"I will produce a budget balance!
d to this revenue projection because I am required to by law. We all know a budget reflects the values of our state. All options must be on the table to produce a budget that works."
Tax increases are not the answer and should be removed from the table as an
option to help remove any distractions from making the necessary budget
Illustrating this point, earlier this year more than 30 economists warned state officials that raising taxes "during a recessionary period is contrary to responsible economic policy and instead will thwart the state’s economic recovery."
Several state newspapers have also called on state officials to avoid tax increases:
Though lawmakers and the Governor will be tempted to address the state's $2.6 billion budget deficit with one-time fixes, doing so is a recipe for future budget pain and the potential for the state's credit rating to be downgraded. According to Moody's October 9 report on Washington's credit outlook, the following could result in a reduction to the state's credit rating:
Protracted structural budget imbalance.
Increased reliance on one-time budget solutions.
Failure to adopt plan to cover expenditures once federal fiscal stimulus monies are no longer available.
Instead state officials should make fundamental changes by "re-booting" state government as called for by the Governor in her state of the state address last January:
“. . . one thing we have to do together is reform state government to bring it into the 21st century, and soon. At very basic levels, businesses are struggling to reform, to change the way they do business because they simply must to survive. And our business leaders tell me that American companies, large and small, will emerge from this recession forever changed.
We have to do the same. And that’s government reform.
This is our chance to reform state government to make it a more nimble and relevant partner in a new state economy.
Ladies and gentlemen, we need to reboot!
Over the decades, state government has evolved — layer upon layer upon layer. But too much of what served the peo!
ple well in 1940 or 1960 or 1990 does not serve the people well in the 21st century. We need to make sure we have a government for the 21st century so our workers and businesses can compete with anyone in the world."
Today's Seattle Times contains two sobering reports about education.
One article reports that Superintendent of Public Instruction Randy Dorn is taking steps to further loosen academic requirements. He proposes to further delay the requirement that students pass the state math and science tests in order to earn a high school diploma. He would delay the math requirement from 2013 to 2015 and the science requirement to 2017. Reducing standards is the logical response of a school system run by officials focused on embarrassing high school graduation rates: fully one-third of high schools students drop out. Increasing the math and science knowledge of individual students must play second fiddle to increasing graduation rates.
A second article reports that the Seattle School District has returned to a neighborhood assignment plan for schools. Parent choice has now been eliminated, reversing the open enrollment policy instituted by Superintendent John Stanford in the late 1990's. Until now, this open enrollment policy allowed thousands of parents to make the choice they felt was best for their student, with the result that many schools in the north end of the city became overenrolled and many in the south end became underenrolled.
The proper response of the district to this evidence of broad disaffection with certain schools should have been to close these schools, or replace their underperforming staff.
Instead, underperforming schools will remain open and fully enrolled, and all will be neat and tidy from the point of view of administrators in the district. But this bodes ill for students and families. Parents will be unable to remove their students from underperforming neighborhood schools. The district responds to these concerns by claiming that all schools in all neighborhoods will be excellent, some day in the future. But how can excellence in all schools be achieved now, when a critical factor in driving improvements, the power of parent choice, has been eliminated?
What a sad state of affairs for parents and students in Washington state and in Seattle.
Attendees at this morning's GMAP session were witness to a visibly disappointed Governor expressing her displeasure with an agency's lack of performance. The focus of the meeting was the state's use of the federal stimulus funds. One of the activities highlighted was Commerce's weatherization program.
Commerce Director Rogers Weed opened his presentation by asking the Governor to lower the target for the number of housing units to be weatherized since it would be unlikely for Commerce to meet the current goal. Weed indicated the problem was caused by questions concerning prevailing wage requirements and how much workers should be paid for the weatherization projects.
The original goal for the 2nd quarter was to weatherize 935 units. Commerce's actual production was 107 units.
Responding to this the Governor said she was absolutely disappointed with how many fingers wer!
e being pointed and the bureaucracy getting clogged up. She also stressed that she didn't understand why the problem surrounding the prevailing wage confusion wasn't identified sooner to allow for corrective action. She concluded her criticism by saying "this is not acceptable" and reminded those who work for government that they are the guardian of taxpayer dollars.
