Opinion Columnists

<< Previous   of   Next >>   ADVERTISEMENT   HAVE YOUR SAY Feel strongly about something? Share it with the community by writing a letter to the editor. You’ll need to include your name, address and daytime phone number. (We’ll only publish your name and hometown.) We reserve the right to edit letters, but if you keep yours to 300 words or less, we won’t ask you to shorten it. If your letter is published, please wait 30 days before submitting another. Send it to: E-mail: letters@heraldnet.com Mail: Letters section The Herald P.O. Box 930 Everett, WA 98206 Fax: 425-339-3458 Have a question about letters? Contact Carol MacPherson (cmacpherson@heraldnet.com or 425-339-3472).   Published: Wednesday, June 18, 2008 Disintegrating revenue makes budget biggest issue By Richard S. Davis Tomorrow the economic and revenue forecast council releases its estimate of how much money state government has to spend. It's a little like Groundhog Day without the top hats and Punxsutawney Phil. Unlike groundhogs, however, the state economists emerge from their burrows four times a year to make their forecasts. These days there's little joy in the fiscal numbers. Last February forecasters sliced more than $425 million from projected revenue collections in 2007-2009. Little has improved since then. Last week the forecast council's interim director reported that regular collections were $4 million below forecast for the four months since February. That's just 0.1 percent, not bad, but still sliding south. Absent an imminent tax vote, most people don't pay much attention to state budgets. Inattention invites mischief. This year, the state budget should be the dominant issue in legislative and gubernatorial politics. If it takes a threatened tax hike to spark voter interest, sparks should be flying. When lawmakers left Olympia in March, Democrats crowed about the $851 million they left in reserve, more than half of it in a hard-to-tap rainy day fund. Less was said about the multi-billion gap between estimated revenues and expenses in the two-year budget lawmakers confront next January. Here are the numbers from the staff of the nonpartisan Senate Ways and Means Committee. After the February revenue forecast and adjusting for budget transfers and such, the state general fund will take in about $31.6 billion over the 2009-2011 budget cycle. Projected spending -- just the costs of maintaining current obligations -- is estimated at $34.5 billion, a gap of $2.9 billion. Spending down the beginning cash on hand drops the gap to $2.5 billion. Even if you drain the rainy day fund, there's a shortfall of $1.7 billion. Of course, it would be irresponsible to draw reserves to zero. You'd want to keep about a billion in the bank, preferably more. No matter how you look at it, the state's staring at a shortfall of least $2.5 billion, probably more. Disregard talk about lawmakers "managing" their way out of the hole. You manage your way out of small problems. This isn't a small problem. Curing the looming deficit will require a major, disciplined restructuring of a state budget that has increased 33 percent over the last four years. Incumbents fond of their new and expanded programs will trim reluctantly. They'll want to "balance" spending cuts with tax hikes. Budget battles will dominate the 2009 session, which means taxes and spending should be the dominant issues of the 2008 campaign. While voters and lawmakers may prefer to talk about health care, the WASL, and global warming/cooling/whatever, the budget is the only must-do item on the 2009 legislative agenda. Unlike their counterparts in the other Washington, legislators in Olympia have to make it balance. After tomorrow's release there will be another pre-election forecast in September. By then, the budget gap will likely be deeper. Here's why. Rising gas and food prices claim an increasing share of consumer spending, leaving less money available for more discretionary retail spending. Gas and groceries aren't subject to the state sales tax. As we spend more on untaxed transactions, we cut our taxable spending, reducing the flow of dollars to the state's operating budget. (The gas tax goes into the transportation budget.) State government also feels the pinch of higher fuel prices. So as revenues erode, costs escalate and the jaws of the budget gap stretch wider. Remember that the current projected shortfall reflects a business-as-usual budget. Even in a state that has weathered the economic downturn better than most, business as usual begins to look like an unaffordable luxury. Taxpayers will soon be paying more and receiving less. Think about that when you hear a politician propose state-run health care, smaller classes, exotic environmental programs, or any of the other pricey initiatives trotted out this campaign season. Growing government while private payrolls shrink assures future hardship. The groundhog can hide until things improve. Our political leaders cannot, unless we let them. Before we vote, let's be certain we know how they're going to handle the deficit. Richard S. Davis is vice president-communications of the Association of Washington Business. His columns do not necessarily reflect the views of AWB. His e-mail address is richardsdavis@gmail.com

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