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.

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Transparency coast to coast

September 23, 2008 in Blog

This past weekend I was in Baltimore at a national open government retreat working on recommendations for the next President on how to make the federal government more transparent and accountable.

Among the 70 individuals at the retreat were representatives from OMB Watch, National Security Archive, ACLU, Society of Professional Journalists, OpenTheGovernment.org, League of Women Voters and Reporter’s Committee for Freedom of the Press to name a few.

WPC has been working with these groups for the past year on the 21st Century Right to Know Project. One of the recommendations I made that may be incorporated in the final report produced is for the next President to issue an open government executive order modeled after the one signed by Florida Governor Charlie Crist.

The federal bailout bill also was discussed at the retreat. There is serious concern about the level of secrecy being included in the draft bailout proposal. Here is a memo that was worked on at the conference that is circulating amongst open government groups. Here is the language of the bailout proposal.

Continuing our transparency efforts, last week I also participated on a panel on government transparency in Phoenix at the annual meeting of the State Policy Network, the national organization of state think-tanks. I announced WPC's recommendation for a tax transparency website that would provide an online searchable database of all tax rates in the state. The Seattle Post-Intelligencer endorsed our recommendation shortly after its release. Other SPN groups may now take our recommendation to their own states for their lawmakers to consider.

I’ll provide updates on both these efforts (Baltimore/Phoenix) as they develop.

"Emergency" state contracts

September 18, 2008 in Blog

In response to today's revenue forecast the Governor said she is "directing the Office of Financial Management to locate additional budget savings of $200 million, without affecting vital programs." Hopefully this effort will have more success than her August request that state agencies not sign personal service contracts unless they are an emergency.

Here are examples of some of the personal service contracts signed since the Governor issued this contract freeze:

  • CTED: $400,000 - "The purpose of this contract is to provide tourism and trade services to Washington in the nations of China, Japan & France."
  • Department of Archaeology and Historic Preservation: $149,714 - "Develop a feasibility study for a Washington State Maritime Heritage Area."
  • State Parks and Recreation Commission: $254,701 - "Additional work to address additional funding from the legislature for the Seminary design at Saint Edward State Park."

August Personal Service Contracts Filed (90 contracts)
August Personal Service Contracts Reported (125 contracts)

UPDATED: Good news, bad news

September 18, 2008 in Blog

UPDATED: 4:50 p.m.

Turns out the projected revenue for next biennium is better than I reported this morning. I originally used the numbers from OFM's press release which showed $1.4 billion more in revenue for the 09-11 budget cycle than the current budget.

According to the Economic and Revenue Forecast Council, however, OFM's numbers were inaccurate (since been corrected). The Forecast Council projects $2.4 billion more in revenue for 2009-11 than for 2007-09.

  • 2007-09 forecasted revenue: $29.1 billion
  • 2009-11 forecasted revenue: $31.5 billion
  • Projected revenue increase: $2.4 billion

- END UPDATE -

First the good news, the state is projected to have $1.4 billion more in revenue for the 09-11 budget cycle than the current budget. Now the bad news, the carry forward cost of the current budget leads to a projected budget deficit of more than $3 billion.

  • 2007-09 forecasted revenue: $29.9 billion
  • 2009-11 forecasted revenue: $31.3 billion
  • Projected revenue increase: $1.4 billion

So if the state will have $1.4 billion more in revenue but is facing a $3 billion budget deficit, is that a revenue problem or an overspending problem?

State tax cuts/increases

September 17, 2008 in Blog

Yesterday we posted details on the Governor's statement that she's cut taxes by approximately $900 million since 2005. According to OFM, the table it provided did not account for tax increases, only tax cuts.

Here is the follow up detail OFM provided on the General Fund tax cuts.

Since the OFM information doesn't account for tax increases I reviewed the Legislative Budget notes for 2005-08. Here is the breakdown for the General Fund net tax cut or increase:

  • 2005 - $482 million tax INCREASE (2005-07)
  • 2006 - $6 million tax INCREASE (2005-07); $112 million tax CUT (2007-09)
  • 2007 - $29 million tax CUT (2007-09)
  • 2008 - $6 million tax CUT (2007-09)

So has the Governor been a tax cutter or tax raiser? Short answer, yes but more tax revenue has been raised than returned to taxpayers (at least for the General Fund; discussion of workers' comp tax cuts/increases here).

Breaking the state's piggy bank

September 17, 2008 in Blog

Piggybank320_2 Even though the Governor has yet to acknowledge the projected multi-billion dollar budget deficit (difference between growing revenues and even faster spending growth), key lawmakers are starting to signal a willingness to break the state's new rainy day piggy bank to help balance next year's budget. According to the News Tribune:

"The 2009 Washington Legislature probably will dip into the state’s emergency 'rainy day' savings account to balance the budget because, economically speaking, it’s raining.

Although the state has a budget surplus today, that amount is expected to shrink as Washington’s economy catches up to the rest of the nation and follows a downward economic spiral, due in large part to a sudden drop in home sales and a worsening crisis in the national financial markets.

