. . . so says Speaker of the House Frank Chopp. According to the Tri-City Herald:
House Speaker Frank Chopp said Washington's projected deficit may not be as bad as it looks.
a Seattle Democrat, was in the Tri-Cities on Friday for a forum with
the Columbia Basin Badger Club, a local group that grills politicians
and newsmakers on political issues without taking sides.
club members from the audience of about 75 asked Chopp about the state
budget, which officials estimated in November would face a $5.1 billion
shortfall in the upcoming biennium.
But Chopp said
the doom-and-gloom prophecies include estimates for $1 billion in
spending on new programs, which seems unlikely given the current
"In fact, we won't do that now," he said.
Some programs -- like the idea of offering all-day kindergarten -- will have to wait until the economy turns around, he said.
identified several ways he expects the Legislature will look at
slashing spending so it doesn't have to borrow money to balance the
Among those were cutting programs added to the budget in
recent years that aren't working, like a job search program through the
Employment Security Department that has only a 5 percent success rate.
"We're going to wipe that out," Chopp said.
Kudos to the Speaker for putting the budget discussion into context. It is also important to remember that state revenues are projected to be $855 million higher in the current budget than the last and $1.4 billion higher for the next budget.
General Fund State Revenue Growth (Dollars in Millions)
Source: Washington State Economic and Revenue Forecast Council
It will be very interesting to see what the Governor proposes this Thursday when she releases her budget. Last week WPC sent the Governor our suggestions for budget reform. Here is an excerpt from our letter:
Washington Policy Center would like to offer its assistance in light of the state’s budget outlook. We appreciate your commitment to balance the 2007-09 and 2009-11 budgets without raising new taxes and fees. We share your belief that this is a unique opportunity to rethink what the government does and how it delivers vital services to the public.
Our organization stands ready to help in any way that you find useful to bring about the fundamental budget ref!
orms in which you have expressed interest . . .
To offer constructive suggestions, we have enclosed our “Do not buy list,” which we adapted from your 2009-11 Priorities of Government report, as well as a list of eight reforms that we believe will help put the state on the path toward a sustainable performance-based budget.
I'm a little late on this post but last week the Joint Legislative Audit and Review Committee (JLARC) released a pre-audit report reviewing the state's 470 boards and commissions. According to the report: "At the beginning of this project, no single list identified all of Washington’s boards and commissions."
Thanks to the work of JLARC, there is now a good description of each board and commission starting on page 25 of the report. Included are details on when it was created, authorizing statute, costs, and number of meetings.
Another nugget from the report is Appendix 2 - Statute Summary:
The Legislature has declared that boards and commissions have been:
• Created in excessive numbers;
• Created without legislative review or input and without a!
n assessment of whether there is a resulting duplication of purpose or process;
• Duplicating duties of existing governmental entities, creating additional expense, and obscuring responsibility; and
• Difficult to control in terms of growth because of the many special interests involved.
Accordingly, the Legislature established a process found in Chapter 43.41 RCW to eliminate redundant and obsolete boards and commissions and to restrict the establishment of new boards and commissions (RCW 43.41.220).
The Legislature also finds that the “continued proliferation of both statutory and non-statutory groups of this nature without effective, periodic review of existing groups can result in wasteful duplication of effort, fragmentation of administrative authority, lack of accountability, plus an excessive and frequently hidden financial burden on the state.” (RCW 43.88.500)
Furthermore, the Legislature finds t!
hat a lack of current and reliable information about boards an!
d commissions hinders the effectiveness of legislative oversight and review these entities. Therefore, the Legislature has created a central clearinghouse in the Office of Financial Management (RCW 43.88.500).
It looks like the need for each of the state's 470 boards and commissions should also be part of the current budget savings debate.
The new searchable budget website authorized by SB 6818
(Promoting transparency in state expenditures) will be launched tomorrow by the Legislative Evaluation and Accountability Program
Committee (LEAP) and the Office of Financial Management (OFM). SB 6818
was based on Washington Policy Center’s (WPC) recommendation for the
state to adopt a searchable budget website. It passed the legislature
unanimously in 2008.
searchable budget website provides an unprecedented level of
interactivity allowing users to create their own budget reports to
compare state spending over time.
This website is a great resource for citizens regardless of the level of their budget expertise. From the green eyeshade policy analyst to the casual observer, users
can create a customized look at how our tax dollars are being spent.
