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.

What's New

No need for $11 in savings for every $1 spent?

December 1, 2008 in Blog

One of the biggest surprises from the recent Priorities of Government report is the recommendation to discontinue the state's performance audit program enacted by the voters in 2005. What makes this proposal so difficult to understand is the fact that according to the State Auditor the ratio of cost savings to audit cost so far has been $11 to $1.

Rather than looking for ways to eliminate a program with these types of returns one would think state officials would instead be fast tracking any audit recommendations yet to be implemented.

an style="font-size: 13px; font-family: Arial;">Here is a sampling of the state's editorial boards on this controversy:

One change worth discussing, however, is to focus the program more on state versus local performance audits. Local performance audits add good value (example Port of Seattle audit). After all taxpayers savings are taxpayer savings whether state or local but the bigger bang for the buck may be realized by digging deeper into state programs and spending.

What shouldn't be on the table, however, is eliminating performance audits. Now more than ever the state needs to be looking at ways to improve the economy, efficiency and effectiveness of every tax dollar spent.

Time for a real spending limit

November 20, 2008 in Blog

Though the shock of yesterday's revenue forecast will not soon fade a great opportunity is at hand if lawmakers will rise to the occasion. The unsustainable spending growth of the past is being brought back to reality by the economy. If state officials respond by enacting a meaningful constitutional spending limit next year we may be able to avoid future headlines of multi-billion dollar deficits.

Consider what may have been had I-601, the 1993 voter-approved spending limit, not been eviscerated by lawmakers in 2005. During I-601's heyday (1993-2005), state spending growth averaged just under 8 percent per budget. Assuming an even more liberal 10 percent budget growth since 2005, state spending today would be $1.2 billion lower.

Projected General Fund State spending based on 10 percent growth since 2005
(Dollars in Millions)

Budget

Spending

$ Increase

% Increase

2003-05

$23,671.7

-

-

2005-07

$26,038.9

$2,367.2

10%

2007-09

$28,642.8

$2,603.9

10%

Actual General Fund State spending growth since 2005
(Dollars in Millions)

Budget

Spending

$ Increase

% Increase

2003-05

$23,671.7

-

-

2005-07

$27,766.1

$4,094.4

17.3%

2007-09

$29,838.2

$2,072.1

7.5%

If state officials really want to get off the boom and bust budget roller coaster a meaningful constitutional spending limit modeled after I-601 is the solution.

Revenue down but also up

November 19, 2008 in Blog

Today's headlines will likely read: "State revenue down $1.9 billion." This is the news coming out of the state revenue forecast. What is important to remember, however, is despite this decrease, revenue is still projected to grow by 5% in the next budget cycle and revenues are still expected to be higher in the current budget than the past. This fact is demonstrated in the table below.


General Fund State Revenue Growth
(Dollars in Millions)
 




























































Budget


Revenue


$ Increase


% Increase


1991-93


$14,862.2


-


-


1993-95


$16,564.6


$1,702.4


11.5%


1995-97


$17,637.7


$1,073.1


6.5%


1997-99


$19,620.1


$1,982.4


11.2%


1999-01


$21,262.1


$1,642.0


8.4%


2001-03


$21,140.7


<$121.4>


<0.6%>


2003-05


$23,388.5


$2,247.8


10.6%


2005-07


$27,772.0


$4,383.5


18.7%


2007-09


$28,626.6


$854.6


3%


2009-11


$30,070.4


$1,443.8


5%



Source: Washington State Economic and Revenue Forecast Council


This does not mean the state isn't facing a real problem. The reduced revenue growth for the current budget means that the state is now facing a potential $413 million cash deficit due to the spending levels adopted (not including budget reserve account).


According to the Budget and Accounting Act - RCW 43.88.110(8):

If at any time during the fiscal period the governor projects a cash deficit in a particular fund or account as defined by RCW 43.88.050, the governor shall make across-the-board reductions in allotments for that particular fund or account so as to prevent a cash deficit, unless the legislature has directed the liquidation of the cash deficit over one or more fiscal periods . . .

With today's economic news, now is the time for Washingtonians to become actively involved and offer their recommendations to state officials on how to build a sustainable core function focused budget.

SC Governor to DC: Don't bail us out

November 17, 2008 in Blog

In a message few in D.C. thought they'd hear, South Carolina Governor Mark Sanford is telling the federal government NOT to bail out the states. Here is an excerpt from Sanford's Wall Street Journal op-ed:

I find myself in a lonely position. While many states and local governments are lining up for a bailout from Congress, I went to Washington recently to oppose such bailouts. I may be the only governor to do so.


