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

Part III of the Laffer Curve Series

March 26, 2008 in Blog

Here is part III of the Laffer Curve video series produced by the Cato Institute. Part one focused on the theory of the Curve, part two highlighted the evidence surrounding the effect of the Curve, and this one talks about the inane budgetary policies of the Congressional Joint Tax Committee.

It is important to remember the principles behind these videos as the U.S. is experiencing economic turbulence.

View the video here

Former U.S. Comptroller David Walker in Seattle April 15

March 25, 2008 in Blog

When you’re done filing your taxes on April 15, 2008, come join Washington Policy Center for an interactive conference on how to make government work best for taxpayers. Former U.S. Comptroller David Walker of the Government Accountability Office (GAO) will deliver the keynote lunch address. Walker has been touring the nation imploring Americans to "wake up" and deal with the growing fiscal cancer facing the nation.

On July 8, 2007, CBS News did a story on Walker's efforts (video here):

David Walker is a prudent man and a highly respected public official. As comptroller general of the United States he runs he Government Accountability Office, the GAO, which audits the government's books and serves as the investigative arm of the U.S. Congress. He has more than 3,000 employees, a budget of a half a billion dollars, and a message he considers urgent.

"I'm going to show you some numbers…they’re all big and they’re all bad," he says.

So bad, that Walker has given up on elected officials and taken his message directly to taxpayers and opinion makers, hoping to shape the debate in the next presidential election.

"You know the American people, I tell you, they are absolutely starved for two things: the truth, and leadership," Walker says.

He calls it a fiscal wake up tour, and he is telling civic groups, university forums and newspaper editorial boards that the U.S. has spent, promised, and borrowed itself into such a deep hole it will be unable to climb out if it doesn’t act now. As Walker sees it, the survival of the republic is at stake.

"What’s going on right now is we’re spending more money than we make…we’re charging it to credit card…and expecting our grandchildren to pay for it. And that’s absolutely outrageous," he told the editorial board of the Seattle Post Intelligencer.

Along with Walker, national budget and tax experts will also be speaking at the April 15 conference. Click here for additional details.

King County budget priorities

March 20, 2008 in Blog

At the invitation of Councilmember Kathy Lambert, I had the opportunity this morning to brief the King County Council on budget reform tools it could use to help prioritize the county's budget and address the structural deficit caused by overspending. My presentation focused on utilizing the following best practices to prioritize and efficiently deliver core government services:

  • Balanced budget requirement
  • Spending limit/Rainy day account
  • Non-partisan revenue forecast
  • Performance budgeting (POG)
  • Performance management
  • Budget transparency

By effectively using these budget tools in concert, spending can be prioritized and structured to avoid self-inflicted deficits. This means a budget is better positioned to weather economic downturns while delivering the performance outcomes citizens expect and deserve of their government.

Click here to view the full presentation.

How High is Too High?

March 19, 2008 in Blog

A new Tax Foundation Fiscal Fact study shows that half of U.S. states tax job providers at a higher rate than any other country in the developed world. The United States already has the highest corporate income tax rate in the industrialized world. When combined with state and local taxes, only Japan has a higher tax rate.

Washington state surprisingly fares well on the overall comparison, coming in right about the middle of the pack in comparison with other states. But this is far from a mark of honor because the Tax Foundation chart shows that our state's tax rates are still far greater than the next 29 nations listed. As the study's author, Scott Hodge says,

"This is startling news for America's businesses and workers. Tax
competition for jobs and investment is fierce, and the U.S. continues
to fall further and further behind. Our states should be the world's
leaders in many things, but high taxation should not be one of them.
The high federal corporate tax rate is literally crushing states'
competitive abilities. That means fewer jobs for American workers."

Policymakers, both state and federal, should keep these statistics in mind as the economy continues to ride this current roller coaster.

This Session, There’s a Little Something for Everyone

March 16, 2008 in Publications

Looking back can give one a sense of pessimism or optimism. On one hand you can observe failures; on the other hand you can see room for improvement and discern a productive plan for the future.

