Earlier this week Governor Gregoire announced phase one of her government reform package. The Governor stressed that this effort was just the first of many changes she thinks the state needs to make to become a 21st Century, customer focused government.
So what will phase two and three look like?
Thanks to the efforts of the Evergreen Freedom Foundation, we now can see the list of 87 ideas the Governor's budget and policy staff came up with to reform and change state government. It is possible those not yet implemented could show up in Governor's next round of reform recommendations.
Among their recommendations:
Eliminate state library
Eliminate Governor's salmon recovery office
Eliminate passenger rail program
Eliminate local government I-695 backfill
Consolidate Growth Hearings Boards
Reduce higher education program duplication among institutions
Combine "sin" agencies (Lottery, Liquor Control Board, Gambling and Horse Racing Commission)
Privatize liquor sales
Privatize child welfare services
Privatize state printer
Contract out DOT engineering
As for the Governor's proposed elimination of some state boards and commissions, here are additional details:
But what seems lost on everyone, except maybe Secretary of Transportation Paula Hammond, is the negative impact on state fuel tax revenues. During the House Transportation Committee (about 1 hr 13 min) hearing yesterday, Rep. Brad Klippert asked this question:
I would just like to share my confusion. We keep talking about these Vehicle Miles Traveled. I went to a transportation breakfast on Friday morning, and I heard the transportation secretary s!
ay when we shut down Snoqualmie Pass on I-5 due to the weather we lost a lot of state revenue from the gas tax and quote, I heard her say "it would have been nice if people got in their vehicles and drove around in circles so we would have got the money from that gas tax." What do I tell my constituents in Eastern Washington, reduce you vehicle miles traveled or keep driving so we get money from the gas tax?
To which Secretary Hammond responded this way:
And that’s the dilemma we are in right now. What we want to do is we need the revenue from the gas tax in order to pay for our transportation costs both in terms of safety, preservation, maintenance and everything else. In addition to that, in terms of our responsibility, in terms of road congestion, and emissions and all of these other components, the more people drive, I mean, we want people to drive less. So it is clearly a message, a mixed mess!
age that we deal with every day. And we need to find the balan!
In other words, the state policy to limit VMT doesn't make any sense. Our research shows that if the state is able to achieve its first target of reducing VMT, state gas tax collections will fall 10.2% ($1.5 billion) by 2020. And this is on top of the most recent Transportation Revenue Forecast that shows state fuel taxes are already over committed by $1.5 billion through 2023.
Most think that tolling will eventually replace the gas tax. But a policy of reducing VMT for drivers, while simultaneously adopting a primary revenue stream that relies on driving, guarantees the state will fail at one or the other.
Joe Copeland’s criticism (Sunday P-I, 2-8-09) of our recent study of the state-mandated home warranty bill misses the main conclusion of our analysis. The bill’s primary effect would be to create a new way for trial lawyers to file lawsuits against homebuilders, exactly the opposite message state lawmakers should be sending to the depressed housing market. All builders, even the most scrupulous, will have to buy more insurance to guard the increased legal threat, and pass the cost on to homebuyers. Increasing the potential for lawsuits introduces more uncertainty among buyers and sellers, at a time when the real estate market desperately needs greater predictability and confidence. Besides, if the purpose is to protect consumers, passing a bill!
to boost business for trial lawyers won’t help. The consumer complaint rate against building contractors is only 1.5%; the consumer complaint rate against lawyers is 7%.
So said Governor Gregoire this morning as she announced her reform package for bringing state government into the 21st Century.
It is a good first step.
Here are some of the details from the Governor's one-page summary:
1. Reduce the size of the bureaucracy The
proposal would eliminate more than 150 boards, commissions, and
advisory committees and consolidate several agencies, including the
merger of the Health Care Authority and the Department of Retirement
Systems. All 470 of the current boards were created with the best
intentions, but often make it more cumbersome and costly to serve the
people of the state.
More than 50 boards will be eliminated immediately by executive order.
Another 100 will be repealed through legislation, some as of June 30, 2009, and others by June 30, 2010.
Other mergers include the Department of Archeology & Historical Preservation into State Parks.
