Open Government

WPC's Center for Government Reform's mission is to partner with stakeholders and citizens to work toward a government focused on its core functions while improving its transparency, accountability, performance, and effectiveness for taxpayers.

Open Government Blog

$270 million in tax and fee increases estimated for 2009-11

April 24, 2009 in Blog

The Office of Financial Management just issued the I-960 tax and fee impact statement for the version of the budget that passed the Senate Ways and Means Committee.

2009-11 impact: Minimum of $270 million in tax and fee increases.

Not included are some higher education fees: "All other fees imposed by institutions of higher education are as of now indeterminate. SSB 5600 gives authority to institutions of higher education to set other fees, but any fee increases have yet to be determined and approved by governing boards of public baccalaureate institutions."

Details here.

UPDATED: Lawmakers to State Auditor: You don't really need performance audit funding, do you?

April 24, 2009 in Blog

Holy smoke!

I'm reading through the just released state budget compromise and one clear loser is the State Auditor. It appears lawmakers didn't take too kindly to his complaint about their raids on the dedicated performance audit funding authorized by voters.

Consider Section 805: It raids $29 million of the performance audit funds. The original House budget took $12 million; The original Senate budget $15 million. Looks like the compromise response to the Auditor's complaints was to combine the money raided.

Unfortunately for the State Auditor the hits in this budget just keep coming.

  • Section 124 (3) appears to set up a bounty for audit savings. I.E. - Auditor can have some of the money back for any savings implemented as a result of performance audits: "It is the intent of the legislature to reduce the 2009-11 legislative transfers from the performance audits of government accounts to recognize actual reductions achieved in expenditures from the state treasury as a result of these performance audits."
  • Section 927 (2) limits number of audits the State Auditor can do of local governments: ". . . the state auditor shall conduct audits no more often than once every two years of local governments with annual general fund revenues of ten million dollars or less and no findings of impropriety for the three-year period immediately preceding the audit period."
  • Section 928 reduces the amount the State Auditor can charge local governments for their audits: ". . . the state auditor shall reduce the municipal revolving account charges for financial audits performed on local governments by five percent."

I wonder if the State Auditor is now considering changing the "incomplete grade" he gave lawmakers in this TVW interview yesterday to "failing."

UPDATED: The State Auditor just sent over this letter to House Speaker Chopp expressing his disappointment with the proposed budget.

Also, according to legislative sources the raids on the I-900 funds aren't doubled by the proposed budget - the $29 million taken from the performance audit account is the same as in earlier budget versions but is occurring in a different way.

Either way the State Auditor is very unhappy with the budget proposal as evidenced by his letter.

Viaduct: I have altered the deal. Pray I don't alter it any further!

April 24, 2009 in Blog

Did you know the deep bore tunnel reduces capacity from the current six lane configuration to just four lanes? This is not a "replacement" of the viaduct, but rather a reduction in service.

And in classic government fashion, taxpayers will have to pay more for it. Just like Vader's deal to Lando Calrissian, the deal given to taxpayers just keeps getting worse.

State Auditor on "Reinventing Government"

April 23, 2009 in Blog

State Auditor Brian Sonntag was a guest today on Inside Olympia. The interview focused on the theme of reinventing government. Among the topics discussed:

  • Legislative action or inaction on reforms
  • Auditor's budget
  • Statewide performance review
  • Why the auditor doesn't issue press releases
  • I-900 and Tim Eyman
  • Legislative detractors of audits
  • Sonntag's participation at the anti-tax rally on April 15

Here is the video:

Additional Inform!
ation
Whatever happened to government reform?
State Auditor fights performance audit cuts

Lawmakers answer questions about sales tax increase

April 23, 2009 in Blog

TVW's The Impact last night had an insightful exchange between two lawmakers on the proposed sales tax increase. Here is the video:

Additional Information
"Responsible cuts" or "People will die"?
Details on sales tax increase proposal

Missouri looks to reform tax system by eliminating income taxes

April 22, 2009 in Blog

The talk about how adopting an income tax is the answer to the state's budget woes must be news to states like California that already have high income taxes and large budget deficits.

Despite this fact you can bet that you'll hear that argument made at the hearing later this week to enact a state income tax.

I wonder what the income tax advocates think about this news coming out of Missouri. According to the Tax Foundation:

Missouri lawmakers are considering a drastic change to their tax system. A bill recently passed by the state’s House of Representatives would allow residents to vote on a Constitutional amendment that would eliminate corporate and individual income taxes in the state and replace them with a broad based sale!
s tax. The plan is essentially a state version of the national FairTax proposal popular with some grassroots groups that would replace the federal income tax with a national sales tax. If the Senate passes the bill Missouri residents would be voting on the amendment in November of 2010.

Missouri currently has a sales tax, a corporate income tax, and a personal income tax. The sales tax rate is 4.225%, and the top corporate and personal tax rates are 6.25% and 6%, respectively. The plan put forth would replace all those taxes with a single sales tax levied at a rate of 5.11%. Accompanying the sales tax rate hike would be a substantially broadened sales tax base that would include all purchases. Currently most services are tax exempt and certain goods, most notably groceries, are taxed at a reduced rate of 1.225%. These exemptions would not exist under the new tax structure.

The overhaul of the tax system is meant to be revenue neutral. In other words, t!
he revenue from the sales tax increase and broadening of the t!
ax base is meant to exactly offset the elimination of income taxes.

Regardless of how you slice up a state's taxes, there is no such thing as a recession proof tax structure. For budget peace of mind states need to use a “three-legged stool” of sound budgeting:

  • Meaningful spending limit;
  • Protected 10% reserve account (so you don’t have to resort to tax increases or deep spending cuts in the bad times); and
  • Limiting base expenditures to core functions within the revenue forecast when in the good times.

WA stimulus spending: what about reducing traffic?

April 21, 2009 in Blog

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."

The governor has certified 212 transportation projects for about $622 million in federal stimulus spending.

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?

Details on sales tax increase proposal

April 21, 2009 in Blog

While the House Health & Human Services Appropriations Committee takes a break from this morning's hearing on the proposed sales tax increase (HB 2377), I'm reading the fiscal note on the bill. Here are a couple things of note:

  • 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."

Here is additional background on what the chair of the committee thinks about the tax increase and the budget.

"Responsible cuts" or "People will die"?

April 20, 2009 in Blog

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.

Here comes a 30-40% increase to your property taxes: HB 2261

April 17, 2009 in Blog

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. 

 

Schools can be improved within existing revenues, without HB 2261 spending formulas, without a prototype school model, without CORE 24 or full-day kindergarten.  See our "Eight Practical Ways to Reverse the Decline of Public Schools," at http://www.washingtonpolicy.org/Centers/education/policybrief/Education_Reform_Plan.html.

 

Taxpayers can instead demand that schools:

1) Put the principal in charge of his budget and staff

2) Give parents choice among public schools

3) Let teachers teach

4) Double teacher pay

5) Replace the WASL

6) Create no-excuses schools

7) Make the Superintendent of Public Instruction an appointed office