But I suspect I'm not entirely alone, as there are a lot of taxpayers who aren't pleased with Christmas coming early for politicians. And I hope these taxpayers make their voices heard before Democrats load up the next bailout train for states with budget deficits . . .


In 2008 bailouts became the first resort. Over the past year the federal government has committed itself to $2.3 trillion (including the tax rebate "stimulus" checks of last February) to "improve" the economy. I don't see how another $150 billion now will make a difference in a global slowdown. We've already unloaded truckloads of sugar in a vain attempt to sweeten a lake. Tossing in a Twinkie will not make the difference.


However, there is something Congress can do: free states from federal mandates. South Carolina will spend about $425 million next year meeting federal unfunded mandates. The increase in the minimum wage alone will cost the state $2.6 million and meeting Homeland Security's REAL ID requirements will cost $8.9 million.

Meanwhile The Heritage Foundation last week published this report: Why Government Spending Does Not Stimulate Economic Growth


UPDATED: Here is a video of Governor Sanford's testimony before Congress.

Smart Budgeting and Accountability

November 17, 2008 in Publications

A few years ago Washington State became an innovative leader in budgeting by doing what families do all the time but governments seldom do. Families first establish how much money is available then set the priorities. They spend on the highest priorities first and continue only up to where the available funds will allow. Well the last time Washington did that with determination and vigor was in the 2003-05 budget when it closed a potential deficit problem. It’s time to resurrect that budgeting strategy as the state faces a staggering budget deficit.

2009-11 Priorities of Government Final Report

November 13, 2008 in Blog

The Office of Financial Management has just posted the 2009-11 Priorities of Government (POG) Report. According to OFM:

The following report compiles individual Priorities of Government (POG) Result Team priorities for state activities. These Result Teams of agency, OFM and other executive staff were charged with making choices based solely the activity performance and alignment with evidenced-based strategies for achieving each of the ten statewide results.

This information is advisory to the Governor as she develops her 2009-11 budget for the state.  It does not represent any final budget decisions.

I haven't had a chance to digest the information yet but here is a sampling of the "low" priorities identified:

  • Early Learning Programs
  • National Board for Professional Teaching Standards

  • Student Achievement Fund

  • Rail Passenger Operations

  • Public Transportation - Congestion Mitigation and Transit Efficiency

  • Roadside and Landscape Maintenance

  • Health Insurance - Adults between 100-200% of poverty level

  • SCHIP - Coverage over 200% FPL

  • Convention and Trade Shows

  • Film Office

  • Growth Management

  • Family Medical Leave Program

  • Washington's Lottery

  • Audits of Local Government

  • Motor Pool

  • Management, Accountability and Performance (GMAP)

  • Liquor Control Board

  • Public Printer

  • Performance Audits

For those budget geeks at heart, here are the full details on the POG team recommendations.

Change is coming to state budget

November 11, 2008 in Blog

After attending the state economic forecast meeting last Friday and hearing about the trouble ahead, I needed some good news. Thankfully it came in the way of the Governor's comments yesterday to the Associated Press. As reported in the News Tribune:

Gregoire, describing herself as an optimist, said she’s looking at the budget gap and faltering economy as an opportunity to fundamentally rethink the role of state government in Washington’s economic health.

Without going into specifics, Gregoire said she hopes to identify government functions and programs that might be better handled in the private sector or the nonprofit arena.

“This should not be simply a budget-cutting exercise. We should be thinking about, how do we grow our economy, how do we create jobs, and what reforms we can put in place,” Gregoire said. “Government is really going to have to get back to the absolute, essential basics.”

Amen!

Count the Washington Policy Center ready to help bring about this fundamental reform to state government.

One idea is to begin a “base closing” process for state programs and agencies to determine which ones can be consolidated or eliminated. We discuss this reform and many others in our Policy Guide for Washington State.

More good news has come in the way of the state's editorial boards, reminding the Governor that they expect her to deliver on her no tax or fee increase campaign pledge. Here is a sampling:

