"As states and school districts across American begin drawing down the first $44 billion in education funds under the American Recovery and Reinvestment Act, they should bear in mind the core levers of change under the law. In order to drive reform, we will require an honest assessment by states of key issues like teacher quality, student performance, college-readiness and the number of charter schools."
Arne, let me tell you something you already know: the number of charter schools in Washington State is ZERO. Only eight other states have banned charter schools from their borders.
And let me also tell you that the big new education reform plan which just passed by the legislature, HB 2261, is not a charter school bill, but just the opposite. It adopts a one-size-fits all prototype school model and promises that work groups formed by the bill will address issues of teacher quality and student performance at some future time.
The only way to get charter schools in Washington State, Arne, is to withhold federal funding. Then, perhaps, the legislature will sit up and enact real reform.
If you care about reducing traffic, then you may question how Washington policymakers propose to spend our portion of the $5 billion in stimulus funding.
In order for the various state and local agencies to receive funds, the governor must "certify" the project. In the process, the governor says each project "has received the full review and vetting required by law and that [she] accept[s] responsibility that such investment is an appropriate use of taxpayer dollars."
We could argue all day long about the appropriateness of some of these projects. But ever since the governor's Blue Ribbon Commission on Transportation identified about $150 bill!
ion in unmet transportation infrastructure needs, some of these certified projects may raise your eyebrows.
Island Co Bicycle Touring Enhancement Produce a map identifying bicycle touring routes on both Whidbey and Camano Islands. Improve shoulders along approximately 1400' of Crescent Harbor Road in front of Crescent Harbor Elementary School. Sign the route from Deception Pass Bridge to the City of Oak Harbor as a "Bike Route". $53,329
Lummi Nation Pedestrian Path Construct approximately 9000 LF of a shared bicycle pedestrian trail between Kwina road and Slater road east of Haxton way. $250,000
West Dayton Street Beautification This enhancement project will add vegetation and an irrigation system to the West entrance into the City of Dayton along US 12. $149,000!
Beards Hollow Overlook Design an!
d construct beach/ocean overlook at Beards Hollow on SR Loop 100. $100,000
LINK Transit Upgrade shop lighting Upgrade shop lighting. $50,000
In fact, I went through the list and found about $9.8 million dedicated to sidewalks, $4.7 million for trails, and whopping $77.7 million earmarked for vehicle replacement. Funding is the single largest obstacle in building/maintaining transportation projects, especially at the local level. With population projections expected to reach an additional 1.2 million people and traffic congestion expected to double over the next twenty years, could we not have found more important projects?
The Department of Revenue will have to dedicate 44 full-time equivalent employees to implement the policies.
General Fund B&O tax receipts will be REDUCED by $3 million and the Performance Audit account will be REDUCED by $67,000 due to reduced sales.
"The decrease in the Business and Occupation Tax, Performance Audit Account and Local Government Revenues is due to reduction in taxable sales due to the higher tax rate (elasticity). Elasticities were calculated based on Department of Revenue data."
"As a result of elasticity this bill will decrease local government revenues by $12.4 million in the 2010-2011 Biennium and $15.4 million in the 2012-2013 Biennium. In addition there may be negative impacts to local lodging taxes if their combined state and local tax rates will be above their statutory limits."
"The Department assumes, based on IRS information that approximately 370,000 persons in Washington who file for the Earned Income Tax Credit (EITC) will apply for a rebate under this legislation in Fiscal Year 2010."
"After consultation with the Department of Social and Health Services, the Department assumes that a high proportion of claimants will not have English as their primary language. This requires additional advertising outreach, forms translation, and additional language scripts for the automated phone application system to work most efficiently."
"Review of IRS information indicates that there is a higher than average error rate for EITC claims. This higher error rate will require added collection effort for claims paid in error. The Department has assumed that denied claims can be settled with minimal formal appeals. Should experience show otherwise, additional FTEs may be added in later fiscal years to handle the appeals caseload."
"It is estimated that costs of approximately $1,515,000 may be incurred in Fiscal Year 2012 as the Department continues to respond to taxpayers questions and submission of applications. No costs have been included in the fiscal note to administer the Working Families' Tax Rebate after Fiscal Year 2011. Current law requires specific legislative appropriations in each biennial budget for the program to continue beyond the 2009-2011 biennium."
US Transportation Secretary Ray LaHood sent a letter to all fifty governors today, reminding them that any federal stimulus money that is saved from lower than expected costs can remain in the state, but must continue to be spent on other eligible transportation projects.
