner’s invitation to rewrite the Washington Constitution in this way." (page 38)
"Both the framers of the constitution and subsequent legislatures and voters have recognized that certain specified actions should command the support of more than a simple majority. Petitioners, to the contrary, urge that the same constitutional convention that embraced supermajorities for some purposes intended to prohibit statutes requiring supermajorities for any other purposes. The Constitution contains no language supporting this notion, however. The framers may not reasonably be presumed to have implied the prohibition of a political mechanism that they themselves adopted through language that does not say so. Given the plenary legislative authority of the people and the legislature, and the absence of a clear constitutional prohibition, the Court should not conclude otherwise." (page 48)
Taxpayers should be encouraged by the Attorney General's vigorous defense of the law. Oral arguments before the State Supreme Court should occur this September. We'll likely know sometime next year when the Court rules if it will allow Brown's lawsuit to "rewrite the Washington Constitution" and strike down the will of the people.
The State Auditor's Office (SAO) today released its Statewide Accountability Report for fiscal year 2007. According to the report, SAO "identified 20 conditions or concerns significant enough to be reported as federal findings." An additional 20 accountability findings were issued against state agencies in fiscal year 2007.
It is important to remember an accountability audit is different than a financial or performance audit. A clean accountability audit does not necessarily mean an agency will not have any findings for financial or performance issues.
On a positive note, of those agencies receiving an accountability audit in 2007, 59 didn't receive any accountability findings. This includes the Office of Attorney General, Department of Corrections, Office of Financial Management, Department of Health, Department of Transportation and Department of Revenue to name a few.
Last week SAO released its summary of fraud investigations for 2007. SAO noted that in 2007 it "reported on 24 [fraud] cases totaling more than $1.7 million at state agencies and local governments." Of those:
Last Thursday the state filed notice of appeal of a May 23 court ruling that invalidated three rules the Department of General Administration (GA) adopted to implement the competitive contracting provisions of the 2002 Civil Service Reform. The Washington Federation of State Employees (WFSE) sued to have the rules thrown out. The state's brief has yet to be filed.
It is encouraging to see the state willing to defend the importance of competitive contracting.
Washington State isn't the only government battling union efforts to roll back competition. Members of Congress sympathetic to unions continue to battle the White House's contracting reforms. According to a June 19 article on NextGov.com:
A House subcommittee has introduced a bill that would effectively end the Bush administration's already weakened competitive sourcing initiative.
In a markup of its fiscal 2009 appropriations bill, the House Appropriations Financial Services and General Government Subcommittee approved on Tuesday a one-year moratorium on any new A-76 competitions, leaving the decision to continue the public-private job competition program up to the next administration.
"The provision halts this administration's controversial and detrimental federal workforce program until the next administration has had an opportunity to consider and implement its own workforce policies," said subcommittee Chairman José Serrano, D-N.Y.
The bill has the support of federal labor unions who have lobbied against competitive sourcing by arguing that it amounts to little more than a thinly veiled outsourcing and privatization agenda.
"I think a governmentwide suspension of A-76 makes a lot of sense," said Randy Erwin, legislative director for the National Federation of Federal Employees in Washington. "The competitive sourcing program has not exactly been a glowing success, and who knows if the next president is going to want to continue what has been a very controversial program."
The bill provoked a strong rebuke from the Bush administration, which has made competitive sourcing a top priority of its management agenda.
"A moratorium would inappropriately interfere with agencies' ability to manage resources in the most cost-effective manner," said Robert Shea, associate director for administration and government performance at the Office of Management and Budget. "Competitions completed across government since fiscal 2003 are expected to produce more than $7 billion in savings, the majority of which are expected within the next five years. Most of these savings will be achieved by federal employees who have fared well under public-private competition by creating 'most efficient organizations' to eliminate inefficiencies from the federal workplace."
At least we don't have our legislators actively trying to undermine competitive contracting, yet. The battle for now is in the courts.
On June 18, the Joint Legislative Audit and Review Committee (JLARC) released the annual report required by I-900 on the implementation of the State Auditor's performance audit recommendations by the Legislature. According to the report:
Status Following the 2008 Legislative Session
Adopted as Presented - 5
Addressed with Different Approach - 6
Legislature Made Different Policy Choice - 2
Bills Introduced on Topic But Not Adopted - 2
Other Circumstances - 8
No Information - 4
Total - 27
Legislative Meeting Activity Directly or Indirectly Related to the 2008 SAO Performance Audits
Legislative public hearings or work sessions specifically on an SAO performance audit - 14
Legislative public hearings or work sessions on the topic reviewed in an SAO performance audit - 14
Total - 28
The full report is available here. The Appropriations Subcommittee on General Government & Audit Review has scheduled a public hearing on the JLARC report for July 9 @ 10 am.