2. Deliver 21st century customer service Washington
has been a national leader for years in using technology to serve
customers – for example, nearly 40% of license tabs are renewed online
– but we can do much more to make sure our citizens have the same 24/7
online convenience when they deal with government that they do for the
rest of their daily business, like online banking and booking airline
Expanded online access and availability of mobile service units in rural communities.
instruction through community and technical colleges, where online
course-taking is proving the instructional equivalent to four
Easier use of credit and debit cards in transactions with the state
3. Streamlined government operations The
state will consolidate similar functions and cut government’s internal
red tape for services needed by all agencies, and begin the groundwork
to set the stage for major changes in the future.
government central-service functions (personnel, property management,
IT support, etc.) so agencies can focus more effort on their core
Transfer Department of Licensing fuel tax program to the Department of Revenue
Merge Eastern and Western Washington historical societies
Not announced at the press conference is a new statewide
performance review to be done at the direction of the State Auditor.
Demonstrating the importance of this effort, the Governor is allowing
her GMAP director, Larisa Benson, to switch over to the State Auditor's Office to work on the statewide performance review.
This week, the Senate will again hear testimony on the state's proposed cap-and-trade legislation, designed to reduce greenhouse gas emissions. In the first round of hearings, there was a great deal made about the potential economic costs and benefits of cap-and-trade. Setting those aside for the moment, there was an assumption that,whatever the cost, cap-and-trade will work to reduce CO2 emissions. In fact, the evidence shows that it is unlikely to do so.
Ecology Director Jay Manning testified twice before the Legislature this year that Europe was likely to meet its CO2 reduction targets using the cap-and-trade system under the Kyoto Protocol. A quick look at the data from Europe shows this is not true. The most recent data, found on the EU Environment Agency’s web page, show that the emissions reductions they have achieved under cap-and-trade are almost nonexistent.
First, while the Kyoto Protocol measures emissions against 1990, the agreement was signed in 1997 and has been in effect since then. Emissions reductions prior to 1997 are due to other factors including the collapse of the communist bloc and the economies of E. Europe in the early 90s and the UK’s switch from coal to natural gas in the early 90s. Thus, cap-and-trade is only responsible for emissions reductions since 1997. From 1998 to 2006 (the most recent year for which data is available), emissions of greenhouse gases have declined only 0.42%. Nearly 90 percent of CO2 emissions in Europe occurred before Kyoto was signed. The note below, which highlights this point, is taken from the EU report.
Second, for Europe to meet the goals it would require a sudden reduction of 5 percent in CO2 emissions during the final five years of the protocol (i.e. from 2007 to 2012). As you can see in the chart below, following existing measures, Europe will fail to meet the targets. Adding “additional” measures gets them close but still fails. Only when Europe aggressively pursues carbon offsets from China and elsewhere do they meet the target. Ironically, the EU recently tightened the rules on offsets, meaning that such offsets are likely to decrease, not increase.
Additionally, as is evident, the 5-year average of emissions, represented by the black line, would leave Europe with emissions only slightly below 1990 levels, missing even the projections for the existing measures. Only a sudden downturn not evident at any time up to this point would leave Europe in compliance. The argument that EU is on track to meet their goals is wishful thinking at best. There is no reason to believe that the WCI cap-and-trade system would be any different.
Finally, as a result of the failure of Kyoto in Europe, countries are facing a large penalty,on the order of $46 billion. This cost will be paid by the economies and taxpayers of Europe.
Put simply, cap-and-trade has not lived up to its promise and alternatives are needed. Whatever you believe about the economic merits or disadvantages of cap-and-trade, if it doesn't work, why would we adopt it?
Washington Policy Center has long asked that policymakers rethink the mandate-heavy system we find ourselves in today. Why? According to the SBEC:
ditional negative factors in the health care equation are government mandates and regulations. For example, some elected officials think it is a good idea to mandate that insurance companies provide certain kinds of coverage. But each mandate and regulation comes with added costs. No matter what the intentions of elected officials or policymakers have been, government intervention in markets -- including regulations and mandates -- comes with costs."
The SBEC rated states in five areas 1) health care regulation: "Pay or Play" mandate, 2) Health Savings Accounts, 3) Guaranteed Issue for Self-Employed Group of One, 4) Community Rating and 5) Number of Mandates.
