Every day, families are encouraged to save for a “rainy day” in case something unexpected comes up — an emergency that stretches the household budget.
Shouldn’t we expect our government to do the same? We believe that the answer is, emphatically, “Yes.”
Washington voters will have the chance on Nov. 6 to amend our Constitution to require a state “rainy day” fund — formally known as the Budget Stabilization Account. This measure is a long-overdue step to protect Washington’s future by making sure the state has an account it can draw on in tough budget times. That’s just common sense.
What is the “Budget Stabilization Account”?
Last year, the Legislature passed ESSJR 8206, a constitutional amendment to create a permanent emergency reserve fund. It garnered overwhelming bipartisan support.
Lawmakers on both sides of the aisle — Republicans and Democrats alike — understand the need for such an account. Although our state’s economy is in relatively good shape today, think back just six years to what we faced in 2001 after 9/11. We had an unemployment rate hovering at nearly 8 percent as the aerospace industry plummeted and tax receipts at the state level dropped dramatically. On top of all that we experienced a magnitude 6.8 earthquake. Without a “rainy day” fund to ease the impact, important education, social service and criminal justice programs faced cutbacks.
That’s why we’re asking voters to make the government save for a rainy day. As anyone in Washington knows, our economy has been drenched before. 2001 was a pretty lousy year all the way around.
Here’s how this savings account would work: Every year, 1 percent of state revenues would be automatically put into the account. It’s that simple. And prudent. The measure clearly states that the money collected in the account can only be used for true emergencies. Money in the fund can only be used in case of a natural disaster, economic downturn or vote of a supermajority of both houses of the Legislature.
These three safeguards are built into the amendment to ensure that funds are only released for true emergencies.
Why does our state need a “rainy day” fund?
In the past, when Washington’s economy weakened, taxes where raised to support the state budget. In the economic downturn of the early 1990s, the state raised taxes across the board by $1 billion. And remember what happened in the early 1980s, another time of economic downturn? The state imposed a sales tax on food. It was perhaps the most unpopular tax levied in our state’s 119-year history.
With a “rainy day” fund, money for the budget would be drawn from this emergency account instead of increasing taxes or cutting services. Washington’s Budget Stabilization Account will be funded during strong economic years. It will be the first line of defense against the impacts on the state budget resulting from recession.
Similarly, a “rainy day” fund would protect Washington in case of a natural disaster such as an earthquake. If Washington experienced a severe natural disaster today, our state government would not have the resources to handle the physical and economic consequences. It’s hard to forget what happened in the central Puget Sound area during the Nisqually Earthquake of 2001. We were lucky. If the earth had moved for an additional 45 seconds, there would have been billions of dollars more damage to freeways, bridges, overpasses and other vital transportation infrastructure. As it was the bill was staggering.
With a “rainy day” fund, Washington will have the money to stabilize the state in the event of a natural disaster.
The state’s economy is in good shape today. It won’t always be that way. And we simply have no idea when a natural disaster might hit. So now is the right time to create a Budget Stabilization Fund.
The campaign for a state Budget Stabilization Fund — ESSJR 8206 — is supported by business and community leaders across the state. Please join a bipartisan coalition and business leaders across the state in supporting this measure. This is a common sense vote that will pay off in the long run.
Steve Mullin is president of the Washington Roundtable, a public policy organization comprised of CEOs representing major private-sector employers throughout the state.
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