Look Beyond the Numbers of State Budgeting

March 16, 2008 in Publications

There’s a lot of talk about the state budget these days. February’s revenue forecast, new deficit projections, and the legislature’s supplemental budget proposals have drummed up a lot of numbers. The talk focuses on looming deficits and what that means both today and even years down the road.

Under the Gun and Under the Radar

March 13, 2008 in Blog

As legislators prepare to adjourn officially today, March 13th, a host of legislation is making its way out of conference committees -- where both the House and Senate must hammer out the details (compromise) on legislation that passed both chambers yet were somewhat different. Usually this amounts to nothing more than crossing T's and dotting I's.

Something interesting to note today, however, is that at least one piece of legislation is calling for what amounts to be a payroll tax for employees of self-insured companies. In Washington state, every employee has to be covered by workers' compensation. Most workers are covered by the state's plan. But several, mostly larger companies, have the option to self-insure their workers -- as long as they meet the Department of Labor and Industries' stringent self-insure criteria.

ESSHB 3139 emerged from conference committee today with a new section that was not part of any previously adopted version that was brought before the public that reads, in part, in section 3,

"...each self-insured employer shall retain from the earnings of each of its workers that amount as shall be fixed from time to time by the director, the basis for measuring said amount to be determined by the director. These monies shall only be retained from employees and remitted to the department in such manner and at such intervals as the department directs and shall be placed in the self-insured employer overpayment reimbursement fund."

The disagreement over this portion of the statute will come in the question of "is this a tax/fee increase? or is this an insurance premium increase?" Due to Initiative 960 passed last year, if the definition meets the former description, it should have been required to pass the legislatu!
re with a 2/3 majority vote. Looking at the history of the bill, it failed to garner 2/3rds of the House vote after conference committee. The question isn't whether the fund this payroll "extraction" goes towards is something meritorious, the question is whether the payroll extraction is legal.

Did the employees of self-insured companies just get hit with possible future payroll taxes?

You make the call.

More information on Initiative 960's requirements:
1) House Votes on Fee Increases
2) Legal challenge to I-960

2008 supplemental budget

March 12, 2008 in Blog

The 2008 supplemental conference budget was released for public view today. Lawmakers will have until tomorrow to wade through the 407 pages to understand the spending increases they are being asked to approve. It took me a couple of hours, but I just finished reading through the proposed spending plan and found a couple of things worth noting.

I-960's finger prints are all over the supplemental budget. Last year's voter-approved initiative requiring legislative approval of all fee increases first makes an appearance in Section 127 (12) which requires the Office of Financial Management (OFM) to track its cost to implement the requirements of I-960 and report the results to the Legislature by November 1.

Section 127 (15) then instructs OFM to "conduct a review and analysis of all fees for which the legislature has delegated to state agencies and institutions of higher education the ability to establish and determine the amount, either upon initial establishment or subsequent increases . . . The objective of the review and analysis is to document the level of fees paid over the past five years, the cost of those programs over that same time period, and, to the extent available, the effectiveness of the activity in meeting its performance targets." The report is due by October 1.

The budget then authorizes agency fee increases in Sections 218 (23), 222 (1), 302 (4), 309 (1), 401 (1), 602 and 603. These are in addition to the fees being increased in HB 3381. Though not a fee increase, Section 222 (54) authorizes spending $130,000 from the General Fund to supplement a reduction in revenue from midwifery licensure fees.

Along with I-960, I-900 (performance audit authority for State Auditor) also makes an appearance in the budget. Section 139 (5) directs the Department of General Administration to report by August 31 its progress towards implementing the recommendations of the Motor Pool performance audit. A similar requirement is placed on OSPI in Section 501 (2)(b)(ii) concerning the performance audit of the state's Educational Service Districts.

In a troubling development, Section 502 (13) assumes passage of SB 6450, which the State Auditor strongly objects to.

Though there are plenty of other spending decisions worth highlighting the final one I'll point out is the attention paid to the state's paid family leave program:

Section 227 (11)
$6,218,000 of the family leave insurance account--state appropriation is provided solely for implementation of the family leave insurance program.