I'm guessing this report won't be touted by too many people in Olympia.
On Wednesday the House passed out of the Commerce and Labor Committee an increase to Unemployment Insurance benefits (HB1906). If enacted, the bill would provide a temporary increase in unemployment benefits by adding $45 to the weekly benefit amount and make $155 the minimum amount payable weekly. Washington already has the 5th highest UI payments in the nation, and the 2nd highest UI taxes in the nation.
This is a part of the state's "economic stimulus" package some policymakers are pushing as an attempt to get our economy back on track. Having just experienced a very large increase in the unemployment rate (6.3% in November to 7.1% in December) it is natural for policymakers to assume that raising UI benefits to those who have recently been laid off will help keep the economy flowing. The rational is that increased benefits will be passed on through the economy in the!
form of rent, groceries, consumer goods and entertainment. This is referred to as the "multiplier effect" -- a dollar of benefits results in more than $1 in economic good.
Unfortunately, this is misleading. What is not being said is that UI benefits, while perhaps causing a "multiplying" effect on the back end, also reduce economic growth on the front end, thus negating any true economic stimulus strategy. UI benefits are simply redistributed dollars. Employers pay UI premiums, which results in a loss in opportunity cost. This is forgotten because UI premiums have been around for so long that no one remembers what that money could have gone to instead of paying for UI. But UI is here to stay and the sentiment is that employers should help pay for a social safety net the public wants.
But this isn't a discussion about UI. This is a discussion about the potential benefits that increased UI benefits will or won't have on the greater ec!
The legislature's plan of drawing down our su!
bstantial UI reserve fund ($4 billion as of December '08) makes sense. Similar action was taken with the Workers' Compensation fund last year, which resulted in a six-month partial rate holiday for workers. But it is also a gamble. The fiscal note attached to one of these bills shows that the state is calculating these higher UI benefits at a cost of about $180 million over the 2009-11 biennium, but they assume a 7.5% unemployment rate. Hopefully, the rate won't break the 7.5% mark, but if it does, and stays above that level for an extended period of time, that's where the danger comes in. That would result in needing to shore up the UI trust fund with higher UI premiums charged to employers -- thus making Washington state an even more expensive place to do business (see above about our rankings).
The bottom line is this UI move by Olympia is a gamble and may work out for the thousands now on the rolls of the unemployed in the short term. But passing t!
his off as true economic stimulus, something that is supposed to actually grow the economy as opposed to government, is disingenuous.
A stimulus package too often reflects the view that government simply spending more dollars, through public benefits or public works, will cause a bow wave of spending that will lift us out of the doldrums. Growth in the Gross Domestic Product (and therefore State Domestic Product) can only be increased through a rise in productivity and growth in the private sector. Increasing the cost of government does not accomplish this, because government relies on funding itself through the extraction of taxes, which is private capital removed from the market.
Expect to hear more about the state economic stimulus package on the capital budget side of things in the coming days (e.g. Is giving the State Conservation Commission $10 million for a livestock nutrie!
nt program really economic stimulus?).
"Within a span of 13 months, we had two 100-year floods,” [Gov. Gregoire] said, evidence of climate change. - Gov. Gregoire, quoted in TVW Capitol Record, January 29, 2009
"President Obama may be in the White House, but we're not out of the woods yet! The wheels are falling off the old economy, I-5 has been closed by floodwaters 2 years in a row... Governor Gregoire has just introduced a bill to cap and reduce global warming pollution and put Washington at the forefront of building a new energy economy." - Kerri Cechovic, Environmental Priorities Coalition, e-mail to supporters on the need for a cap-and-trade bill to address climate change, February 2, 2009
"How many times have you heard that severe windstorms and heavy rains will increase in the Northwest under global climate change? The truth is, there is no strong evidence for these claims and the whole matter is being actively researched. Some portions of the Northwest have had more rain and wind during the past decades, some less. And initial simulations of future Northwest climate do not suggest heavier rain events." - University of Washington atmospheric scientist Clifford Mass, Seattle Times editorial, January 13, 2009
As both federal and state policymakers debate the merits of various economic stimulus packages, it is refreshing to see the role technology is playing. No, I'm not talking about buttressing our technology infrastructure, as Obama has mentioned. I'm referring to the technology that allows average Americans to keep tabs on the national stimulus packaged.