" . . . the nine audits have made 434 recommendations to improve the efficiency and effectiveness of government. They point the way toward millions in savings of taxpayer dollars, and they recommend ways to transform government operations and to make significant improvements in services to citizens.
The audits identified $240 million in one-time and long-term potential cost savings and in unnecessary spending over five years. In addition, our audit of Puget Sound traffic congestion pointed to $3 billion in economic impacts to citizens and businesses and to the environment – provided all the audit recommendations are put in place.
Considering the $8 million cost of conducting the audits, the findings and recommendations represent a healthy return on investment."
The state's budget outlook took a turn for the worse today with news that the expected increase in the revenue forecast is $167 million smaller than anticipated. Even before this news the state was facing a self-inflicted $2.5 billion deficit caused by overspending.
It looks like some in the legislature are all ready planning to address this problem with tax increases. The Senate Majority Leader filed a lawsuit earlier this year to help make it easier to raise taxes.
Perhaps the question candidates should be asked before the election is: "Do you plan to use budget restraint or resort to tax increases to fix the state's fiscal health?"
The answer will have a big impact on our wallets next year.
Last month the Office of Financial Management (OFM) sent state agencies instructions on how to make their budget submittals for the Governor's 2009-11 budget proposal. One of the new sections in the instructions is the requirement for agencies to define their performance expectations for the money received. From page 33 of the OFM budget instructions:
What specific performance outcomes does the agency expect? Describe and quantify the specific performance outcomes the agency expects as a result of this funding change. As appropriate, describe:
- What desired results will be achieved? - What undesired results will be reduced? - Will efficiency increase? How? - Will outputs change? How? - What is the expected impact on clients? On services provided? On citizens? On other agenci!
es or governments?
Note: Proposals that do not make a compelling case for a quantifiable and positive performance impact on activity or statewide results will likely fare poorly in the budget competition.
Page 46 further explains:
OFM will ask some agencies to submit specific budget decision packages or additional information as part of their budget submittal. There are two key drivers for these requests:
The Priorities of Government result teams may recommend ideas for improving results, reducing costs, or gaining research to aid the evidence-based prioritization of activities. OFM may select some of these proposals and ask agencies to prepare proposals or information as part of their 2009-11 budget submittals.
HB 1242 was enacted in the 2005 legislative session, establishing new requirements for performance measure review and followup. Key requirements include:
Each agency must establish performance measures for each major activity in its budget that measure whether the agency is achieving or making progress toward the purpose of the activity and toward statewide priorities
OFM must regularly conduct reviews of selected activities to analyze whether measurements submitted by agencies demonstrate progress toward statewide results
When a review determines the agency's measurements demonstrate that the agency is making insufficient progress toward the goals of any particular program or is otherwise underachieving or inefficient, the agency's budget request shall contain proposals to remedy or improve the selected programs
The Governor's operating budget documents will identify activities that are not addressing the statewide priorities. [RCW 43.88.090, RCW 43.88.030(4)]
It is encouraging to see OFM focusing agency spending requests on their performance. This is especially important as state officials look for ways to close the projected $2.5 billion spending deficit.
Yet another federal audit has been released begging our elected leaders to address the country's fiscal situation. The following is from acting Comptroller General Gene L. Dodaro's testimony before Congress today:
"The nation’s long-term fiscal challenge is a matter of utmost concern. The federal government faces large and growing structural deficits due primarily to rising health care costs and known demographic trends. There is a need to engage in a fundamental review of what the federal government does, how it does it, and how it is financed. Understanding and addressing the federal government’s financial condition and the nation’s long-term fiscal challenge are critical to maintain fiscal flexibility so that policymakers can respond to current and emerging social, economic, and security challenges.
While some progress has been made in recent years in addressing the federal government’s short-term fiscal condition, the nation has not made progress on its long-term fiscal challenge. However, even this short-term deficit is understated: It masks the fact that the federal government has been using the Social Security surplus to offset spending in the rest of government for many years. If the Social Security surplus is excluded, the on-budget deficit in fiscal year 2007 was more than double the size of the unified deficit . . .