Included on the website are details on:
state expenditures by fund or account
expenditures by agency, program, and subprogram
state revenues by source
state expenditures by budget object and subobject
state agency workloads, caseloads, and performance measurements.
budget website also links to performance information on the Government
Management Accountability and Performance (GMAP) website and OFM’s
website on personal services’ contracts.
To help build on
the success of Fiscal.wa.gov, WPC sent letters to GMAP and OFM
encouraging these agencies to enhance their websites to mirror the
functionality of the new budget website. This effort could also serve
as a template for creation of a tax transparency website. Earlier this
year WPC released a proposal for a ‘Taxation Disclosure Act’ similar to
We are hopeful that state officials will
build on the success of the new budget website and also make details on
taxation more transparent to help citizens learn more about what
government decisions mean to their pocketbooks.
adopted by state officials, the tax transparency proposal would set up
an online database where users could find their state and local tax
rates (such as property and sales taxes) by entering their zip code,
street address, or by clicking on a map showing individual taxing
district boundaries. An online calculator would let citizens determine
their total tax burden and which officials are responsible for which
parts of it.
One change worth discussing, however, is to focus the program more on state versus local performance audits. Local performance audits add good value (example Port of Seattle audit). After all taxpayers savings are taxpayer savings whether state or local but the bigger bang for the buck may be realized by digging deeper into state programs and spending.
What shouldn't be on the table, however, is eliminating performance audits. Now more than ever the state needs to be looking at ways to improve the economy, efficiency and effectiveness of every tax dollar spent.
The Department of Information Services (DIS) last week launched a YouTube site for the state. This is part of the state's effort to "incorporate Web 2.0 functionality that helps us expand our public outreach."
Earlier this year DIS put out a Request For Proposal (RFP) 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 effort is continuing but may run into budget pressures due to the state's fiscal outlook.
In the meantime the state's new searchable budget website is scheduled to go live next month. I had the opportunity to see a demo of the site and am happy to report it won't disappoint. We're encouraging the Governor's GMAP Office and the Office of Financial Management to enhance their websites to mimic the functionality of the pending searchable budget website. (WPC letters here and here)
It looks like the Governor has also caught the Web 2.0 bug; her office launched a redesigned website last week. The Governor noted in a press release:
“To be effective and responsive, state government must stay in tune with changing technologies. This new Web site provides opportunities for Washingtonians to easily find the information they need about how the governor’s office works on their behalf and readily provide feedback.”
The Washington State Auditor’s Office is revamping its Web site, www.sao.wa.gov. We are asking citizens, audit clients and interested parties to provide feedback on the usability of our existing Web site and suggestions for our new Web site. The brief survey is available at http://www.surveymonkey.com/s.aspx?sm=4rnLG0uBAXDY8uaa9S11hg_3d_3d and closes at 5 p.m. on Dec. 4. Thank you for your time and assistance in improving the Washington State Auditor’s Web site.
Though the shock of yesterday's revenue forecast will not soon fade a great opportunity is at hand if lawmakers will rise to the occasion. The unsustainable spending growth of the past is being brought back to reality by the economy. If state officials respond by enacting a meaningful constitutional spending limit next year we may be able to avoid future headlines of multi-billion dollar deficits.
Consider what may have been had I-601, the 1993 voter-approved spending limit, not been eviscerated by lawmakers in 2005. During I-601's heyday (1993-2005), state spending growth averaged just under 8 percent per budget. Assuming an even more liberal 10 percent budget growth since 2005, state spending today would be $1.2 billion lower.
Projected General Fund State spending based on 10 percent growth since 2005 (Dollars in Millions)
Actual General Fund State spending growth since 2005 (Dollars in Millions)
Today's headlines will likely read: "State revenue down $1.9 billion." This is the news coming out of the state revenue forecast. What is important to remember, however, is despite this decrease, revenue is still projected to grow by 5% in the next budget cycle and revenues are still expected to be higher in the current budget than the past. This fact is demonstrated in the table below.
General Fund State Revenue Growth (Dollars in Millions)
Source: Washington State Economic and Revenue Forecast Council
This does not mean the state isn't facing a real problem. The reduced revenue growth for the current budget means that the state is now facing a potential $413 million cash deficit due to the spending levels adopted (not including budget reserve account).
If at any time during the fiscal period the governor projects a cash deficit in a particular fund or account as defined by RCW 43.88.050, the governor shall make across-the-board reductions in allotments for that particular fund or account so as to prevent a cash deficit, unless the legislature has directed the liquidation of the cash deficit over one or more fiscal periods . . .