StimulusWatch.org is a good site that details the long list of projects people are asking the federal government to fund. The site shows just how many people are confusing economic stimulus with earmarked projects. U.S. Budget Watch provides a detailed description of government actions taken to deal with the recent financial and economic turmoil.
Of course, national news outlets are keeping their websites updated with real-time technology as stimulus proposals shift in !
the proverbial political winds. Of course, a billion here, a billion there... (check out the Wall Street Journal, CNBC,Washington Postand almost any other news site).
For Washington state, we're compiling Washington Policy Center's stimulus analysis on StateStimulus.org. This new site will be a one-stop-shopping site for WPC analysis on the state stimulus, principles that both state and federal policymakers should take into account for putting together stimulus packages, and links to external reports that we think will be useful during this protracted debate.
Over the next couple of weeks, as state policymakers flesh ou!
t the details of infrastructure projects and other methods to !
infuse the state economy with liquidity and jobs, we'll do our best to make sure their efforts stay on track towards truly stimulating our economy. We can't afford to waste billions of dollars we don't have on pet projects and gambles. Stay tuned for more on this issue, because our economy sure isn't recovering any time soon.
About two weeks ago I wrote about how King County's 1% MVET increase to pay for the tunnel didn't have anything to do with replacing the Viaduct. It was simply to pay for expanding mass transit in King County.
Now the question is how the legislature will react to this news. King County needs legislative approval to raise car tabs, in this case, about $75 per car, per year. I would suspect this is unlikely given the voter approved initiative to limit car tabs to $30 and the subsequent state legislati!
on also limiting car tabs to $30.
As of today, I have not seen a bill that would grant King County this authority.
So how will this impact the preferred option of replacing the Viaduct with a deep bore tunnel? It should have no impact at all. The MVET increase in King County was to pay for transit service. In fact, one could argue that it unnecessarily increased the price tag of the Viaduct. A cynic could also argue it was a political bone to buy support from Ron Sims and some of the special interest groups on the stakeholders committee.
“Closing our state’s multi-billion dollar budget gap required making
many tough decisions,” Gregoire said. “This exercise gives people an
important understanding of the difficult choices our state government
must make when dollars are scarce.”
The interactive tool will allow users to change spending levels in
several policy areas until the budget gap is eliminated. As users click
through the calculator, they’re encouraged to keep an eye on the bottom
line to see how their choices affect the budget.
“With this budget calculator, you may find different priorities among
various programs,” Gregoire said. “Your feedback is important. If you
don’t like a budget decision, I want to know how you will fix it. What
would you sacrifice instead? The budget is a work in progress, and my
proposal is the first step in a long process that will continue in the
Legislature in the coming months.”
After a user has created a balanced budget, the user can submit personal budget ideas to the governor.
Last November WPC encouraged the Governor's office to make available a resource for citizens that would allow them to build their own budget by “purchasing” items from the state's Priorities of Government (POG) list to see the tradeoffs and help focus their budget recommendations to the Governor and legislators.
Although the Governor's calculator does not allow users to make purchases at a detailed level it does provide important information on the types of activities the state is spending money on.
Last Friday, the House Ecology and Parks committee heard testimony on HB 1718, which is 159 pages of ways we can reduce greenhouse gases, including growth management, restrictions on transportation, green buildings and other new regulations and fees.
We outlined a number of concerns about the bill, specifically that the green buildings elements of the bill are likely to be ineffective and that energy efficiency improvements are best made by families and businesses rather than mandated from above.
On the other hand, Miguel Perez-Gibson from Climate Solutions testified in favor of the bill. I can only describe his comments as non-serious. He talked about the evidence of climate change and the need for action. And what did he cite? Our recent record snowpack? Snow in Dubai or London? Recent downward trends in worldwide temperatures? Nope.
He said that evidence could be found in the Sierra Nevadas where rainfall was one-third normal this year. This is not a credible comment from anyone who claims to be serious about the issue of climate change. In any given year we can cite parts of the planet which are unusually warm or unusually cold. There are always places where rainfall is above normal and those where drought is present. Cherry picking data is the tactic of those who will grasp at any piece of evidence, no matter how unscientific.