Beyond the Commerce fireworks there was other news of note from today's GMAP meeting:
The Governor commented that the accountability states are being held to for the stimulus funds is "mind boggling" and only 1/10 of what the big banks were required to do under TARP.
The Governor mentioned a phone call she recently had with the Vice President about the cliff states will fall off if the federal funds for social services (Medicaid, etc) are not extended for use next year and that she is actively lobbying for more federal funds.
The Governor stressed the need for agencies to focus on whether results were actually being achieved for expenditures not simply whether the money can be accounted for.
Also discussed was an overview of the state's stimulus funds:
$2 billion for program grants - 30,000 jobs (24,000 of which are in education)
$2 billion for federal direct expenditures - 2,900 jobs
$1 billion for local governments and non-profits - 3,000 jobs
$1 billion for assistance to individuals (Medicaid, etc)
The state was not required to keep track of how many of those jobs are new. Last month The News Tribune questioned the 24,000 education jobs reported. From the article:
New numbers released by the federal government Friday estimate that the federal stimulus package has helped create or save 34,500 total jobs in Washington, making it the state with the third-largest reported number of stimulus jobs behind California and New York.
But there’s a caveat on those job creation numbers: 24,000 of them probably weren’t in danger in the first place.
State officials used a chunk of stimulus money to cover paychecks for 24,000 teachers who were already contracted to finish out the school year. That money came from a pot of stimulus funds given to the state to hel!
p offset budget cuts.
Without that funding, the money to pay the teachers would have come out of the state general fund, said Jill Satran, Gov. Chris Gregoire’s main adviser on stimulus projects.
That would have meant cuts elsewhere, Satran said, but the job losses that would have resulted from such cuts is difficult to quantify. Few, if any, of the 24,000 teacher jobs would have been among them, Satran said.
I've noticed WSDOT crews installing metal sign columns along a busy stretch of I-5 between Boeing Field and I-90. They are about every 300 feet and appear on both sides of the freeway. I took some pictures on a recent trip.
According to the WSDOT, these columns will be used to install variable speed limit signs.
The signs will display speed limits from 40 to 60 mph, depending on traffic
levels. The result will be fewer traffic collisions and less
WSDOT estimates the speed limits will become variable beginning Summer 2010. Active Traffic Management systems are a sure fire way to increase vehicle throughput along a particular corridor (and they are relatively inexpensive). Reducing the speed limit may seem counter intuitive to some, but as former WSDOT Secretary Doug MacDonald demonstrates in this video, it makes sense:
As we have noted many times before, there is no formal policy to reduce traffic congestion in Washington State. So its refreshing to see a project with a direct relationship between spending transportation taxes and maximizing vehicle throughput. Seattle and Sound Transit officials have taken the opposite position by implementing policies and programs that don't reduce congestion or deliberately make it worse.
The Archives of Surgery recently a published a peer reviewed paper concluding that people without health insurance were more likely to die after major trauma than people with health insurance. The study looked at trauma deaths as recorded in the national trauma registry from 2002 through 2006 and included a total of almost 700,000 patients.
Overall mortality in the insured group was 4.7% with a breakdown of 3.3% for commercial insurance, 2.9% for managed care, 3.7% for Medicaid and as expected in the higher age range, 6.7% for Medicare. The uninsured had a 5.7% overall mortality rate.
The study was very well controlled for matching age, race, severity of trauma, and type of trauma (blunt vs penetrating). The authors concluded that having health insurance determines the likelihood of survival after major trauma.
The one glaring difference between the insured and uninsured groups was the incidence of penetrating injuries. The commercially insured and managed care groups had a 6% and 9% rate respectively with seniors in Medicare at 4%. The uninsured had a 24% rate. Most penetrating injuries are gun shot wounds and it can be argued that the chance of surviving a gun shot injury is much less than surviving blunt trauma which is usually in the form of an auto accident or a fall.
The implication of the paper is that providers treat patients in an emergency setting differently based on their insurance status. This is disingenuous and is absolutely insulting to the medical profession.