  • "The people of this state are suffering right now, and a tax increase to pay for programs to address some of these issues is the worst possible idea. Government should not punish Washington families by piling on more fees and taxes that make it harder to make ends meet. Thankfully, Gregoire vowed during the campaign that she is also not in favor of any new taxes. We remind her now of that promise, and promise on our end to do what we can to hold her to her word." - Bellingham Herald (Much work to be done in state; taxes not an option)
  • "We expect her to follow through with campaign promises and inform her fellow Democrats in the Legislature that she will veto any tax or fee increases that come out of the Legislature." - Yakima Herald (Times call for tough leadership, action by governor and the Legislature)
  • "Her biggest challenge will not be Republicans in the Legislature who desire to block and impede her efforts, but fellow Democrats who will clamor to raise taxes to spare pet programs from the budget ax. Gregoire the candidate said she would not raise taxes. How hard will she fight to live up to that promise? Raising taxes is the last thing we need in this dour economy." - Seattle Times (Re-elected Gov. Christine Gregoire has tough work ahead)
  • "Next month, Gov. Gregoire will present a balanced budget, one that does not rely on new taxes. She needs to defend it. It's the right decision." - WashACE (Budget Leadership Begins with the Governor)

So much for "wiggle room" on tax or fee increases.

Overview of Property Tax Levies for Pike Place Market and Seattle Parks

November 8, 2008 in Publications

This November, Seattle voters are being asked to approve three new tax increases. Two are proposed by Seattle’s elected leaders, who are again urging voters to authorize an increase in the tax burden, over and above what citizens pay now, to pay for core public amenities.

"Wiggle room" on tax increases?

November 6, 2008 in Blog

With the prospect of a projected $3.2 billion budget problem growing even larger after this month's revenue forecast, some in Olympia are already talking about tax increases - this only two days removed from the election. According to the Seattle Times (Gregoire's next big test: balancing budget without raising taxes):

. . . Senate Majority Leader Lisa Brown, D-Spokane, didn't rule out the prospect of tax or fee increases.

Brown also said lawmakers could look at targeted taxes or fees, or consider ending certain tax exemptions.

"If you look at a tax exemption and you decide you need to close it or limit it somehow, is that raising a tax? Some of it comes down to definitions," she said.

Gregoire was pretty explicit during the campaign when pressed on whether she'd support increasing taxes or fees next year. She said no and reaffirmed the vow Wednesday.

"Now is not the time you put taxes on people," she said, adding that during the campaign she has met people across the state who are suffering from the economic problems that have shaken the nation.

Still, some Democrats see wiggle room for the governor.

Paul Berendt, a former chairman of the state Democratic Party, said he thinks Gregoire and lawmakers could put together a tax package that would help balance the budget and support new programs — and send it to voters.

That would allow Gregoire to propose additional spending without signing a tax increase.

The fact that voters agreed to raise sales taxes for a $17.9 billion Sound Transit light-rail expansion suggests that approach could work, Berendt said.

When asked recently if she'd support sending a tax increase to voters, Gregoire said, "I will leave that to my colleagues in the Legislature. I will forever maintain that the voters ought to be able to decide that. ... I wouldn't be involved in it. It would bypass me. It would not be something that the governor would sign on to or sign off on."

While sending a tax increase proposal to voters would be consistent with the Governor's comments that any tax increase should receive voter-approval, how would a tax increase referendum provide any "wiggle room" on her repeated campaign statements reaffirmed in the Times article that now is not the time to raise taxes on Washingtonians?

Based on her comments above, any doubt now that Sen. Brown's lawsuit to overturn the voter-approved 2/3 vote requirement for tax increases has more to do with the ability to easily raise taxes than the Senator let on?

Oregon running away from income taxes?

October 31, 2008 in Blog

While some in Washington continue to flirt with the theory that if only the state had an income tax we'd never have another budget problem, our neighbor to the south is discussing repealing its income taxes and moving instead to sales taxes.

According to The Oregonian (Panel offers long-term tax ideas for Oregon):

Oregon's state government system relies heavily on income taxes, with about 90 percent of its general fund and lottery revenues coming from individual income taxes. That system is volatile because income tax receipts drop during economic downturns, leaving the state short of money to pay for education and other services.

Long-term options listed by the task force include:

Eliminating the state's personal income tax and imposing an 8.5 percent sales tax with exemptions for items such as shelter and in-home food. The group notes this approach would reduce net income for most households without offsetting provisions . . . The task force began meeting a year ago. While it does not favor any long-term approach over another, it does recommend some short-term changes, including having Oregonians vote on placing the state's rainy day fund, created by the 2007 Legislature, in the Oregon Constitution and increasing the fund's cap.

As demonstrated by Oregon's experience with income tax receipts, there is no recession proof tax structure. Policy makers should not focus tax reform discussions around raising more revenue but instead should ensure the tax system is based on sound principles of taxation.

This is why the state's notorious B&O tax is ripe for reform or replacement - it fails the principles of sound taxation on many levels as identified by WPC's Carl Gipson in this four-part series:

So what exactly are sound principles of taxation? We answer that question here: Guiding Principles of Taxation for Elected Officials