Washington Policy Blog

Sightline's critique of new taxes gets numbers wrong

March 3, 2010 in Blog

Eric de Place over at The Sightline Institute took exception to our recent Legislative Memo, “Tripling Hazardous Substance Tax Would Boost Gas Prices.”  In particular de Place claims we were “obviously” wrong in our analysis in two specific areas; claiming that the proposed tax would increase gas prices four to six cents per gallon and in our data regarding the total amount of pollutants entering the Puget Sound through stormwater.

But a closer look shows that the criticism is a bit reckless.

Sightline claims we are wrong to say that the proposed tax “would increase gas prices by four to six cents per gallon.”  De Place writes:

“…it’s obviously false to anyone who bothers to perform some simple arithmetic. All you need to do is multiply the tax increase (1.3%) by the wholesale price of gasoline (about $2.30).... the correct answer is that the impact would be less than 3 cents per gallon." 

There are several problems with Sightline’s over-simplification of the math.  First, he conveniently ignores the recent trends in wholesale gas prices.  According to the U.S. Energy Information Administration(EIA), the average wholesale price for gasoline in 2008 was $2.69/gal on the West Coast for all gas products.  During 2008 the wholesale price topped out at $3.63, which would equate to a 4.7 cent tax increase at the pump under the current proposal. He conveniently picks the low point of recent gas prices for his estimate.

Second, while it may be true that 2008 numbers represent the current high-water mark in wholesale gas prices, it cannot be ignored that oil industry is a volatile market and most predict prices will increase in the near future. Many agree with this assessment, including, ironically, de Place.

One year ago he argued that the EIA has historically underestimated the price of gas.  In his blog post, entitled, “Future Gas Prices,” de Place bemoans the low EIA estimates of gas prices.  In late 2008 the EIA predicted that prices would top out just over a $3/gal, well under the $4/gal mark that prices actually reached in 2008.  De Place at the time wrote:

“as anyone not living under a rock is aware, the average retail price of gasoline is currently above $4 per gallon….the EIA also publishes a "high price" forecast, just in case something untoward should happen. Boy, I sure hope that high price forecast doesn't materialize because it shows future gas prices getting up almost, but not quite, to $4 a gallon by... wait for it... sometime around 2030.”

Finally, de Place points to the state’s Department of Revenue (DOR) as the definitive authority on price increases based on the proposed tax.  He notes:

 “Not surprisingly, that's also what the state's Department of Revenue says: 3 cents, at most.”

However, an email sent by Drew Shirk, DOR’s Legislative and External Affairs Liaison said, “We estimate that every one percentage point increase of the hazardous substance tax rate will likely result in about a 2.5 to 3.5 cent increase in the retail price/gal.”  That means, at least before politics took over DOR’s gas price projections, the tax proposal would raise prices at the pump by as much as 4.6 cents/gal, not the 3 cents they are now predicting.

The second point questioned by Sightline is our analysis of the Department of Ecology’s re-calculation of pollutants entering the Puget Sound through stormwater.  They claim we are guilty of “cherry-picking” our numbers and misrepresenting the actual amount of pollutants that enter the Sound.  Here too, de Place is wrong in his criticism.

Our analysis of Ecology’s re-calculation highlights that an error was found in the first two phases of the Department’s toxic loadings reports.  In our Memo we note that David Dicks, Director of the Puget Sound Partnership, wrote in July of 2009 that:

“Nearly 150,000 pounds of toxic chemicals – including petroleum, lead arsenic and fertilizers – enter the Puget Sound each day.”

In addition, this is the same claim that Director Dicks and others made when the Partnership released their Action Agenda in December of 2008.  At the time, the claim of 150,000 pounds represented the low end of the range based on phase two of the toxic reports.

However, after re-calculating the toxic loading reports, the claims regarding the amount of toxics entering the Puget Sound on an daily basis has been revised down from the 150,000 pounds to 39,000 pounds.  The re-calculation was published in January of 2010.  Our use of 39,000 lbs/day (14.2 million lbs/year) is consistent with what proponents, like Washington Conservation Voters and the House Democratic Caucus, have been using all along.

