State's Spending Chickens Come Home to Roost
Paul Guppy, Vice President for Research, August, 2010
This op-ed appeared August 1, 2010 as part of WPC's monthly column
by Paul Guppy in The Spokesman-Review
Gov. Chris Gregoire is considering a special session to wrestle with Washington state’s looming budget crisis, but she’s expressed skepticism about the results. Speaking at a budget forum in Vancouver, the governor said she doubts “both parties could reach agreement on budget cuts.”
This struck me as an odd turn of phrase. With Democrats firmly in control of the House, Senate and the governor’s mansion, she doesn’t need “both parties” to deal with the deficit – her own party has the votes to enact any budget changes it likes.
More likely, she is responding to pleas from lawmakers engaged in tough re-election campaigns. Legislators are not allowed to raise money while in session. For those in tight races, a late-summer summons to Olympia would be inconvenient to say the least. With all members of the House and nearly half the Senate up this year, the stakes couldn’t be higher.
The constant budget crisis is not caused by lack of money. Washingtonians are generous in paying taxes, and year-over-year revenue has dipped only slightly. Also, lawmakers passed a $500 million tax increase in 2005 and added a further $800 million boost this year (more on that later).
The problem is the state’s spending chickens have come home to roost. The proof is in the numbers. During the fat years, lawmakers boosted long-term spending by more than 30 percent in four years, raising the state’s financial obligations an astonishing 16 percent in 2005 alone. Olympia lived like the good times would last forever.
The crash came last year, when legislators were forced to cancel a number of planned spending increases (known in Olympia-speak as “cuts”) and balanced the budget without raising taxes. They had little choice. Voter-passed Initiative 960 required a two-thirds vote to raise taxes, and minority Republicans said firmly that in a recession they were not going to increase the financial burden the state places on its citizens.
The chance to escape the limit came this year, when the two-year ban on amending initiatives without a supermajority expired. On Feb. 22, a majority in the Legislature passed a two-year suspension of I-960, repealing the two-thirds requirement. The measure passed on a partisan vote; only Democrats voted for passage, and 15 Democrats joined all the Republicans in voting against it. Gov. Gregoire signed the repeal bill two days later.
The move proved unpopular with the public, who had enacted the tax limit in the first place. A poll of state residents reported 68 percent called the repeal “the wrong thing to do.” When asked about requiring a two-thirds vote to raise taxes, 74 percent said such a limit should be required.
Interestingly, Section 3 of the bill canceled a number of disclosure provisions designed to inform the public. Disclosure would have meant that each tax increase, its annual and 10-year cost, the name and contact information of each lawmaker, and how he or she voted on each tax increase would appear in the official pamphlet mailed to every voter in the state.
Most lawmakers had cast votes for more than a dozen tax increases. Seeing one’s name listed on page after page of tax increases is not a comforting thought for an officeholder seeking re-election.
Knowing their names wouldn’t appear cleared the way for the tax increases themselves. 2010’s tax hikes add up to some $6.7 billion over 10 years and impose new levies on items ranging from bottled water to nursing home beds.
Senate Majority Leader Lisa Brown put it this way: "...The reason we need revenue is because of what government does.” And that’s the problem. State leaders fail to set priorities and try to do too much. They enact policies based on ever-rising spending, and government ends up overpromising and underdelivering. The result is a chronic sense of fiscal crisis. No matter how much lawmakers increase our tax burden, they always seem to need more money.
Rep. Kathy Haigh, of Shelton, was more frank. “Is it (the budget) sustainable? Probably not.” No kidding. Today the state faces a $3 billion deficit starting in July 2011, and a whopping $8.7 billion deficit for the 2013 - ’15 budget.
Lawmakers hoped the tax increases they passed in February would cover the deficit until after the November election. Instead, “probably not” arrived sooner than expected.