Property tax cut coming but oh what a budget gimmick!
Nothing is ever easy in the legislature. Take for example what looked to be a very simple decision to provide property tax relief after the tremendous growth in forecasted tax revenue. While a one-year property tax cut is coming, it is being facilitated by a major budget gimmick creating the terrible precedent to prevent funds from ever reaching the voter-approved constitutionally protected Budget Stabilization Account (BSA). Like all controversial budget moves, this development happened in the last few days of session with little public involvement. So what exactly happened?
After looking at the floor calendar for the House & Senate, I decided it was safe to go to bed early on Tuesday night. There wasn’t anything controversial scheduled and it had been a crazy couple of weeks so I thought I was safe. Foolishly, I forgot the warning from the sage legislative philosopher Metallica who warned that you must always “sleep with one eye open, gripping your pillow tight” as long as the legislature is in session.
Sure enough, when I came to work Wednesday morning I saw my email in-box had exploded about the time I went to bed with news of a major budget gimmick afoot in Olympia. Learning the details left me channeling Vince Lombardi trying to figure out what the hell was going on.
What occurred is that an amendment was being added to SB 6614 to provide a one-year property tax cut paid for by keeping money that would have gone to the constitutionally protected BSA from ever being deposited. This means that using these funds didn’t require a 3/5 vote as mandated by the constitution. While everyone in the legislature agreed there should be some type of property tax relief (there was disagreement over the size and timing), the precedent set by SB 6614 to keep funds from ever being deposited into the BSA as required is very troubling.
As you can imagine there was a major procedural fight on Wednesday over whether this process was constitutional. One amendment was proposed by Senate Republicans to rename the bill title:
“An act relating to violating the public trust, downgrading the state's bond rating, and ignoring the will of the voters by unconstitutionally raiding the state's Budget Stabilization Account.”
The amendment was eventually withdrawn before a vote.
There was also a challenge whether this move would actually escape the requirement of a 3/5 vote to use the funds. The Lt. Governor, who presides over procedural disputes as President of the Senate, eventually ruled that SB 6614 didn't require a 3/5 vote for use of BSA funds since the money hasn't been deposited yet into the account. Another challenge was raised whether SB 6614 violated the single subject rule. The Lt. Governor also rejected that challenge.
As for why any of this matters, the State Treasurer summed it up best when he said:
“As the State’s Chief Financial Officer I have a duty to speak out if we can avoid a self-inflicted wound. If the Legislature shifts its rules to avoid filling the Rainy Day Fund in the year ahead we weaken our financial position and disregard the spirt of the Constitutional Amendment passed overwhelmingly by voters who wanted to save extraordinary revenue. We also damage our well-deserved and hard-won reputation for good fiscal management with bond rating agencies and investors. Say ‘no’ to budget gimmicks. Raiding, or diverting, the Rainy Day Fund for today’s desires is the opposite of good fiscal management. Don’t do it. I urge the Legislature to not start a terrible precedent of diverting Rainy Day funding.”
During my younger years I thought you could design mechanisms to force fiscal discipline on the legislature. Experience has taught me, however, those efforts are like trying to use a spaghetti strainer to hold water. SB 6614 is the perfect example of that.
While it is good to see the legislature recognize the need to provide property tax relief, the terrible precedent set by SB 6614 will surely come back to bite us again in the future.
Updated 2:15 p.m.