The Working Group implementing school finance reform under last session's reform bill, HB 2261, faces a serious new challenge. Last week, in the Federal Way School District case, the Supreme Court found that the legislature's school funding allocations do not violate the constitutional clauses requiring ample provision and a general and uniform system of schools. Legislators can no longer rely on the judicial system to fix the public school finance in Washington State. And the projected budget shortfall of over $2 billion increases the pressure for finding better solutions.
The current system of school finance (and the prototype school system embraced by HB 2261) allows legislatures and school districts to decide how to staff schools, which is so inefficient that less than 59 cents of every dollar actually reaches the classroom.
A better solution for school finance reform is available. This solution would allow schools to make better use of and provide greater transparency and clarity over the $9 billion Washington state's taxpayers currently provide to educate one million students.
This solution is described in a new report from the U.S. Chamber of Commerce and the American Enterprise Institute, Leaders and Laggards: A State-by-State Report Card on Educational Improvement. This report concluded: "The results were deeply troubling. From weak data capacity to anachronistic finance systems, schools just do not have the ability to respond to 21st century educational challenges." Among the report's key recommendations is a system of student-centered funding to minimize complexity, improve funding transparency, and help improve student achievement. Specifically, the report states:
"In light of these challenges, states could benefit from a system of student-based funding under which a student's school would receive a certain amount of dollars based on the student's particular needs, and could then spend those funds flexibly. This policy has a number of other names, including results-based budgeting and weighted student funding. ...Such a system would give local educators far greater autonomy and allow them to allocate resources in ways that would best serve students. ...when dollars follow a child directly to the classroom, the people closest to the student—school leaders and community members—are empowered to make decisions that affect that child, as opposed to central district offices that have little to no interaction with pupils. This system would, of course, also increase clarity and transparency!
, helping to create a funding model in which parents and policymakers can easily judge how effectively educators use resources."
See pp. 25-26 of this report for full discussion of this reform and other much-needed reforms.
Governor Gregoire will not call a special session of the Legislature despite a budget deficit likely to exceed $2 billion after Thursday's state revenue forecast. Sen. Joe Zarelli (R-18), ranking member on the Senate Ways and Means Committee, has been calling for a special session for months. Zarelli issued this statement in a press release last week:
“The Legislature doesn’t have to sit back and wait for the governor to bring out her budget proposal next month. We can call ourselves into special session in early December, when we’re already scheduled to be at the Capitol. The budget writers already know where they can reduce spending; the sooner we act, the more can be saved to preserve important programs which otherwise would be subject to slashing later.
The alternative to spending reductions is tax hikes. The majority party won’t come out and say it is planning to fill the budget gap t!
hrough higher taxes, but if the taxpayers don’t see quick action in Olympia to lower spending, they will see something else: the writing on the wall that tax increases are coming in 2010, even though people can’t afford higher taxes.”
According to The Olympian, the Governor has no plans to call a special session and instead will wait to take action next year:
Gov. Chris Gregoire rejected new Republican calls for a special legislative session in early December to deal with the growing budget shortfall, despite her prediction it might hit $2.5 billion after Thursday's revenue forecast . . .
“This is not something you do overnight. It’s something you do thoughtfully,” she said, rejecting Republican Sen. Joe Zarelli’s renewed calls for a special session in early December when lawmakers !
are in town. Gregoire contended special sessions would cost mo!
ney and that budget-writers in the Legislature that she’s talked to “haven’t gone in-depth” on the budget and don’t want to do anything piecemeal.
State law prohibits a cash deficit from occurring by requiring the Governor to take action. Here is what RCW 43.88.110(7) says:
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 . . .
Since the Governor has not ordered across-the-board reductions as required by law and will not call a special session to address the $2 billion plus de!
ficit, she should veto any bills passed by the Legislature until the budget deficit is resolved.
Delay only exacerbates the budget problem and makes the needed corrections more difficult. If there isn't the will to fix the problem now the Governor and lawmakers must commit to fix the problem at the beginning of the session versus waiting until the waning days.
Tax increases, however, should be removed from the table as an option to help remove any distractions from making the necessary budget reductions.