At some point, action will need to be taken to change the nation’s fiscal course. The sooner appropriate actions are taken, the sooner the miracle of compounding will begin to work for the federal budget rather than against it. Conversely, the longer that action to deal with the nation’s long-term fiscal outlook is delayed, the greater the risk that the eventual changes will be disruptive and destabilizing and future generations will have to bear a greater burden of the cost. Simply put, the federal government is on an imprudent and unsustainable long-term fiscal path that is getting worse with the passage of time."
On the same day the general election campaign for the presidency officially began, Sen. Barack Obama (D-IL) and Sen. John McCain (R-AZ) co-sponsored legislation to enhance the federal spending transparency website they previously teamed up to create in 2006.
This Act would expand information on USASpending.gov to include:
A copy of each Federal contract in both PDF and searchable text format.
Details about competitive bidding, the range of technically acceptable bids or proposals, and the profit incentives offered for each contract.
The complete amount of money awarded, including any options to expand or extend under a contract.
An indication if the Federal award is the result of an earmark.
Information about government lease agreements and assignments in the same manner that information is reported for contracts, grants, and other assistance.
An assessment of the quality of work performed on Federal awards.
Information about Federal audit disputes and resolutions, terminations of Federal awards, suspensions and debarments, and administrative agreements involving Federal award recipients.
Information about any civil, criminal, or administrative actions taken against Federal award recipients, including for violations related to the workplace, environmental protection, fraud, securities, and consumer protections.
Information about Federal tax compliance by Federal award recipients.
Information about parent company ownership that will be made accessible, along with other data on USASpending.GOV, through application programming interfaces.
Links to publicly available Government reports.
The Act would improve data quality on USASpending.gov through:
Improved searchability of data and use of unique award identifiers that prevent the release of sensitive personally identifiable information.
A simple method for the public to report errors and track the performance of agencies in confirming or correcting the records for which error reports have been filed.
Agency inspectors general review statistically representative samples of agency awards to verify accuracy and compliance with improved data standards.
General quality audit of website data every six months, including review and report of public error reporting system and recommendations for new quality standards and procedures.
On April 1, 2008, Governor Gregoire signed into law Washington's version of the 2006 federal reform, SB 6818. The new law is based on Washington Policy Center’s (WPC) recommendation for the state to adopt a searchable budget website. It passed the legislature unanimously.
Washington's new law already includes the requirement for performance information to be included on the searchable spending website. It's good to see this information may soon be available on the federal website.
On May 23, 2008, Thurston County Superior Court Judge Chris Wickham invalidated three rules the Department of General Administration (GA) adopted to implement the competitive contracting provisions of the 2002 Civil Service Reform. The Washington Federation of State Employees (WFSE) sued to have the rules thrown out. A copy of the ruling was made available by the Attorney General last night.
At issue are WAC 236-51-006, 236-51-010(11) and 236-51-225. The main issue of contention is on what it means to be a "displaced employee" due to an agency competitively contracting work.
I had an opportunity to talk with the Director of GA, Linda Bremer, after today's GMAP session to ask what the ruling means and what the next steps are. She said that at this time GA was reviewing its options and would make a decision in the next few weeks on whether to appeal or adopt new rules.
Even before the ruling, the use of competitive contracting by state agencies under the 2002 reform has been less than stellar. A performance audit conducted by the Joint Legislative Audit and Review Committee (JLARC) in January 2007 found:
“…few agencies have competitively contracted for services in the 16 months since receiving authorization to do so. Agency managers reported two main reasons for not competitively contracting. First, managers perceive the process itself to be complicated and confusing, providing a disincentive to pursue competitive contracting. Second, competitive contracting is a subject of collective bargaining, which creates additional challenges by requiring labor negotiations. Managers must bargain, at a minimum, the impacts of competitive contracting. Additionally, some agency collective bargaining agreements include provisions which proh!
ibit agencies from competitively contracting.”
Regardless of the ultimate outcome of the court ruling on the GA rules, Washington policymakers should simplify the bidding process to make it easier for agencies to use competition to improve services. Lawmakers should also shield contracting out from union and political influence by removing it from the collective bargaining process. Improving service to the public is too important to be a bargaining chip in government labor negotiations.
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.