Across the country, bids are 10-20 percent less than the engineer's estimates....Any Federal dollars that are not used for that particular project must be used for other projects consistent with the Recovery Act appropriation.
LaHood goes on to say:
Money saved from Recovery Act-funded highway projects, for example, may be used for transit and rail.
Compare and contrast the following quotes about the health care priorities of the proposed House budget. Both quotes are from the same lawmaker.
The first is from the March 31 House budget release press conference:
“I really am very proud that the decisions that we made as difficult as they were, were definitely responsible cuts and also again allowed us a body to rise to the occasion to make those difficult decisions.”
The second quote is from the April 17 hearing on a proposed sales tax increase and what might happen if voters don't approve the tax increase to supplement the proposed House budget:
“Make no doubt about it, people will die . . . If this is not in the voters' interest to pass this (tax) piece, people will die."
As for the proposed tax increase, according to these economists raising taxes during a recession will damage Washington’s economy and hamper economic recovery.
HB 2261, the big education reform plan which may pass the legislature soon, would increase the definition of Basic Education by adding 80 instructional hours, 24 high school credits, five more than the 19 currently funded by the state, all day kindergarten, early education for at-risk children, and other reforms.
Even if we had the funds to pay for HB 2261, none of these very expensive programs will improve student achievement in Washington State, unfortunately. The bill would support additional centralized, bureaucratic mandates which do not address or correct the reason for Washington's failing schools---that principals are not in charge of their budgets or staff. See the Washington Policy Center Education Reform Plan: "Eight Practical Ways to Reverse the Decline of Public Education."
Think about it: if we raise the $7-8 billion to pay for these programs, will principals have the power to allocate resources to the classroom to raise the effectiveness of the teachers? (Less than 59 cents of every public education dollar actually reaches the classroom and only 45% of public school employees are classroom teachers.) Will principals be able to give bonuses to hard-working teachers so as to create cultures of excellence to replace cultures of mediocrity? Will principals be able to replace ineffective teachers?
The answer to all these questions is NO. We'll have a much more expensive system and achieve the same abysmal results. More money is not the answer---the way we spend current education dollars must be improved. And decentralizing authority, not more unfunded mandates from Olympia, is what is needed in Washington State. Principals should be given the tools they need to reallocate resources to the classroom, improve the culture of their schools and raise the effectiveness of teachers.
HB 2261, the bill which passed the Senate last night, resembles Initiatives 728 (smaller class sizes and other reforms) and Initiative 732 (teacher pay increases). Here we have yet another expensive, unfocused education spending program without a revenue source.
This time, however, legislators stand poised to expand the definition of basic education to include a variety of additional programs, costing perhaps as much as $7 to 8 billion. The legislation provides no fiscal breakdown of the cost categories for this 50% increase to state spending on education.
Why would we expand the definition of basic education, when we can't even get basic education right?
HB 2261 sets the stage for shifting the blame for our failing schools to the taxpayer, even though the blame lies squarely with the legislature and with the schools themselves.
I can hear it now: the schools are failing because you (the taxpayer) won’t agree to an increase of 30-40% to your property taxes.
The astronomical $787 billion federal “recovery” package was back in the news this week as thousands of Washingtonians took to the streets across the state to protest among other things taxes, spending, and the federal bailout packages. According to the Washington State Patrol, the tax and spending protest was 5,000 strong in just Olympia – the largest rally by far of the year.
Although it may be of little consolation to these protesters, it appears a local Seattle company is beating the federal government to the punch in terms of helping shine a light on where the federal recovery money is going.
On March 31, Seattle-based Onvia launched Recovery.org, a site capable of tracking every dollar of federal, stat!
e and local Recovery Act spending in real time, according to company officials . . .
"We put up Recovery.org to do for the federal government what it is not doing for itself," Onvia Chief Solutions Officer Michael Balsam said. "We felt that we had an obligation to make this information available to businesses, taxpayers and the government" . . .
The next step, Onvia said, is to format the data so users can filter it by contractor, project type or federal agency; currently the information can be sorted based only on the geographical region of the project. Onvia also plans to allow citizens to download the data so they can create mash-ups, or overlay it with other information sources, such as census or crime statistics.
Next Wednesday, April 22, is Earth Day and we are celebrating in proper style. Join us at Rachel Carson Elementary School in Sammamish at 6:30 to see "Not Evil Just Wrong: The True Cost of Global Warming Hysteria," an excellent film about the costs of thoughtless environmentalism.