(a) The amount provided in this subsection assumes that, in developing the information technology systems to support the payment of benefits, the department will incorporate the claim filing and benefit payment efficiencies recommended by the joint legislative task force on family leave insurance in Part III of its final report dated January 23, 2008, including:

(i) Eliminating the option for awarding attorney fees and costs for administrative hearings;

(ii) Authorizing claims for benefits to be filed in the six-week period beginning on the first day of the calendar week in which the individual is on family leave;

(iii) Not requiring claimants to verify the birth of a child or the placement of a child for adoption;

(iv) Including an attestation from the claimant that written notice has been provided to the employer of the intention to take family leave; and

(v) Not deducting and withholding federal income taxes from benefit payments.

(b) In addition, the department shall incorporate the following claim filing and benefit payment efficiencies:

(i) Define "qualifying year" to mean the first four of the last five completed calendar quarters or, if eligibility is not established, the last four completed calendar immediately preceding the first day of the application year;

(ii) Allow individuals to file a claim for benefits in the six-week period beginning on the first day of the calendar year in which the individual is on family leave; and

(iii) After an initial family leave insurance benefit is paid, subsequent payments must be made biweekly, rather than semimonthly, thereafter.

Who needs to pass a paid family leave funding bill when you can design the payments via the budget?

Budget transparency reform off to Governor

March 11, 2008 in Blog

The Senate just unanimously concurred with amendments made by the House to SB 6818 (Promoting transparency in state expenditures). All that remains now for this reform to become law is the signature of the Governor. SB 6818 is based on WPC's recommendation for the state to follow the lead of the federal government and other states by adopting a searchable budget website.

It passed the House 94-0 last week and was previously adopted in the Senate by a vote of 48-0. According to the House bill report:

By January 1, 2009, the LEAP Committee, in collaboration with the OFM, is directed to make publicly available a searchable state expenditure information website. The website must contain information on: (1) state expenditures by fund or account; (2) expenditures by agency, program, and subprogram; (3) state revenues by source; (4) state expenditures by budget object and subobject; and (5) state agency workloads, caseloads, and performance measurements. The website must provide current and historical information.

The LEAP Committee must prepare and post on a public website, a presentation specific to K-12 education funding. The presentation will show examples of the type and level of educational programs and services supported by funding appropriated in the budget for the support of common schools. In addition, the website must contain a link to an OFM website on personal services contracts required to be filed with the OFM.

Among the supporters of this reform are the State Auditor and Attorney General.

House votes on fee increases

March 11, 2008 in Blog

The news wires are a buzz this morning with stories about yesterday's vote by the House on HB 3381 -- an omnibus fee increase bill. Many of the stories mention that prior to I-960 agencies were allowed to increase fees up to a certain percentage as authorized by law. While this is true, the legislature would consistently insert blanket authority via a budget proviso for agencies to increase their fees in excess of the fiscal growth factor. Here is just one of the many examples in the base 2007-09 budget:

NEW SECTION. Sec. 146. FOR THE HORSE RACING COMMISSION
Horse Racing Commission Operating Account—State Appropriation . . .$5,499,000

The appropriation in this section is subject to the following conditions and limitations: During the 2007-2009 fiscal biennium, the commission may increase license fees in excess of the fiscal growth factor as provided in RCW 43.135.055.

These budget provisos provided agencies with a blank check to increase fees to any level they desire. I-960 changes that process by requiring the legislature to approve the actual fee increase amount instead of delegating that authority to agencies – a process that appears to be working at this time though the following sections of HB 3381 appear to be in conflict with this requirement:

  • 12
  • 13
  • 14
  • 28
  • 29

Under I-960 the legislature needs to authorize the actual fee increase amount or can authorize a percentage increase as done in section 30 of HB 3381, but it can’t delegate the decision on the fee increase to the agency without an amendment of I-960 (this would be just like the previous system of inserting blanket line item provisos for agencies to increase fees at will without legislative approval for each increase as required by I-960).

Here are today's articles on the legislative vote: