Legislative chambers last session echoed the refrain often heard in the aisles of mall retailers: “We can’t afford it now.” It’s a nonjudgmental comment, one that doesn’t come to grips with the merits of the proposed purchase.
Saying we don’t have the cash now buys time and delays the deciding. For example, if we could afford to put every Washingtonian on a state health plan, should we? Does it make sense for tuition at a state college to be lower than that at many private high schools? What’s the proper balance between personal and collective responsibility in social services?
Over the years, fundamental questions about fiscal policy disappear and budgets become cosmetic surgical exercises in nip and tuck. Despite this year’s grueling budget deliberations, lawmakers with access to bail-out dollars failed to confront the pivotal questions regarding the appropriate size and role of state government.
Smart fiscal policy looks beyond what we can afford now to concentrate on what we can sustain in the future.
The budget that “everyone hates” is miscast as a temporary response to an unprecedented revenue collapse. Legislators will replace the money when the good times return. Frozen salaries will be thawed and some will get catch-up pay to cover the lost years. The contraction is a spasm, not a permanent condition. Soon we’ll be back to the status quo ante. Wrong.
Clearly, nearly $4 billion in cuts won’t be easily absorbed. Thousands of public employees face layoffs. Many thousands of lower-income Washingtonians may lose health care coverage. Enrollments will drop at state colleges and universities and those who make it in will pay more. And because the adopted budget is unsustainable, more drastic surgery will be required soon.
Lawmakers considered tax hikes to avoid some reductions. Ultimately, they concluded that the public would not support a tax increase. Even if the next revenue forecast shows another decline in expected tax collections, public opinion will likely remain unreceptive.
Although some legislators contend that as the effects of the budget cuts become apparent taxpayers will be more willing to unclench their fists, that’s unlikely. Most of those tight fists are squeezing the last dime out of dwindling paychecks to cover higher mortgage payments, credit card bills and car repairs.
Some legislators and analysts say taxes and spending have fallen significantly as a share of the economy. Possibly true — the imprecise measure depends on often-flawed estimates — but irrelevant. That doesn’t mean there’s room to raise taxes. Government is not guaranteed a fixed slice of the economy. Public spending should not reflexively swell and recede on the economic tides, with tax hikes imposed to preserve arbitrary ratios. Growing with the bubble inevitably leads to the misery of the bust.
Washington voters came up with a different, similarly arbitrary, measure back in 1993, when they limited budget increases to an index reflecting population growth plus inflation. During periods of rapid growth, it’s a tight restraint. But it has this advantage: Boom time revenues are put into savings to maintain spending during straitened times.
Treating the shortfall as temporary, as lawmakers did, delays the recalibration required to put state spending on a sustainable trajectory.
Cuts made in hasty response to a temporary shortfall differ from those made to assure long-term fiscal stability. Responding to a transient crisis, legislators look at programs and services that can be cut quickly and decisively. Some of those reductions make lasting sense. But the process leaves too much of the iceberg below the waterline. Further, the adopted budget still relies on more than $3 billion in one-time federal money to maintain ongoing programs.
In this year of plummeting revenues, perhaps this is the best we could expect. But fundamental policy decisions cannot be delayed indefinitely. The most optimistic forecasts point to a multi-billion dollar shortfall in two years, when the federal money is gone.
There’s no simple formula for determining the right size and scope of government. Neither is there an easy rule setting the proper level and distribution of the tax burden. This is the stuff of principled philosophical disagreement. Some want more government and higher taxes. Most of us don’t.
Once again, the Legislature deferred the debate. We’re running out of time.
Richard S. Davis writes on public policy, economics and politics. His e-mail address is richardsdavis@gmail.com.
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