The film is the second documentary by journalists Phelim McAleer and Ann McElhinney. Two years ago they joined us as keynote speakers for our environmental luncheon when they showed clips from their first film, "Mine Your Own Business."
The film highlights the high cost of the ban on DDT and the millions in Africa and Asia who have died from malaria as a result. Two years ago, the World Health Organization, saying they could no longer ignore the science, approved the use of DDT as a tool against malarial mosquitoes. The film combines interviews with scientists, environmental activists and average citizens to raise concerns about the current wave of regulations and taxes being proposed to fight global warming.
You can see clips of the film at the Not Evil Just Wrong Youtube site or watch the preview below.
The private screening is the first in the Seattle area and is free. Please RSVP by calling (206) 963-3409 or lleveque [at] washingtonpolicy [dot] org">lleveque [at] washingtonpolicy [dot] org.
Since it is all the rage these days to through out rankings based on what national magazines say (especially Forbes) about ourbusiness climate as justification for policies that usually make running a business in this state more expensive, I say, we might as well expand this trend to other areas.
Forbes says that the loss of the Sonics put Seattle over the edge to gain this year's award. But not to worry, the Seahawk's 2006 Super Bowl tragedy, the Mariners lack of a World Series appearance, and only one national championship to speak of (1979 - Sonics) also contributed. We even beat out Cleveland, which is saying something.
But once again, I must point out the shortcomings of the Forbes ranking. Seattle actually has another national championship to its name -- that of the 1917 Seattle Metropolitans' Stanley Cup victory. It was the first time an American team had won the St!
anley Cup. Of course, seven years later the team folded. Come !
to think of it, the Seattle Pilots baseball team also left town in 1970. Perhaps there's a pattern here.
It seems that Forbes got this ranking correct. (sigh)
Last night the Senate Ways & Means committee adopted numerous amendments to the proposed Senate budget. Since the amendments are not available online, here is a brief summary of some of those adopted:
Requiring a study by the Joint Legislative Audit and Review Committee (JLARC) of the state’s recreational boating programs. (This in contrast to our suggestion yesterday for JLARC to review how well the state is following the current performance-based budgeting requirements already in law.)
Suspending the Select Committee on Pension Policy (SCPP) during the 2009-11 biennium. (SCPP studies issues and policies affecting the state's public employee retirement systems and makes recommendations to the Legislature regarding changes. The base Senate budget proposal defers over $400 million in pension contributions.)
Directing the State Board of Education to develop a comprehensive accountability index and a “process for addressing performance challenges that will include the following features:
(A) An academic performance audit using peer review teams of educators that considers school and community factors in addition to other factors in developing recommend specific corrective actions that should be undertaken to improve student learning;
(B) a requirement for the local school board plan to develop and be responsible for implementation of corrective action plan taking into account the audit findings, which plan must be approved by the state board of education at which time the plan becomes binding upon the school district to implement; and
(C) monitoring of local district progress by the OSPI. The proposal shall take effect only if formally authorized by the legislature through the omnibus appropriation act or other enacted legislation.
In coordination with the OSPI, the state board of education shall seek approval from the United States Department of education for use of the accountabilit!
y index and the state system of support, assistance, and intervention, to replace the federal accountability system under . . . the no child left behind act of 2001.”
Authorizing a 14 percent per year tuition increase for four-year colleges and universities to increase “budgeted enrollment levels by 3,475 full-time equivalent students each year to account for the additional $83 million of tuition revenue resulting from the higher annual increases.” (The House Ways and Means last week adopted an amendment to remove the budgeted enrollment levels from its budget proposal.)
As for those amendments that failed, The Olympian has this story about "Senate Republicans unsuccessfully propos[ing] a 2 percent cut to the amount of money used to cover health insurance costs for state employees."
As some policymakers continue to push for "revenue enhancements" to shore up the state's $9 billion budget deficit, some are oft to quote studies showing Washington's pro-business climate in order to justify said "revenue enhancements (tax increases)".
Their study ranks Washingt!
on as the 4th best place for small businesses viz a viz tax systems. This is a one place improvement over 2008.
While I do think the world of the SBE Council, for years we have had issues with the way they weight their index. I've blogged on their methodology before but here's a quick summary:
Washington ranks very well in the rankings where there essentially is no data. We rank 1st in personal and corporate income taxes becau!
se we do not have them. We rank 1st in capital gains tax rates because we do not have them. We are in the middle of the pack for property tax rates. We are second-to-last in state, local sales, gross receipts, and excise taxes. We are 44th in adjusted unemployment taxes. Second-to-last in gas taxes.