Sightline is correct that we could have better clarified our use of the table from Ecology’s re-calculation.  In our Memo we wrote, “The table below shows the change in pollutant loading to the Puget Sound after the recalculation.”  What we should have said was the table shows the re-calculation of oil and grease in the Puget Sound.  This was a minor oversight on our part, but one that should have been caught and will be corrected.

That does not change the fundamental reality, however.  Oil and grease represent more than 90 percent of pollutants, so the revision of those numbers is a dramatic and wholesale change of the data. Sightline’s critique is tantamount to saying, “yeah, but what about the other nine percent?”

None of Sightline’s claims attempt to undermine the basic argument we made.  The truth is that hundreds of millions of dollars are spent on stormwater improvements today and the state’s roadmap guiding this work was flawed and has been re-calculated, drastically reducing the amount of toxics entering the Puget Sound.

Policymakers have a choice.  Based on current funding levels and the scientific record, lawmakers should reevaluate their pursuits to increase the tax burden on citizens and business of the state, until we can be certain that the costs are appropriate to the challenge.

As for Sightline’s claims that we are in error in our analysis, we have in the past enjoyed an open dialogue and communication with them.  It is too bad they chose not to use the open dialogue to correct such a minor oversight.  Had they e-mailed their concerns or questions, we could have addressed them. Instead they shot first and missed the mark.  As a result, it looks as if it is Sightline is the one “cherry-picking” numbers and playing politics to avoid the truth.

Feds grant WA $84 million for broadband expansion

March 2, 2010 in Blog

The U.S. Department of Commerce's National Telecommunications and Information Administration announced today a grant of $84 million to the Northwest Open Access Network (NoaNet) "to deliver new and enhanced broadband capabilities to some of the more remote regions of the state by adding 830 miles of figer and eight new microwave sites to their existing high-speed network."

Tolling I-405 bill DOES convert general purpose lanes

March 2, 2010 in Blog

During the public hearing on SHB 2941, which would toll I-405 between Bellevue and Lynnwood, the first person to speak on the bill was Rep. Judy Clibborn, chair of the House Transportation Committee.

As the prime sponsor, she obviously spoke in favor of the bill. In a preemptive strike against those (including WPC) who argue the bill would circumvent the I-405 Master Plan adopted in 2002, Rep. Clibborn explicitly claimed the bill would NOT convert General Purpose lanes to toll lanes. Rep. Clibborn went on to admit that if this were true, this bill would have trouble passing.

WSDOT representative Craig Stone tried to substantiate Clibborn’s claim by stating the Master Plan did include language directing WSDOT to continue looking at managed lanes. He simply read the following sentence from the Master Plan’s record of decision and did not add anything further:

“The proposed I-405 free!
way design includes a buffer separating the general purpose lanes and the high occupancy vehicle (HOV) lane to provide safer and more reliable HOV and transit operations within the corridor. This design allows for further consideration of expanded managed lanes operations on I-405, which could include managing up to two lanes in each direction. “

The I-405 Master Plan was adopted in 2002 and plans for up to two additional lanes in each direction along the entire I-405 corridor. Some of the projects, including the new lanes between Bellevue and Lynnwood, were funded with the Nickel and TPA gas tax increases in 2005 and 2007. In fact, the WSDOT has already built a portion of the lanes just north of Bellevue to fix the infamous “Kirkland Crawl.” This mile-and-half section is open and being used by general purpose traffic. The WSDOT is also currently extending the lanes further north.

SHB 2941 would convert these existing lanes and the remainder of t!
he yet-to-be-built gas tax lanes to HOT lanes.

The claim!
that SHB 2941 does not convert GP lanes to tollways is just wrong.To repeat:

  • The new lanes are already paid for with the Nickel and TPA gas tax projects approved in 2005 and 2007 and the gas tax projects on I-405 were always intended to be general purpose.
  • WSDOT has already built a portion of the new lanes and they are being used by general purpose traffic.
  • All of the numbers and assumptions in the I-405 Master Plan call for the new lanes to be general purpose.
  • If SHB 2941 fails, WSDOT would continue building the new lanes and they would be general purpose. 

So it just seems kind of silly to me when policymakers and WSDOT officials claim they are not taking GP lanes. There is no doubt this bill converts general purpose lanes.

