Published: Sunday, December 13, 2009
IN OUR VIEW / STATE BUDGET CRISIS
Some principles to follow
The all-cuts budget released Wednesday by Gov. Chris Gregoire painted the picture she intended. It was ugly, and unacceptable. It effectively made the case for considering some tax increases in the legislative session that starts Jan. 11.
But ...
Tapping new revenue sources in a weak economy threatens to forestall recovery by holding down consumer spending and job creation. That fact must remain top-of-mind as lawmakers, the governor, and various stakeholders discuss and debate ways to close a $2.6 billion budget gap.
That’s a huge number, especially on the heels of some $6 billion in cuts last spring — even after the feds shoveled in $3 billion in stimulus cash. And because about two-thirds of the budget is protected from further reductions, that $2.6 billion must come out of a $9.3 billion piece of the state budget pie.
The governor’s all-cuts proposal — a blueprint she was required by state law to prepare — showed the painful choices we face. Gone would be the Basic Health Plan, which provides subsidized coverage for 65,000 low-income people; a general assistance program for people who can’t work because of disabilities; some $180 million in financial aid to needy college students; and levy equalization money that’s crucial to rural school districts with low property values — among other serious and truly damaging cuts.
The governor says she’ll propose about $700 million in revenue increases to avoid some of that damage, and would prefer to avoid increases in property, business and general sales taxes. She has the Department of Revenue looking for opportunities to close tax loopholes or repeal exemptions that no longer make sense, and is asking the business community and other stakeholders for ideas on new revenue, budget cuts and reforms that can save money.
A few principles we suggest the governor and lawmakers follow:
n Make any new taxes temporary, aimed only at addressing the current recession-caused crisis.
n Look for revenue sources that pose the least danger to economic recovery. That would put business and general sales taxes at the bottom of the list, along with repealing exemptions in struggling or otherwise key industry sectors.
n Keep education cuts — early learning, K-12 and higher ed — to a minimum. Education is the most important investment we can make in our economic future.
n Make needed cuts, and have them take effect, as early as possible. The longer lawmakers wait, the greater the cuts will have to be.
That last point is crucial. Even after balancing this budget, a $2.8 billion hole awaits in the next biennium. One-time cuts won’t be enough. Reforms that offer permanent savings — that’s the real gold Olympia should be mining.
But ...
Tapping new revenue sources in a weak economy threatens to forestall recovery by holding down consumer spending and job creation. That fact must remain top-of-mind as lawmakers, the governor, and various stakeholders discuss and debate ways to close a $2.6 billion budget gap.
That’s a huge number, especially on the heels of some $6 billion in cuts last spring — even after the feds shoveled in $3 billion in stimulus cash. And because about two-thirds of the budget is protected from further reductions, that $2.6 billion must come out of a $9.3 billion piece of the state budget pie.
The governor’s all-cuts proposal — a blueprint she was required by state law to prepare — showed the painful choices we face. Gone would be the Basic Health Plan, which provides subsidized coverage for 65,000 low-income people; a general assistance program for people who can’t work because of disabilities; some $180 million in financial aid to needy college students; and levy equalization money that’s crucial to rural school districts with low property values — among other serious and truly damaging cuts.
The governor says she’ll propose about $700 million in revenue increases to avoid some of that damage, and would prefer to avoid increases in property, business and general sales taxes. She has the Department of Revenue looking for opportunities to close tax loopholes or repeal exemptions that no longer make sense, and is asking the business community and other stakeholders for ideas on new revenue, budget cuts and reforms that can save money.
A few principles we suggest the governor and lawmakers follow:
n Make any new taxes temporary, aimed only at addressing the current recession-caused crisis.
n Look for revenue sources that pose the least danger to economic recovery. That would put business and general sales taxes at the bottom of the list, along with repealing exemptions in struggling or otherwise key industry sectors.
n Keep education cuts — early learning, K-12 and higher ed — to a minimum. Education is the most important investment we can make in our economic future.
n Make needed cuts, and have them take effect, as early as possible. The longer lawmakers wait, the greater the cuts will have to be.
That last point is crucial. Even after balancing this budget, a $2.8 billion hole awaits in the next biennium. One-time cuts won’t be enough. Reforms that offer permanent savings — that’s the real gold Olympia should be mining.
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