Basically, we are overweighted towards a high ranking because Washington is unable to be ranked in so many of the criteria. And when we can contribute data to the study, we rank pretty low.
So as poli!
cymakers pitch a sales tax increase and while pointing to this study as reason why businesses should be able to "handle it", they are forgetting that we are already ranked second-to-last in the sales and gross receipts tax column. Maybe they are trying to shoot the moon. I think this is one reason why the business community, and a lot of other folks, are nervous about letting the state establish new avenue of taxation. Washington ranks very well in the SBE Council study in the areas where we don't tax, but pretty awful in the areas we do tax. Perhaps its just a matter of trust.
A new report out from the Small Business Administration reveals the effective tax rates for small businesses when it comes to federal income taxes. Average rates range from 13.3% for small sole proprietorships to 27% for small S corporations. And remember, the effective tax rate is the actual amount of taxes paid by a firm as a percent of its net income. This is important because these rates reflect the statutory benefits aimed at lowering a business' tax liability. In essence, the 13-27% is lower than what the rate would otherwise be without legislative deductions, exemptions, credits, et al.
And keep in mind that the SBA defines a small business as a firm with less than 500 employees. In my mind, a firm with 499 employees is a pretty large enterprise. I do appreciate that the state government defines a small business as one with 20 or fewer wo!
rkers and earn less than $3 million or less in annual gross income.
As the economic downturn interminably lags on, the importance of supporting small businesses is more important than ever. Looking at data from the last recession in the early 2000s (granted a different type of slowdown, but a strong one nonetheless), sole proprietorships and LLCs see strong growth during the downturn. Even going back to the early 1990s recession -- and before LLCs were available in Washington -- sole proprietorships skyrocketed while corporation registrations floundered. This also happened during the recession of the early 80s.
When unemployment takes off during a recession, budding entrepreneurs who have been laid off are almost forced to finally start that small business they have been thinking about for so long. In fact, according to the
t="_blank">census bureau, during the 2001-2002 period, firms with between 1-4 employees saw a 14% increase in employment while firms with 5 or more employees saw an average employment percentage decrease of 5.3%. As the economy turned around over the next few years, and the unemployment rate improved, some of those small business owners went back into the fold of a large employer and steady paycheck.
So, as policymakers in Olympia debate what (not if) kind of tax increases should be leveled on businesses, they should remember that any kind of tax increase will come on top of the 13-27% federal income tax.
As lawmakers put the finishing touches on their 2009-11 budget proposals, there is still time to shift the focus to needed reforms to ensure the state is moving towards a performance-based government.
One way to facilitate this debate could be to review just how well the state is following the current performance-based budgeting requirements already in law.
JLARC (Joint Legislative Audit & Review Committee) is the perfect vehicle for this type of exercise. If interested, lawmakers could insert a proviso in the budget for JLARC to review current requirements in the statutes governing budget development. It could direct JLARC to:
Evaluate the executive branch’s performance measurement requirements related to budget requests and budget development (RCW 43.88.030 and RCW 43.88.090).
The study will focus on these statutory provisions by evaluating the extent to which:
(1) State agencies establish goals for achieving results that conform to statutory direction and limitations.
(2) State agencies establish quality and productivity objectives that are outcome-based, objective, and measure progress toward goals.
(3) The office of financial management assists state agencies with the development of performance measures.
(4) State agencies budget requests link performance measures to achievement of quality and productivity objectives.
(5) The office of financial management analyzes whether the measures for state agency activities are demonstrating progress toward objectives.
> (6) Agency budget requests !
include proposals for improvement when the office of financial management identifies insufficient progress toward goals.
(7) The governor’s biennial budget proposal includes indicators that demonstrate measurable progress toward priority results.
Although the current budget proposals reduce JLARC’s funding, lawmakers should weigh the benefits of directing JLARC to conduct this type of review to help lay the ground work for the Legislature to move towards performance-based budgeting.
By now you’ve either closed the books on the 2008 tax year or are putting the finishing touches on your tax return. If you don't by midnight, however, you’ll be hearing soon from the IRS and becoming intimately acquainted with what it means to face federal tax penalties.
But just because you can put last year’s taxes behind you doesn’t mean it’s too early to look ahead to what your bill may be next year. In fact, if some state House and Senate Democrats have their way your 2009 state tax bill might be much higher.
The current debate in the Legislature is whether to put a tax increase package on the ballot for voters to approve.
Senate Democrats are leaning towards an income tax for the “rich.” House Democrats are tossing around a “temporary” sales tax increase.