State's unemployment rate now at 9.3%

March 2, 2010 in Blog

The Employment Security Department announced today that Washington's unemployment rate for the month of January now stands at 9.3% percent. 

The state unemployment rate stood at 9.2% (revised) for the month of December 2009, while nationally the rate remained at just under 10%. A year-over-year comparison shows that Washington has shed almost 108,000 jobs since January 2009. However, there was some positive growth for the first time in quite awhile.

Tolling I-405 bill passes Senate Committee with fatal amendment

March 2, 2010 in Blog

Yesterday, the Senate Transportation Committee held a public hearing on SHB 2941, which would toll I-405 between Bellevue and Lynnwood. The bill did pass committee with an amendment to allow HOV 2+ to use the lanes without paying the toll.

This amendment defies the WSDOT tolling study, which estimates the new HOT lanes could not accommodate the additional volume if HOV2+ were allowed. In fact, the very same amendment was rejected by the House.

I’m not sure if the two chambers will be able to work out the difference. Based on testimony against the bill, this may be more of a gesture to move the bill forward, while killing it at the same time.

Increase taxes to protect and save jobs. Really?

March 1, 2010 in Blog

The House finally released its revenue package today to the tune of $758 million in new revenue (really more like $858 million when you account for "anticipated budget actions"). 

It shapes up to resemble the Governor's proposal (mostly because it lacks a general sales tax increase) more so than the Senate's version. But I'll leave the budget minutia in the more capable hands of WPC's budget savant Jason Mercier

But how will these tax increases affect the business community? Along with the Washington Research Council, we have et="_blank">issued data that show the negative impact on jobs from increasing either the sales or B&O tax. If policymakers want $1 billion in increased sales tax revenue, they should be prepared for the loss of thousands of jobs over the next couple of years. 

But according to some analysts, the state should increase taxes even more in order to save more jobs. This comes from the Economic Opportunity Institute's Marilyn Watkins who wrote an op-ed in last week's Puget Sound Business Journal saying just that (subscription required for whole article).

She quotes former McCain economic advisor (who also advises President Obama) Mark Zandi's assertion that each $1 of government spending results in a $1.41 increase in economic activi!
ty. It's called the multiplier effect and it's somethi!
ng we've written about before (and here too). 

Watkin's assertion is that, due to the multiplier effect, the state should actually increase state spending. And to do that the state needs to increase its coffers, therefore, we should raise taxes even more than is being proposed.

Highway Trust Fund to Shut Down Monday; U.S. DOT to Furlough Workers Tuesday

February 26, 2010 in Blog

Highway Trust Fund to Shut Down Monday; U.S. DOT to Furlough Workers Tuesday 

federal Highway Trust Fund will shut down first thing Monday,
suspending all payments to state transportation departments, and four
U.S. Department of Transportation agencies are expected to furlough
employees beginning Tuesday after Congress was unable to reach an
agreement this week on legislation to extend surface transportation
authorization past its Sunday expiration date.

Larry Ehl, Washington State DOT's own federal liaison has more here and here.

State Auditor releases performance audit work plan

February 26, 2010 in Blog

While lawmakers debate ways to balance the state budget, State Auditor Brian Sonntag released today his performance audit work plan to help identify savings and efficiencies. According to the plan:

This work plan identifies 30 state government programs and functions we plan to evaluate under the authority of Initiative 900 between now and June 2013.

This plan reflects a blend of near- and long-term audits of major state programs as well as shorter-term audits that will give policymakers ideas to consider as they work to meet the state’s financial challenges. They also reflect our goal of independently and objectively identifying opportunities for cost savings, efficiencies and improved customer service . !
. .

The following programs and functions have been selected for audit, review and further consideration.

