Published: Saturday, March 1, 2008
GUEST COMMENTARY
Look beyond the numbers of state budgeting
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 today and even years down the road.
Tomorrow the numbers may change, or at the very least they won't be what stick in people's minds. So let's look at some ideas that ought to stick.
As a rule of thumb, the state budget is the opposite of gravity. Gravity pulls things down, while all of the spending pressure on the state budget is upwards. That's right -- the swarms of lobbyists roaming the halls of the state Capitol are not there asking lawmakers to spend less money. It should come as no surprise, then, that state spending growth tends to outpace population growth and inflation.
Thanks to a strong economy, revenue has grown well beyond inflation for the past few years. Even amidst the talk of a revenue decline, it's only a cut in the rate of increase -- revenue is still projected to grow beyond inflation. State lawmakers do not have a revenue problem. They have a spending problem.
Let's say I buy a scratch lottery ticket today and win $500. Does it make sense for me to then buy a car with a $500 per month payment? That's basically what lawmakers in Olympia have done in the last few years. They've used one-time revenues during boom years to make the down payments on new spending programs, with no way to make the long-term payments.
It's basic math: the bigger the budget this year, the more it costs to maintain next year. Adding to the budget only compounds that problem.
We hear a lot about a "revenue problem" (code talk for "we need an income tax"). But is that really the issue? The natural tendency is for government spending to grow, not shrink, and recent history has shown that no matter how flush with cash state coffers are, lawmakers will always push to spend more. Their appetite for spending appears insatiable, so more revenue will only lead to more spending.
Not content with a 33 percent increase in state spending over four years, some lawmakers and special interest groups have proposed the state spend more in the face of projected deficits caused by overspending.
Still others argue that speeding up government spending on rebuilding infrastructure will provide jobs now and help keep the economy strong. But this is an absurd argument. It's like saying burning my neighbor's house down is good for the economy because it will keep local builders in business. The only way the government can "create" a job is by taking money away from someone else.
These proposals might make for good election-year politics but they're bad policy that will only make matters worse in the long run.
The governor and legislative leaders have insisted the state needs to get off of the "spending rollercoaster." Their proposed solutions? Build a bigger roller coaster.
Here's a final thought. The sound approach to the state's budget woes is a meaningful constitutional spending limit. The state's I-601 spending limit, passed by voters in 1993, is so riddled with holes that it's now meaningless. Clearly a statutory restraint is not enough. The state needs a meaningful spending limit that makes allowances for genuine emergencies, much like the rainy day amendment that voters approved in November, but cannot be gamed and sidestepped by fund transfers and off-budget spending, as lawmakers have done over the last few years.
Numbers and projections will come and go, but unless lawmakers change the way they budget taxpayer dollars, the fundamental problem will remain.
The real problem is on the spending side of the state's ledger, not the revenue side. Lawmakers must learn to prioritize expenditures, realizing that not every project or program (no matter how attractive) can be a priority. That's how people budget in the real world.
John Barnes is communications director for Washington Policy Center, a nonpartisan public policy research organization in Seattle and Olympia. For more information contact John at jbarnes@washingtonpolicy.org or 206-937-9691, or visit washingtonpolicy.org.
Tomorrow the numbers may change, or at the very least they won't be what stick in people's minds. So let's look at some ideas that ought to stick.
As a rule of thumb, the state budget is the opposite of gravity. Gravity pulls things down, while all of the spending pressure on the state budget is upwards. That's right -- the swarms of lobbyists roaming the halls of the state Capitol are not there asking lawmakers to spend less money. It should come as no surprise, then, that state spending growth tends to outpace population growth and inflation.
Thanks to a strong economy, revenue has grown well beyond inflation for the past few years. Even amidst the talk of a revenue decline, it's only a cut in the rate of increase -- revenue is still projected to grow beyond inflation. State lawmakers do not have a revenue problem. They have a spending problem.
Let's say I buy a scratch lottery ticket today and win $500. Does it make sense for me to then buy a car with a $500 per month payment? That's basically what lawmakers in Olympia have done in the last few years. They've used one-time revenues during boom years to make the down payments on new spending programs, with no way to make the long-term payments.
It's basic math: the bigger the budget this year, the more it costs to maintain next year. Adding to the budget only compounds that problem.
We hear a lot about a "revenue problem" (code talk for "we need an income tax"). But is that really the issue? The natural tendency is for government spending to grow, not shrink, and recent history has shown that no matter how flush with cash state coffers are, lawmakers will always push to spend more. Their appetite for spending appears insatiable, so more revenue will only lead to more spending.
Not content with a 33 percent increase in state spending over four years, some lawmakers and special interest groups have proposed the state spend more in the face of projected deficits caused by overspending.
Still others argue that speeding up government spending on rebuilding infrastructure will provide jobs now and help keep the economy strong. But this is an absurd argument. It's like saying burning my neighbor's house down is good for the economy because it will keep local builders in business. The only way the government can "create" a job is by taking money away from someone else.
These proposals might make for good election-year politics but they're bad policy that will only make matters worse in the long run.
The governor and legislative leaders have insisted the state needs to get off of the "spending rollercoaster." Their proposed solutions? Build a bigger roller coaster.
Here's a final thought. The sound approach to the state's budget woes is a meaningful constitutional spending limit. The state's I-601 spending limit, passed by voters in 1993, is so riddled with holes that it's now meaningless. Clearly a statutory restraint is not enough. The state needs a meaningful spending limit that makes allowances for genuine emergencies, much like the rainy day amendment that voters approved in November, but cannot be gamed and sidestepped by fund transfers and off-budget spending, as lawmakers have done over the last few years.
Numbers and projections will come and go, but unless lawmakers change the way they budget taxpayer dollars, the fundamental problem will remain.
The real problem is on the spending side of the state's ledger, not the revenue side. Lawmakers must learn to prioritize expenditures, realizing that not every project or program (no matter how attractive) can be a priority. That's how people budget in the real world.
John Barnes is communications director for Washington Policy Center, a nonpartisan public policy research organization in Seattle and Olympia. For more information contact John at jbarnes@washingtonpolicy.org or 206-937-9691, or visit washingtonpolicy.org.
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