It appears that at least one Democrat member of the House Ways and Means Committee recognizes this. From The Everett Herald:
style="margin-left: 40px;">Rep. Mark Ericks, D-Bothell, who is vice chairman of the House Ways and Means Committee, said the Legislature tried to “spread the pain” last year by paring a little from everywhere. Now they must look at mothballing entire programs.
“From my perspective, that is what we have to do,” he said. “That won’t make some people happy but that is what is ahead for us.”
No one’s talked to Ericks about hiking taxes. Nor does he think it’s a panacea.
“Where’s that tax that people would raise that would temporarily increase our revenue to get us over the hump? I don’t see it,” he said. “The whole issue about the tax is a red herring.”
On Sunday, the Washington Post reported on the federal government possibly taking over yet another industry, local rail systems.
Under the proposal, the U.S. Department of Transportation would do for
transit what it does for airlines and Amtrak: set and enforce federal
regulations to ensure that millions of passengers get to their
In October, Ron Sims, Deputy Secretary of Department of Housing and Urban Development spoke at Cascadia's Beyond Oil Conference at Microsoft and gave us a glimpse of his role in this massive centralization!
of power. He began his remarks with this introduction:
“I have an interesting Job. I have both the responsibilities for day to day operations of the Department of Housing and Urban Development and then two major policy initiatives. I’m called the new breed of deputy secretaries. And one of those is “sustainability” and “livability.” It’s really interesting when you talk about how to transform an agency because we were told by the President that we could not exist in silos anymore. That it would be unacceptable for us to go to any meeting and say the problem we face in any major urban area or even the rural areas across the country was not our jurisdictional issue. That would not be a good meeting. There would not be a positive result. The President at that moment would thank you for your service and replace you.” (here is the video)
Centralization of power at the federal level means local officials have less control over policy decisions. It also means the federal government has an ever increasing role in our lives. And I think we all get a little anxious when federal officials claim that every issue is now within their jurisdiction.
This week the federal government released its rules and scoring system for states competing for a portion of federal Race to the Top funds. Today's Seattle Times front page article discusses Washington's education policies which are likely to prevent Washington from winning these funds. These include a ban charter schools and a ban on the state takeover of persistently failing schools.
The Seattle Times article also reveals that, in order to qualify for these funds, the state will be attempting to describe its National Board Certification for teachers as a performance pay system. This program does not involve evaluating the individual performance of teachers for their effectiveness in the classroom. Rather, National Board Certification gives bonuses to teachers willing to take another set of classes and/or willing to work in inner-city classrooms.
Small business owners, legislators, and policymakers from all over Washington gathered in SeaTac this past Tuesday to discuss the state's business climate at WPC's 2009 Statewide Small Business Conference. During several interactive issue breakout sessions, business owners suggested and discussed solutions to improve the climate for small businesses in Washington. This was the fourth statewide small business conference hosted by WPC since 2003.
With jobs high on the agenda for the public, environmental activists have made the creation of "green jobs" a central talking point in their campaign to justify government expenditures and environmental regulation. Politicians have jumped on this message as well. For instance, WPC was attacked by Dow Constantine in the recent King County Executive race because, he claimed, we "oppose green jobs."
Of course what we oppose are policies that kill two jobs for every one created in a politically favored industry. That is the path to higher unemployment and reduced prosperity. By way of contrast we favor innovation tax cuts that strengthen job growth, green or otherwise, while promoting energy efficient technologies.
Now, there is more evidence from the other side of the Columbia that the strategy favored by environmental activists and "green" politicians is costly and ineffective.
Writing about Oregon's effort to create green jobs, the Longview Daily News today highlights the costs of their government subsidies:
No state has been a more vigorous advocate of green economy — or, as it turns out, invested more in attracting renewable energy companies — than Oregon. ... [The Oregonian] reported that the state’s Business Energy Tax Credit (BETC) cost taxpayers $68 million in 2007-09 — more than 40 times what legislators had been told it would cost. And that’s only for starters. The cost of BETC subsidies for green projects is estimated to climb to $167 in 2009-11, and to $243 million in 2011-13.
