Clear Fog Blog

Political musings from Warren E. Peterson

Budget Crisis in Olympia

Posted by Warren Peterson on April 8, 2009

Years ago when I was in the Washington State House of Representatives, I was among several cosponsors of a tax reform proposal. It would have eliminated the business killing Business and Occupation tax, lowered the state sales and property tax and, I confess, instituted an income tax. The so-called “three legged stool” of taxes would have spread the burden of state taxation across a broader base. The proposal was designed to be revenue neutral. To prevent legislatures from leap frogging tax increases, it included a constitutional provision prohibiting changing one of the taxes without a proportional change in the other two taxes. To no ones surprise, the proposal went into the dustbin with all the other past income tax tainted reforms.

Older but wiser, I’m sure even the constitutional mandate would not have been enough to prevent all three taxes from rising ever higher. We’d still find ourselves in a fiscal crisis at every economic downturn. Democrats would then want to add a forth or fifth leg to the stool. So “vital state functions” would not have to be cut. For supporting evidence, just look at the states with sales, property and income taxes. Virtually all of them are crying for even more money.

I don’t like the “starve the beast” philosophy expressed by some because government does require taxes to pay for basic services and necessary social programs. But I understand their frustration. Legislative bodies are genetically prone to spending. They also tend to operate in the short term neglecting to address the long-term effects of their actions. Public employee benefits are one example.

Nevertheless, Washington State’s constitutional balanced budget requirement combined with a serious recession has placed the State Legislature at a budget Rubicon. This time the usual inflated revenue forecasts, accounting gimmicks, fee increases and trimming around the edges fall far short of resolving the financial crisis much less systemic budget problems.

Democrats are already calling for increased or new taxes, even an income tax, and tying them to popular or “bleeding heart” items like education and children’s health care. Much of today’s money crunch is a result of relatively recent biennium spending and program increases. Better to eliminate these increases now before they become ingrained, court protected entitlements that threaten the solvency of the state.

(For another approach to the budget, see https://clearfogblog.wordpress.com/2007/12/01/a-letter-to-senator-adam-kline/ )

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