'It’s pretty clear that things are not going to get better soon,' said state Sen. Margarita Prentice, D-Renton, chairwoman of the budget-writing Senate Ways and Means Committee. 'It looks as if we will (tap the rainy day fund). We can’t commit to a figure, but I think it’s pretty clear for now that everything has to be on the table.'"

Voters created the constitutional rainy day account last November to help the state weather downturns in state revenues.

Which leads to the question, is it really an unforeseen rainy day if lawmakers have spent the last few years seeding the clouds with unsustainable spending increases

What Caused Olympia's Budget Mess? (Hint: It's Not a Lack of Money)

September 17, 2008 in Publications

State finances are in shambles. Olympia leaders have racked up a $3.2 billion deficit and unlike Wall Street, Congress is not going to bail them out. How did we get in this mess? It is not for lack of money. Tax revenues have increased every year, and today the people of Washington send more money to Olympia than ever before.

Taxpayers Need Constitutional Protections

September 17, 2008 in Publications

Washington’s voters have consistently voiced a desire to restrict the ability of government officials to unduly raise their tax burden. Initiative 601, passed by voters in 1993, required not only a strict spending limit, a two-thirds vote of the legislature to raise taxes, but also voter approval of any tax increase in excess of the state spending limit.

Is Governor a tax raiser or tax cutter?

September 16, 2008 in Blog

Last week we highlighted an Olympian blog post that quotes Governor Gregoire on whether or not she's raised taxes. Among the statements made by the Governor:

"Did I raise your sales tax? No. Did I raise property taxes? No. In fact, I brought the Legislature in to cap the property tax with a special session last fall. Did I raise B&O tax? No. What’s the truth? The truth is we cut those taxes almost by $900 million since I came into office."

I asked the Office of Financial Management (OFM) for additional details on these tax cuts. OFM provided the following table in response (Dollars in Millions):

Tax Cuts

2005-07B

2007-09B

Total

General Fund - State

(77.9)

(288.0)

(365.9)

Unemployment Insurance Trust Fund

(31.8)

(141.5)

(173.3)

Workers Compensation Trust Funds

(22.2)

(309.5)

(331.7)

Other Funds

0.0

(9.7)

(9.7)

Total Tax Cuts

(131.9)

(748.7)

(880.6)

WPC's Small Business Director Carl Gipson takes a closer look at the Workers' Compensation numbers in his blog post today.

In light of the $400 million in tax INCREASES during the 2005 Session, I'm following up with OFM to learn if its table accounts for these increases and for additional details on the General Fund tax cuts reported. I'll update this post once I have the answer.

What qualifies as a tax increase?

September 11, 2008 in Blog

The Olympian today has an interesting blog post quoting Governor Gregoire about whether or not she's raised taxes (excluding gas-taxes). Here is what the Governor said (in-part):

"Did I raise your sales tax? No. Did I raise property taxes? No. In fact, I brought the Legislature in to cap the property tax with a special session last fall. Did I raise B&O tax? No. What’s the truth? The truth is we cut those taxes almost by $900 million since I came into office. So the money that we used to do what we’ve done has been because our economy has been humming. And that’s why I’ve tried always to get new employers in here and to make sure we have the skilled work force, because when the economy hums, we can pay for education, we can pay for health care, we can pay for community safety. When the economy slumps, then we can’t." "So he [Rossi] then!
says, ‘she is going to raise taxes,’ Well I didn’t raise taxes to get out of the $2.2 billion deficit he gave me. On what basis does he say that? … (H)e wants you to be afraid. He wants you to be afraid. I just think this ought to be a straight-up election."

Based on this quote one is left to wonder just what the Governor believes qualifies as a tax increase. For example, in 2005, the Governor signed into law approximately $400 million in tax increases made possible by suspending the 2/3 vote requirement from I-601. The largest of these tax increases were:

  • Cigarettes – $175 million
  • Death-tax – $139 million
  • Liquor – $47 million
  • Extended warranties for product repairs or replacements –  $37 million

These tax increases were the subject of a court challenge for violating I-601 but were ultimately upheld by the State Supreme Court last year (this is a separate lawsuit than the one heard by the Court this week).

If these aren't tax increases, what exactly are they and why did the Governor and Legislature feel the need to suspend the 2/3 vote requirement in 2005 to adopt them?

If I was a betting man . . .

September 9, 2008 in Blog

. . . I'd put money on the State Supreme Court dismissing Senator Lisa Brown's tax lawsuit on procedural grounds. At today's Court hearing on the constitutionality of I-601, the Justices spent most of their time questioning whether the way Brown filed her lawsuit is something they can rule on. In particular, Justice Barbara Madsen expressed concern with the Senator's attempt to have the Court inject itself in the legislative process of passing a bill.

If the Court does ultimately pass on deciding the constitutionality of a 2/3 vote requirement for tax increases, the clearest way to resolve this issue once and for all is for the Legislature to put on the ballot a constitutional amendment and allow the voters to decide.