With today's economic news, now is the time for Washingtonians to become actively involved and offer their recommendations to state officials on how to build a sustainable core function focused budget.
In a message few in D.C. thought they'd hear, South Carolina Governor Mark Sanford is telling the federal government NOT to bail out the states. Here is an excerpt from Sanford's Wall Street Journal op-ed:
I find myself in a lonely position. While many states and local governments are lining up for a bailout from Congress, I went to Washington recently to oppose such bailouts. I may be the only governor to do so.
But I suspect I'm not entirely alone, as there are a lot of taxpayers who aren't pleased with Christmas coming early for politicians. And I hope these taxpayers make their voices heard before Democrats load up the next bailout train for states with budget deficits . . .
In 2008 bailouts became the first resort. Over the past year the federal government has committed itself to $2.3 trillion (including the tax rebate "stimulus" checks of last February) to "improve" the economy. I don't see how another $150 billion now will make a difference in a global slowdown. We've already unloaded truckloads of sugar in a vain attempt to sweeten a lake. Tossing in a Twinkie will not make the difference.
However, there is something Congress can do: free states from federal mandates. South Carolina will spend about $425 million next year meeting federal unfunded mandates. The increase in the minimum wage alone will cost the state $2.6 million and meeting Homeland Security's REAL ID requirements will cost $8.9 million.
The following report compiles individual Priorities of Government (POG) Result Team priorities for state activities. These Result Teams of agency, OFM and other executive staff were charged with making choices based solely the activity performance and alignment with evidenced-based strategies for achieving each of the ten statewide results.
This information is advisory to the Governor as she develops her 2009-11 budget for the state. It does not represent any final budget decisions.
I haven't had a chance to digest the information yet but here is a sampling of the "low" priorities identified:
Early Learning Programs
National Board for Professional Teaching Standards
Student Achievement Fund
Rail Passenger Operations
Public Transportation - Congestion Mitigation and Transit Efficiency
Roadside and Landscape Maintenance
Health Insurance - Adults between 100-200% of poverty level
At a very lively meeting of the state's Sunshine Committee today, the members adopted a recommendation concerning public record exemptions for "work product" and "attorney-client privilege." By a 7-3 vote, the members approved the following resolution submitted by Ken Bunting:
BE IT RESOLVED THAT: It is the sense and intent of this committee that the state of applicable law in Washington state, on the attorney-client privilege and the work-product rule as they relate to open government matters, should be essentially what it was before the state Supreme Court’s 2004 Hangartner ruling and its 2007 Soter ruling.
Next step is for the Legislature to weigh in on this contentious issue.
In other open government news, the 21st Century Right to Know Coalition (WPC is a member) released today its recommendations to President-elect Obama on how to improve federal government transparency. As noted by OMB Watch:
As President-elect Obama's transition team gets to work, OMB Watch has teamed with dozens of organizations and individuals to provide key recommendations on government openness, reform of the regulatory process, and government performance issues. Started well before the 2008 elections, the projects that produced these recommendations brought together diverse groups of people to work on some of the most pressing problems and concerns that will face Obama when he takes office in January 2009.
OMB Watch convened a group of hundreds of individuals and organizations from across the political spectrum to put together recommendations on government openness, information, and other transparency issues. The recommendations stress the need for the Obama administration and Congress to move the federal government's information disclosure and sharing policies and processes into the 21st century, which includes the efficient, effective use of modern Internet technologies. The recommendations fall into three categories: National Security and Secrecy; Usability of Information; and Creating a Government Environment for Transparency. The group has also lifted up a number of the recommendations as issues the Obama administration should tackle during its first 100 days.
After attending the state economic forecast meeting last Friday and hearing about the trouble ahead, I needed some good news. Thankfully it came in the way of the Governor's comments yesterday to the Associated Press. As reported in the News Tribune:
Gregoire, describing herself as an optimist, said she’s looking at the budget gap and faltering economy as an opportunity to fundamentally rethink the role of state government in Washington’s economic health.
Without going into specifics, Gregoire said she hopes to identify government functions and programs that might be better handled in the private sector or the nonprofit arena.
“This should not be simply a budget-cutting exercise. We should be thinking about, how do we grow our economy, how do we create jobs, and what reforms we can put in place,” Gregoire said. “Government is really going to have to get back to the absolute, essential basics.”
Count the Washington Policy Center ready to help bring about this fundamental reform to state government.