We've seen this before with Cash for Clunkers and other programs. Programs that offer free government money end up finding many takers. The problem is that the results are not in line with the costs. The Oregonian highlighted some costly failures:
Among them was the Clatskanie ethanol plant which eventually went bankrupt and ceased operations. It received $12 million in tax subsidies and a $20 million energy loan from the state. Another wasteful example cited in the report was a wind energy project that was handed tax credits totaling $40 million. [The Oregonian] found that this project will generate less electricity than projects that received credits totaling around $4 million.
The question is, have these projects generated jobs? Oregon's unemployment rate is currently 11.5 percent. More than 1.3 percent higher than the national average and 2.2 percent higher than Washington's rate.
Given the poor results from these subsidies, imagine what could be done with that funding that would truly make a difference.
The results are worthy of Linda Richman: "green" jobs are neither green, nor jobs...discuss.
During the PSRC's Transportation Policy Board (TPB) meeting this morning, the city of Seattle expressed opposition to the Transportation 2040 plan and asked for an extra year to work out their issues. The prepared statement was read by a city representative and signed by Mayor Greg Nickels and all nine councilmembers.
Despite Seattle's protest, the TPB voted to move the preferred alternative forward and directed staff to prepare an EIS.
Another interesting factoid (and probably Seattle's reason for opposition) is the preferred Transportation 2040 alternative does not achieve the state's targets for reducing emissions or reducing how much people drive, even with PSRC's assumption of more than 160 miles of light rail.
A major part of Washington's strategy to reduce CO2 emissions is the promotion of plug-in hybrid vehicles that would run on battery power for many trips but would use a gas-powered engine when needed. It is argued that these vehicles will significantly reduce carbon emissions. A study that came across my screen today calls this into doubt.
A study advocating hydrogen vehicles includes the graph below. Of course hydrogen vehicles come out looking good. There are many problems with hydrogen vehicles that cannot be captured in this graph, notably that the cost of vehicles is high and the refelling infrastructure is nonexistent.
What interested me most is the comparison between the projections of carbon emissions between gasoline-powered hybrids and plug-in hybrids. Plug-in hybrids emit only four percent less CO2 than regular hybrids. This is a remarkably small return on investment of the state's money to build plug in stations across the state. For instance, diesel hybrids are projected to emit less CO2 than plug-in hybrids.
These numbers are national and the numbers for Washington are likely to be different because so much of our energy is carbon-free hydro and nuclear. We should remember, however, that going to plug-ins would increase demand for energy and we aren't likely to build many new dams or even nuclear power any time soon.
Plug-ins are one of those technologies politicians have latched onto in an effort to demonstrate "greenness" to the public. As is common, however, what is politically popular isn't always environmentally friendly and spending money on inferior technologies misses opportunities to make real improvements in energy efficiency.
In a landmark ruling today, Washington’s Supreme Court ruled unanimously that the legislature’s method of funding public schools is constitutional under the “ample provision” requirement of the state constitution.
The ruling bolsters the research findings of Washington Policy Center showing that public schools receive ample funding, as the constitution requires.
Washington taxpayers are generous, providing $9 billion a year to educate about one million students.
Per student funding is $10,274 a year, the highest level in state history.
The average teacher salary is $72,000 in pay and benefits for a nine-month work year. The average salary for other workers is about $42,000.
With the trend toward smaller families, there are proportionately fewer children in school today than in the past, with more taxpayers than ever paying into the system.
Local voters approve most supplemental levies, and the legislature recently enacted rules making it easier for school levies to pass.
Much of this generous funding, however, is diverted by central district offices long before it has a chance to help children in class.
Only 59 cents of every education dollar reaches the classroom.
School principals control only 5% of their budget.
The majority of school district employees are not classroom teachers.
One third of public high school students fail to graduate.
At the same time, private schools in Washington often spend less money per student, pay their teacher less, and produce better learning outcomes for children. The key difference is that state law authorizes private school principals to control nearly 100% of their budget, pay bonuses to retain the best teachers, fire poor-performing teachers, and hire any qualified applicant as a classroom teacher. Giving public school principals the same authority would lead to better use of the ample funding school districts receive and would provide improved learning opportunities for all students.