Published: Wednesday, January 28, 2009
Legislators' job is to make choices, not punt to voters
It looks like we're going to get to vote on the state budget. The governor's budget director recently told a business audience, "I'd be flabbergasted if a tax proposal wasn't on the ballot."
I'd be flabbergasted if voters approved it. But I'd prefer the Legislature spared us the bother. Despite the populist appeal of such things, I'm not thrilled with ballot-box budgeting. It turns the budget process upside down. Whatever hits the ballot will be unsatisfactory.
Here's why.
Not long ago, budget geeks celebrated something called the "Priorities of Government." They called it the POG and credited it with helping then-Gov. Gary Locke balance the recession-slammed budget earlier this decade. Locke worked with Peter Hutchinson, a consultant who pioneered the approach. Hutchinson later explained the technique in an interview with the Association of Washington Cities.
"This approach starts with the end in mind -- both the results to be delivered and the total revenue to pay for them. By setting the revenue up front, the issue of taxes is resolved at the outset, not at the end," he said. "When there is a shortfall, POG focuses on what to keep (what is most valuable) not on what to cut."
A budget relying on voter approval reverses the dynamic. The "end in mind" is new taxes, not smart priorities. Inevitably, the people designing the tax package will include programs intended to draw votes, high-priority programs that belong in the base budget. That's marketing, not budgeting.
It's the flip side of the "Washington Monument Strategy," a reference to the National Park Service's practice of treating every budget cut as a reason to shut down the capital's iconic attraction. Even when you know it's a bluff, the threat of unacceptable takeaways can be effective.
So we can expect a poll-tested proposal from the Legislature. I'd anticipate a package heavy on education, capitalizing on the organizational effectiveness of the teachers' union and highly motivated school reformers. The key to victory will be turning out multiple constituencies with a stake in the outcome.
Gov. Gregoire took the right approach, using a priority-setting process that followed the Hutchinson model. In her inaugural address, she said her proposal "contains as much care and compassion as we could muster" within available revenues. She rightly rejected appeals to boost taxes on hard-pressed families and businesses.
Now, she has to let legislators know she is serious. It's not enough for her to say she "hates" her budget and step away from the proposal. When she does that, she invites lawmakers to roll her, to increase spending and boost taxes. She did the right thing and must aggressively defend her decision.
It won't be easy. Since she proposed her budget, revenues have declined. Priorities will have to be adjusted. Some of what she proposed will have to be trimmed. She should take the lead in identifying her priorities. And she needs to make it clear to legislators that she will oppose efforts to raise taxes.
And let's consider a possible tax package for a minute. Forget talk about an income tax or major reforms. There are only three major levers to pull: business, sales or property taxes. With the sales tax approaching 10 percent in much of the Puget Sound region, consider a further increase a nonstarter. Likewise, no one's going to raise property taxes with home values falling and foreclosures increasing.
That leaves business taxes. Three ideas get bandied about: extending the sales tax to business and professional services, eliminating exemptions, and boosting the Business and Occupation (B&O) tax. Any increase in the cost of doing business delays the recovery and places jobs and investment at risk.
Voters understand that. In 1993, in what may be the only tax revolt spurred by a business tax hike, they passed a strict tax and spending limit, Initiative 601, to protest a major increase in B&O taxes.
Following years of unsustainable spending, a sharp recession has created a budget crisis requiring decisive action. Legislators should not waste their time or ours designing a budget for the ballot. They should follow the governor's lead, set priorities, and adopt a responsible spending plan within current revenues.
Richard S. Davis writes on public policy, economics and politics. His e-mail address is richardsdavis@gmail.com.
I'd be flabbergasted if voters approved it. But I'd prefer the Legislature spared us the bother. Despite the populist appeal of such things, I'm not thrilled with ballot-box budgeting. It turns the budget process upside down. Whatever hits the ballot will be unsatisfactory.
Here's why.
Not long ago, budget geeks celebrated something called the "Priorities of Government." They called it the POG and credited it with helping then-Gov. Gary Locke balance the recession-slammed budget earlier this decade. Locke worked with Peter Hutchinson, a consultant who pioneered the approach. Hutchinson later explained the technique in an interview with the Association of Washington Cities.
"This approach starts with the end in mind -- both the results to be delivered and the total revenue to pay for them. By setting the revenue up front, the issue of taxes is resolved at the outset, not at the end," he said. "When there is a shortfall, POG focuses on what to keep (what is most valuable) not on what to cut."
A budget relying on voter approval reverses the dynamic. The "end in mind" is new taxes, not smart priorities. Inevitably, the people designing the tax package will include programs intended to draw votes, high-priority programs that belong in the base budget. That's marketing, not budgeting.
It's the flip side of the "Washington Monument Strategy," a reference to the National Park Service's practice of treating every budget cut as a reason to shut down the capital's iconic attraction. Even when you know it's a bluff, the threat of unacceptable takeaways can be effective.
So we can expect a poll-tested proposal from the Legislature. I'd anticipate a package heavy on education, capitalizing on the organizational effectiveness of the teachers' union and highly motivated school reformers. The key to victory will be turning out multiple constituencies with a stake in the outcome.
Gov. Gregoire took the right approach, using a priority-setting process that followed the Hutchinson model. In her inaugural address, she said her proposal "contains as much care and compassion as we could muster" within available revenues. She rightly rejected appeals to boost taxes on hard-pressed families and businesses.
Now, she has to let legislators know she is serious. It's not enough for her to say she "hates" her budget and step away from the proposal. When she does that, she invites lawmakers to roll her, to increase spending and boost taxes. She did the right thing and must aggressively defend her decision.
It won't be easy. Since she proposed her budget, revenues have declined. Priorities will have to be adjusted. Some of what she proposed will have to be trimmed. She should take the lead in identifying her priorities. And she needs to make it clear to legislators that she will oppose efforts to raise taxes.
And let's consider a possible tax package for a minute. Forget talk about an income tax or major reforms. There are only three major levers to pull: business, sales or property taxes. With the sales tax approaching 10 percent in much of the Puget Sound region, consider a further increase a nonstarter. Likewise, no one's going to raise property taxes with home values falling and foreclosures increasing.
That leaves business taxes. Three ideas get bandied about: extending the sales tax to business and professional services, eliminating exemptions, and boosting the Business and Occupation (B&O) tax. Any increase in the cost of doing business delays the recovery and places jobs and investment at risk.
Voters understand that. In 1993, in what may be the only tax revolt spurred by a business tax hike, they passed a strict tax and spending limit, Initiative 601, to protest a major increase in B&O taxes.
Following years of unsustainable spending, a sharp recession has created a budget crisis requiring decisive action. Legislators should not waste their time or ours designing a budget for the ballot. They should follow the governor's lead, set priorities, and adopt a responsible spending plan within current revenues.
Richard S. Davis writes on public policy, economics and politics. His e-mail address is richardsdavis@gmail.com.
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