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New budget, with same old problems

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By Richard S. Davis
The swan song of a lame duck rarely enchants. So, few expected Gov. Chris Gregoire's final budget to receive rave reviews. It didn't.
Released last week, her proposal drew reactions ranging from cool to noncommittal.
"Dead on arrival," pronounced Rep. Gary Alexander, the House Republicans lead budget writer.
The Democrats' budget leader, Rep. Ross Hunter, said Gregoire's plan "exposes the basic structural problems" that makes it difficult to write an acceptable budget without more money.
Sen. Andy Hill, likely head of the Senate budget committee under the majority coalition, called it "a useful reference" as the Senate writes a budget without new taxes.
Through a spokesman, Gov.-elect Jay Inslee, deemed it a "thoughtful effort." He'll offer his own ideas soon.
Diplomatically, everyone expressed appreciation, but enthusiasm was muted. That's how it's been for a while. Gregoire's last few years have been an ongoing fiscal struggle, marked by recession, voter rejection of tax ideas she supported, and the state Supreme Court's McCleary ruling that Washington failed to fund public schools adequately.
There's limited flexibility in state budgets. Legal constraints, personnel contracts, maintenance of effort requirements and the like drive much of what is done year after year. In that sense, Gregoire's budget effectively established a baseline, a starting point. But it's the response to McCleary that will define the 2013 legislative session.
Nearly a year has passed since the court slapped legislators for underfunding the public schools. Lawmakers set the stage for the rebuke several years earlier by passing legislation changing the definition and funding of basic education. They promised full implementation and a lot of new money by 2018.
While the court expressed clear frustration with the Legislature's history of broken promises, the justices agreed that the legislation laid out an acceptable path to full funding. The legislature's pledge became the court's standard.
Two days after Gregoire presented her final budget the black robes appeared again, saying the progress reported after the 2012 session was inadequate.
"Slowing the pace of funding cuts," wrote the majority, "... does not equate to forward progress." In consequence, the report filed after the 2013 session set out a detailed plan for fully funding basic education by 2018.
A significant down payment -- estimates begin at $1 billion -- is expected in the next budget cycle. Gregoire found the billion in tax hikes. About two-thirds of the money comes from extending "temporary" tax increases on beer and service business; the other third comes from an escalating wholesale fuel tax.
Most conversations about new taxes in 2013 have contemplated the extension of the taxes scheduled to sunset next June. The vote to continue them is, nonetheless, a vote to raise taxes requiring a supermajority under current law.
The fuel tax poses other problems. Gregoire says using transportation revenues to pay for student transportation makes other dollars available for enhanced education spending. Something like this was inevitable.
Last October, the state Supreme Court ruled that a fuel tax dedicated to environmental cleanup was constitutional. Critics warned then that the ruling marked the beginning of the end of the 18th Amendment's requirement that gas taxes must be dedicated to highway purposes.
The decision means that "the Legislature can ... increase the gas tax and take those revenues and use them for education or to support social services," said Phil Talmadge, according to the Associated Press. Talmadge, a former state Supreme Court justice, represented the group challenging the tax.
Transportation advocates fear Gregoire's plan threatens funding for necessary road maintenance and operations programs. When first imposed, the tax would boost gas prices a nickel a gallon, rising to 12 cents in 2017, effectively drying up support for higher gas taxes. It's a bad precedent and a bad idea.
The divisions are clear. Republicans and a fiscally conservative Senate majority insist on meeting the McCleary mandate from existing resources. That means cuts to social service programs, which House Democrats find unacceptable. Gov.-elect Inslee pledged to veto tax hikes.
As Gregoire said, lawmakers have rejected her budgets before. There's no magic in her final offering. A fiscal impasse moves to Olympia, with taxpayers, schools and social services on the edge. After extended legislative wrangling, voters may ultimately resolve the budget next November.
Richard S. Davis is president of the Washington Research Council. His email address is

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