Vulnerable Children and Adults
1. WorkFirst Program Effectiveness
2. Child Protective Services
3. Child Care Licensing & Monitoring
4. Foster Care Program Performance
5. DSHS Programs: Possible Gaps and Overlaps
6. Aging and Disability Services
7. Developmental Disability Services

Public Safety
8. Crime Victims’ Programs
9. Reducing Repeat Offenses in Corrections System
10. Community Supervision of Offenders on Parole

11. Purchasing Prescription Drugs
12. Health Insurance Coverage for School Employees
13. Detecting and Preventing Me!
dicaid Fraud

Student Achievement
14. Educational Spending Patterns
15. Intervention for Low-Performing Schools
16. Comprehensive Education Data System

Postsecondary Learning
17. College Student Financial Aid Programs
18. Workforce Development

State Government Efficiency and Effectiveness

19. Opportunities to Improve State Printing Services
20. Grant Management Program Effectiveness
21. Call Center Effectiveness
22. Opportunities to Improve State Procurement
23. Options for Property Management
24. Washington Management Service and Executive Management Service

Economic Vitality
25. Results of Federal Economic Stimulus Funding
26. Master Building Licensing Opportunities
27. Workers’ Compensation System

Natural Resources g>
28. Department of Fish and Wildlife Revenue Options
29. Forest and Fish Adaptive Management Program

30. Sound Transit Ridership Projections (part of local government performance audit work plan)

Additional details on each of these planned performance audits available here.

Seattle homeless advocate would rather cling to his comfortable prejudices than risk listening to alternative views

February 26, 2010 in Blog

During a recent TV appearance on the Seattle Channel I
learned first hand why radicals on the left consistently fail to connect with
the public – they don’t listen.

Earlier this month Seattle homeless advocate Tim Harris and
I appeared on C.R. Douglas’ high-quality City Inside/Out show on the Seattle Channel (on February
5th, at http://www.seattlechannel.org/CityInsideOut/videos.asp?program=3061006

Afterward, Mr. Harris wrote that I had seasoned the
discussion with my “anti-tax, government-solutions-to-poverty-always-fail,
there is no society, there are only individuals, and we should fear them”
message.  The problem is his description
doesn’t remotely reflect what I said.  Let’s
look at what I actually said.

Paul Guppy:  “To the
extent that the homelessness is being reduced…that is good news.  From a taxpayer point of view, the point of
view of the public, the community that wants this to be solved, to the extent fewer
people are living on the street, that’s progress in the right direction.” (in
the video at 15:40).

Tim Harris then said I’m the problem.  Tim Harris: 
“As long as this guy [pointing to me] is basically O.K. with the
structure to funding the ten-year plan, we’ve got a big problem,” referring to
Seattle’s End Homelessness in Ten Years program.  (at 19:31). 

Here’s what I said in response.

Paul Guppy:  “You cast
me as endorsing a public program, which I did not do.  Instead, what I’m doing is holding a public
program accountable for what it promises. 
So if a public program is taking tax money and saying to the public, ‘We
are going to end homelessness in ten years,’ then I think it is reasonable for
people to say, ‘What is the real result from that’.  I didn’t choose this approach, but since our
leaders have taken us down this path, I think the people of Seattle should
expect a real result from it.”

Paul Guppy:  “A lot of
homelessness is based on behavior, so without addressing the mental illnesses,
the substance abuse, the dependencies people have, simply providing them with
homes is not going to be enough…there are social services that go along with
the housing units, so it all has to be done together.” (at 19:55).

I don’t see how celebrating the progress of a government
program that is reducing homelessness can be seen by Mr. Harris as my having a
“government-solutions-to-poverty-always-fail” message.

And I don’t see how providing support services to address the
causes of homelessness can be seen by him as a “there is no society, there are
only individuals and we should fear them” message.

How could Tim Harris get it so wrong?  The reason is simple.  Radical advocates like him simply don’t
listen to others.  He would rather cling to
his comfortable, narrow-minded stereotypes than take the risk of actually listening
to someone with an alternative viewpoint.

House passes bill to toll I-405

February 26, 2010 in Blog

The state House just passed SHB 2941, which would toll I-405 between Bellevue and Lynnwood. The WSDOT estimates the average toll would be about $4 each way.