One idea is to begin a “base closing” process for state programs and agencies to determine which ones can be consolidated or eliminated. We discuss this reform and many others in our Policy Guide for Washington State.
More good news has come in the way of the state's editorial boards, reminding the Governor that they expect her to deliver on her no tax or fee increase campaign pledge. Here is a sampling:
"The people of this state are suffering right now, and a tax increase to pay for programs to address some of these issues is the worst possible idea. Government should not punish Washington families by piling on more fees and taxes that make it harder to make ends meet. Thankfully, Gregoire vowed during the campaign that she is also not in favor of any new taxes. We remind her now of that promise, and promise on our end to do what we can to hold her to her word." - Bellingham Herald (Much work to be done in state; taxes not an option)
"Her biggest challenge will not be Republicans in the Legislature who desire to block and impede her efforts, but fellow Democrats who will clamor to raise taxes to spare pet programs from the budget ax. Gregoire the candidate said she would not raise taxes. How hard will she fight to live up to that promise? Raising taxes is the last thing we need in this dour economy." - Seattle Times (Re-elected Gov. Christine Gregoire has tough work ahead)
With the prospect of a projected $3.2 billion budget problem growing even larger after this month's revenue forecast, some in Olympia are already talking about tax increases - this only two days removed from the election. According to the Seattle Times (Gregoire's next big test: balancing budget without raising taxes):
. . . Senate Majority Leader Lisa Brown, D-Spokane, didn't rule out the prospect of tax or fee increases.
Brown also said lawmakers could look at targeted taxes or fees, or consider ending certain tax exemptions.
"If you look at a tax exemption and you decide you need to close it or limit it somehow, is that raising a tax? Some of it comes down to definitions," she said.
Gregoire was pretty explicit during the campaign when pressed on whether she'd support increasing taxes or fees next year. She said no and reaffirmed the vow Wednesday.
"Now is not the time you put taxes on people," she said, adding that during the campaign she has met people across the state who are suffering from the economic problems that have shaken the nation.
Still, some Democrats see wiggle room for the governor.
Paul Berendt, a former chairman of the state Democratic Party, said he thinks Gregoire and lawmakers could put together a tax package that would help balance the budget and support new programs — and send it to voters.
That would allow Gregoire to propose additional spending without signing a tax increase.
The fact that voters agreed to raise sales taxes for a $17.9 billion Sound Transit light-rail expansion suggests that approach could work, Berendt said.
When asked recently if she'd support sending a tax increase to voters, Gregoire said, "I will leave that to my colleagues in the Legislature. I will forever maintain that the voters ought to be able to decide that. ... I wouldn't be involved in it. It would bypass me. It would not be something that the governor would sign on to or sign off on."
While sending a tax increase proposal to voters would be consistent with the Governor's comments that any tax increase should receive voter-approval, how would a tax increase referendum provide any "wiggle room" on her repeated campaign statements reaffirmed in the Times article that now is not the time to raise taxes on Washingtonians?
Based on her comments above, any doubt now that Sen. Brown's lawsuit to overturn the voter-approved 2/3 vote requirement for tax increases has more to do with the ability to easily raise taxes than the Senator let on?
While some in Washington continue to flirt with the theory that if only the state had an income tax we'd never have another budget problem, our neighbor to the south is discussing repealing its income taxes and moving instead to sales taxes.
Oregon's state government system relies heavily on income taxes, with about 90 percent of its general fund and lottery revenues coming from individual income taxes. That system is volatile because income tax receipts drop during economic downturns, leaving the state short of money to pay for education and other services.
Long-term options listed by the task force include:
Eliminating the state's personal income tax and imposing an 8.5 percent sales tax with exemptions for items such as shelter and in-home food. The group notes this approach would reduce net income for most households without offsetting provisions . . . The task force began meeting a year ago. While it does not favor any long-term approach over another, it does recommend some short-term changes, including having Oregonians vote on placing the state's rainy day fund, created by the 2007 Legislature, in the Oregon Constitution and increasing the fund's cap.
As demonstrated by Oregon's experience with income tax receipts, there is no recession proof tax structure. Policy makers should not focus tax reform discussions around raising more revenue but instead should ensure the tax system is based on sound principles of taxation.
This is why the state's notorious B&O tax is ripe for reform or replacement - it fails the principles of sound taxation on many levels as identified by WPC's Carl Gipson in this four-part series:
Jason Mercier is the 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.