Last year, KC Golden of Climate Solutions cited the fact that children were "insisting on solutions in a clear voice" as a reason to take action on climate change. Now, Miguel Perez-Gibson cherry picks one piece of data as a reason to demand action. Either the folks at Climate Solutions don't know any better or they feel they can simply get away with these fundamentally flippant comments because thoughtful arguments simply aren't being demanded.
Last week Andrew Garber wrote a story for The Seattle Times on the Governor's request for projects that the state stimulus package may eventually fund. I think that the article revealed what is becoming an important debate on the national scale, and should be talked about as policymakers in Olympia start hashing out the details of a stimulus package -- what is economic stimulus?
The story linked to an Office of Financial Management database that listed the projects by type and locale. Quite the good read. But the important point the article and OFM database shows is that most people (policymakers and the general public) are misconstruing economic stimulus with pork barrel projects.
Traditionally, pork barrel projects are the infrastructure projects that a representative lobbies for on behalf of their own district. This is where "bringing home the bacon" comes from. I don't think there's anything inherently wrong with an elected representative trying to get the best deal for his or her district. But as the OFM list clearly shows, most of these projects are just that, projects. These will not stimulate the economy in the long run, and will only help those in the construction industry in the short run. Some projects may have long lasting benefits to the region but others will only serve to temporarily employ some workers while using government sp!
ending to do so and providing little public benefit.
all of this, and more, is being categorized as 'economic stimulus.' You saw this happen on the national leve and the outrage was quite severe as the U.S. House of Representatives considered including millions of dollars of funding in the package for sexually transmitted disease prevention and new computers for government agencies that have little to do with regulating or dealing with the economy. Likewise, there is funding for student-loan programs, affordable housing assistance, $50 million for the National Endowment for the Arts, $75 million for anti-smoking programs, and lots more. Many of these may be good projects and worthy of taxpayer dollars (all the while borrowed) but none of them should honestly be categorized as having anything to do with growing the economy.
Oh, and the critical infrastructure that the stimulus was suppose to target? It received about $43 billion in the package (about 5%).
Columnist Mark Steyn had a good quote on the matter:
"Congress, meanwhile, is behaving
disgracefully, magically transforming pork into "stimulus" by sticking
another three zeroes on the end."
If infrastructure were so important, as Congress claimed, they should have started by quickly passing $50 in infrastructure spending. Instead, they chose to increase that figure by 1,600% and spread it around various industries and pet projects. Granted the Senate will tinker with the package, but it won't look much different, overall, from the House's version.
The lesson here for Washington state policymakers should be that our economic stimulus cannot turn into a pork-ridden piece of legislation that tries to make everyone happy while having little to no effect on growing the economy -- which is what economic stimulus is truly about.
The largest and most difficult task facing lawmakers this legislative session is building the state’s 2009-11 operating budget. As of the November revenue forecast, revenues are projected to increase by five percent, $1.4 billion, in the next biennium, but the planned increases built into the existing budget result in a projected $5.7 billion shortfall.
Perhaps most interesting, is this is the second time the SAO found ST breaking the law on the same issue. And there is nothing to stop the agency from doing it again.
While the audit proc!
ess is valuable, there are limitations. The auditor does not have (nor do they probably want) enforcement authority. And the AG’s office is the state’s attorney, not the people’s attorney.
This shows a flaw in our system that allows agencies to continue breaking the law if they disagree with the auditor’s findings. One solution is to create an office of the inspector general. The state of Illinois has such an agency:
Complaints received by the Inspector General’s Office are reviewed to determine if the allegations constitute a violation of the law by an individual under the jurisdiction of the Attorney General. If so, the allegation is investigated by a member of the Inspector General’s Office. Once the investigation is concluded, and if a violation is found, a report of the investigation is completed and provided to the Attor!
ney General. In that report, the Inspector General may include!
recommendations for personnel actions or recommendations for addressing any violations uncovered during the investigation. The Inspector General may also file a complaint before the Executive Ethics Commission. In addition, the Inspector General may refer cases for criminal prosecution.