WPC completed an analysis on the bill: Tolling I-405 Needs a Closer Look
Here are the key findings:

• Defers some major policy decisions to the Executive Branch
• Fails to adequately compare tolled alternative to a no-build option or to the adopted
Master Plan for I-405
• Underestimates performance of general purpose lanes
• Likely increases traffic congestion in the non-tolled lanes
• Appears to allow toll revenue collected from drivers to be used for public transit
• Overestimates toll revenue bec!
ause of the state law to reduce how much people drive
• Jeopardizes the state’s ability to bond against toll revenue because of state law to reduce
how much people drive

There were three amendments proposed and all three were rejected. The amendments would have:

1. Allowed HOV 2+ to use the toll lanes without having to pay the toll. Currently the bill only allows HOV3+ to use the proposed toll lanes without paying the toll
2. Protected toll revenue to be used subject to the 18th Amendment
3. Prevented the conversion of general purpose lanes to toll lanes

The vote was largely along party lines (56 to 40), with four democrats crossing over to oppose it.

School Superintendents in Tacoma and in Rhode Island take steps to close failing schools

February 26, 2010 in Blog

Signaling that failure will no longer be tolerated, two school superintendents, one in Rhode Island and one in Tacoma, Washington, have taken steps to close underforming schools in their districts.  This means that principals and teachers at these schools will be replaced.  Last year, the Obama Administration's Department of Education informed education officials that $3.5 billion in School Improvement Grants would be available to school districts willing to intervene in the nation's lowest performing schools.  The Department has described four intervention models for turning around these schools, and 3 out of four of these models involve either school closure or replacing existing staff. 

The first story this week came from Rhode Island, where the school superintendent decided to lay off all the teachers at Central Falls High school, which has long been one of the most poorly performing schools in the state. One parent reported that his daughter's teachers had a nonchalant attitude and were not interested in putting in the effort necessary to prepare his daughter for college.   This article describes how school administrators first attempted to require teachers to work harder, but the teacher's union blocked these attempts.  So administrators were forced to take the next step:  school closure.  Now those teachers have lost their jobs.

This school superintendent in Rhode Island had the backing of his school board, of the state's chief education officer, and of the Governor.

The second story this week comes from the Tacoma School District, where Superintendent Art Jarvis has decided to intervene in four low-performing schools.  Hunt Middle School will be closed.  Giaudrone Middle School will be reorganized, so that half its teachers and its principal will be replaced.  The school will instead offer an International Baccalaureate Program, and high-quality, high-rigor college prep program.  Stewart Middle School will also be reorganized, with half its teachers and its principal replaced, and a Science Technology, Engineering and Science program offered instead.  Jason Lee Middle School will retain its new principal, as reforms there have already been started. 

It appears that the teachers union in Tacoma has collaborated with the Superintendent Jarvis in making these decisions.  This is gratifying to see. Schools exist to serve the students, not the adults. 

Most gratifying, though, is the example now set for Washington State by Superintendent Art Jarvis. Many more schools need to be closed and reorganized in Washington. According to the State Board of Education 13% of Washington's schools are persistently underperforming and 70,500 students are trapped there.  More superintendents in Washington need to follow his example.


Interstate purchase of health insurance would cut costs, insure more

February 26, 2010 in Blog

In the wake of yesterday's Health Care Summit, and the lack of progress towards any sort of compromise on the issue (as if we expected something different) comes a reminder that while the big guys duke it out back in D.C., there are still people waiting for reform.

Some of those who would benefit most from meaningful health care reform are the owners and employees of small businesses. The number of small businesses that can afford to provide health insurance to their employees continues to drop and is at a level that is far less than larger businesses. 

Even though the issue is grandiose, there are small steps that policymakers on both sides of the aisle have talked about -- even here in Washington state. One of the steps is to allow for purchase of!
health insurance across state lines
. This would help create more competition and drive prices down. 

Alan Reynolds of the Cato Institute points out that up to 11 million previously-uninsured Americans could gain health insurance through such a move, and without costing taxpayers anything.  

Why isn't this happening already? Because, according to Reynolds,

"Because the main barrier to choice and competition has nothing to do with 'market dominance' or the health insurers' anti-trust exemption that Congress is targeting as this week's scapegoat. Rather, much of the 'national' access-to-insurance problem is that states like New York, New Jersey, Massachusetts and West Virginia impose burdensome mandates and regulations that push premiums sky-high."

HB 3015, sponsor!
erning health savings accounts (another great way to
control medical costs and shift towards consumer-oriented health care) to incorporate the language from 3015. Look for further debate on the issue of both HSAs and interstate purchasing of health insurance. 

