As a father of four beautiful daughters, I know the realities that families face every time an unforeseen financial hardship comes along. You frantically scramble to find an extra dollar here and there; you “rob Peter to pay Paul” by going an extra 2,000 miles between oil changes; you take a close look at your dwindling savings account and wonder why there’s so little there.
On top of that, you have to plan for your children’s education. You try to put a little extra away each month, hoping to make a dent in the high cost of properly educating your kids. You daydream about winning the lottery or having a long-lost rich uncle leave you a chunk of money that you can set aside now, without having it affect your day-to-day expenses.
For our state government, this scenario is all too familiar, only on a much grander scale.
Every decade, it seems, the economy slows or enters a recession. And every time, it catches state government by surprise. In the early 1980s, our state’s response was to put the sales tax on food. In the early 1990s, the state raised taxes on businesses by nearly $1 billion.
But once the economy bounces back, state leaders suffer a sudden case of amnesia and increase spending, creating new programs as if the good times will last forever.
As for the state daydreaming about extra money to set aside? Our “rich uncle” comes in the form of a healthy economy fueled by major gains in the housing, construction, software and aerospace industries. As a result, Washington is sitting on a record $1.9 billion surplus.
It’s time to sock some of that money away for a rainy day and to help pay future education costs.
I’m once again sponsoring legislation to create the state’s first constitutionally protected rainy day account that would automatically set aside 1 percent of state revenue each year, currently about $120 million. This “rainy day savings account” could only be tapped by a 60 percent vote of the Legislature during good economic times – thus ensuring a true emergency exists before raiding the account – or by a simple majority during downturns in the economy.
Also, all interest gained from the rainy day account would be deposited into the education legacy trust account – the same account where the estate tax monies are deposited. In the 2007-09 biennium, the rainy day account would generate about $31 million for education. Once the rainy day account reaches $1 billion, that new revenue stream reaches $156 million per biennium. This is new, dedicated money for education funding.
Think about it. If someone told you right now that you could start saving money for future economic hardships while at the same time reaping the benefits of interest to help pay for your child’s education – all without affecting your current budget – wouldn’t you jump at the chance? Who could say “no” to this win-win situation?
I have one question for Washington state leaders: If not now, with a $1.9 billion surplus, when?
It’s time for our state to get off the budget roller coaster that results in tax increases or severe programs cuts when times are tough, and unsustainable spending and new entitlements when times are good.
It’s time for our state to get creative in finding new education dollars for our children.
It’s time for Washington state to pass a constitutionally protected rainy day fund.
We were very close to seeing this legislation pass last year. We had support from economists across the state, Democrats across the aisle and even the Gates Tax Study Commission.
Hopefully, those who didn’t support us last year see the wisdom in preparing for the future, while at the same time providing a sizable new source of ongoing revenue for education. Washington taxpayers want off the roller coaster and Washington students deserve more.
Sen. Joe Zarelli, R-Ridgefield, is the ranking Republican and former chair of the Senate Ways and Means Committee.
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