"Ghost bill" fleshed out

February 25, 2010 in Blog

A title only bill introduced, subject to a public hearing and adopted by the Senate Ways and Means Committee, all on the same day, for the first time has actual text.

Here is the description of the effect of the amendment to SB 6853:

"Establishes the intent of the legislature that tax preferences be reviewed in the same manner as budget expenditures. Sets standards for what should be included in future tax preference legislation. Establishes a task force to provide a process for the legislature and governor to review and consider tax preferences. Increases the makeup of the Citizen's Commission on the Performance Review of Tax measures, and adds criteria to be used by the C!
ommission in evaluating tax preferences. Requires the Governor, when submitting tax preference requests to the legislature, to offset the cost of any preferences by reductions or eliminations of existing preferences. Requires the department of revenue to provide the tax exemption report every two years rather than every four years."

Since the bill has already been passed to the Senate rules committee it is unclear if the public will have an opportunity to participate at a real public hearing or if this amendment will simply be enacted on the floor of the Senate.

Additional Information
What does legislative transparency look like?
t bill on taxes introduced

Olympia budget writers want families to leave public education to save the state money

February 25, 2010 in Blog

Sponsors of a House budget bill, HB 2824, want to cancel a public education program that serves 7,100 students across the state.  Beginning in the fall of 2010, all funding would be ended for Alternative Learning Experiences for students in kindergarten through sixth grade.  Alternative Learning Experiences includes services for online education, at-risk children and parent partnership programs.  Program funding would continue for now for students beyond the sixth grade.  The bill was introduced by Rep. Kelli Linville (D-Bellingham).

Bill sponsors estimate canceling the program for K-6 students would save $22,745,000.  Most of the savings comes from the sponsors’ assumption that at least 75% of the students expelled from the program would leave public education and enroll their children in private schools or homeschool them.  Bill sponsors expect only 25% of students removed from the program to continue in public education.

Research by Washington Policy Center finds that online public education programs, like Alternative Learning Experiences, are an effective way to provide public education to hard-to-reach children not easily served by traditional brick-and-mortar schools.  Such children are often handicapped, live in rural areas or have special circumstances such as:

  • Students with long-term health problems or physical disabilities
  • Students with particular psychological or emotional needs
  • Students pursuing high-level training in sports or the arts (Olympic speedskater Apolo Ohno attended high school online)
  • Students who do not perform well in traditional schools
  • Students who have dropped out of high school or are at risk of doing so
  • Homeschooled children taking advanced classes
  • Gifted students who need more challenging coursework
  • Slower students who need extra help
  • Teenage students who have jobs or are caring for a young child at home

The research found that in one online program, 22% of students had previously dropped out, and that 13% had been previously homeschooled.  Most states have growing online education programs, and more than 700,000 students nationwide participate in online learning.  The study showed that online education is popular with parents, and has been successful in keeping kids in school and in keeping families involved in public education.

The findings indicate that ending funding for the K-6 Alternative Learning Experiences will likely add to Washington’s drop-out rate, pull more families out of public education, and reduce education opportunities for the state’s hardest-to-reach students.

For more findings see “Learning Online: An Assessment of Online Public Education Programs,” by Liv Finne.

Legislature sidesteps transparency and process

February 25, 2010 in Blog

With the Governor’s signature of SB 6130 the only remaining voter protection from Initiative 960 is a provision that requires citizen notification of proposed tax increases along with a ten-year cost protection.  Despite this legislative requirement, policymakers in Olympia are moving so quickly that often the analysis required is unavailable for review by the public.

Case in point, HB 2816 dealing with gas taxes on exported fuels, was passed by the House Transportation Committee before the ten-year cost analysis could be provided.  The Committee passed the substitute bill on February 8th. 

In response, the state’s Office of Financial Management released the following cost analysis of SHB 2816 on February 24th, stating, “Cash receipts from this bill cannot be determined due to technical problems with language in some sections of the bill.”

Of course this is just the latest in a series of maneuvers in Olympia to side-step transparency.  To see other examples read our previous post on Constitutional Sunshine.

One lesson that we can learn from the actions coming out of legislature this year is they appear to have little regard for transparency or process.