Opinion: Too Many Cuts, Too Few Taxes: The State Legislature’s Budget Proposals Are Out of Balance
Mark your calendar. Tuesday, February 23, 2010 was the high water mark in our state government’s efforts to preserve Washington’s health, education and human-services infrastructure against the ravages of the Great Recession. From here, things will only get worse.
And even now, things aren’t so great.
On Tuesday, the state Senate and the state House released the broad outlines of their proposals to deal with the current $2.8 billion deficit in the $30 billion biennial state budget. The Senate released the details of its cuts and their revenue package, while the House detailed the cuts but not the new taxes.
Despite cutting $3.2 billion last year, both chambers still propose cutting between $650-838 million more from education, human services, health care and other government programs. Both chambers propose increasing the amount of new taxes from the governor’s disappointing proposal of $600 million by just a few hundred million. The Senate came in at $918 million and the House at $857 million (to be fair: if Gov. Gregoire counted the same way as the Senate, she proposed $750 million in new taxes). That means when you look at the 2009-11 biennial general-fund budget as a whole, the state Legislature wants to raise taxes by around 10 percent and cut programs by 44 percent.
At a press conference announcing the Senate’s budget package, Senate Majority Leader Lisa Brown, D-Spokane, spoke proudly of the politicians’ accomplishments. “We cut more than any legislature, Democrat or Republican, in state history,” she says. “The approach that we have chosen is one we think is balanced and responsible. It will further prevent the dismantling of public institutions.”
The reception outside of Olympia from liberals was not so sanguine. “It is in no way balanced,” says Remy Trupin of the Washington Budget and Policy Center, a progressive think tank. “It is going backwards on the health care and education infrastructure of the state.”
The Rebuilding Our Economic Future Coalition, an alliance of over 130 groups of environmental, education, labor, health care and human services advocates, put out a statement that says, in part, “There are still some key services that are on the chopping block. Critical grants that allow community health centers to provide health care to uninsured Washingtonians would be eliminated. Voter-approved efforts to reduce class sizes in early grades and improve student achievement would be suspended. Thousands of residents with long-term care needs would lose assistance with activities of daily living and 1,400 seniors and people with disabilities would lose care entirely. Important environmental protections that keep our communities safe would not be funded.” (The Budget and Policy Center provides more details on cuts.)
The Senate did do a much better job than the governor on closing tax exemptions, however, by plugging $518 million’s worth of loopholes. One of its best proposals is to stop letting financial institutions that created the conditions for the current economic downturn continue to deduct $51 million for their high stakes game of craps with people’s mortgages. The Senate also wants to stop $25 million in subsidies for non-organic fertilizers and pesticides. A less exciting proposal that is worth a cool $92 million would put the sales tax back on cars sold to auto dealers in trade-in deals.
Steal yourself for the cries of outrage from the business lobby and their echo chamber in the state’s newspaper editorial pages, on talk radio and from conservative think tanks . There will be a furious battle over these progressive ideas and not all of the loopholes will be closed.
The Senate leaders also say they will go after tax exemptions in a broader way, proposing a systematic method for dealing with the 580 loopholes in the tax code. Senator Phil Rockefeller, D-Bainbridge Island, is developing a bill that may include an automatic sunset for all loopholes, require the governor to release an annual tax exemption budget proposal or something of that nature. If the Senate can follow through with such legislation, it would be the only serious attempt to use the opportunity of the current fiscal crisis for much needed reform of Washington’s tax structure.
The state Senate also wants to increase the sales tax 0.3 percent to raise $313 million. To mitigate the regressive nature of this tax, the Senate would also put $33 million into the Working Families Tax Rebate. This program would allow low-income Washington state recipients of the federal Earned Income Tax Credit to get some money back from the state for the extra sales tax they would be paying.
The Budget and Policy Center’s Trupin estimates around two-fifths of the state’s population would be eligible. “We are big proponents of the Working Families Tax Rebate. It’s always a good time to look at making the tax structure work better for poor and working people,” says Trupin.
Finally, the Senate proposes increasing the cigarette tax by a dollar a pack, raising $86 million. Oddly, it’s the only sin tax that the upper chamber put forward. The governor included new taxes on soda pop, bottled water, gum and candy that would raise $255 million.
Marilyn Watkins of the Economic Opportunity Institute, another liberal think tank, thinks the Senate should reconsider their approach in this regard. “Rather than general sales tax increase, they should do targeted increases for [bottled] water, soft drinks, candy, gum and bakery products,” Watkins says.
These deep cuts and mild tax increases are coming from the largest Democratic majority that we are likely to see for quite some time. The United States is being swept by a conservative political tsunami that began with the election of President Barack Obama and manifested in last year’s Tea Parties. It has gained momentum through the health-care reform town halls, won Republicans the governorships of Virginia and New Jersey, lifted Scott Brown to the U.S. Senate from Massachusetts and threatens many seats in Washington’s state Legislature in November. As the Democratic majorities in the legislature grow smaller or even disappear, the possibility for new taxes shrink and the likelihood of meaningful reform for our outdated, regressive and inadequate tax system grows even dimmer.
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Comments
By John on February 23rd, 2010 at 10:10 pm
Is this supposed to be an editorial or a news article?
By Sarajane Siegfriedt on February 24th, 2010 at 12:32 pm
King County Democrats and Washington State Democrats recently passed a resolution that asks the Legislature to raise twice as much revenue as the Governor does, to repeal non-performing tax exemptions, beginning with the largest, and to sunset all tax exemptions every 10 years. We thank Sen. Rockefeller for advancing accountability and transparency reforms for tax exemptions and ask other legislators to champion and enact these reforms.
With regard to the specific sin taxes and closing tax loopholes, I say, why not all of the above? It is clear that neither the House nor the Senate is aggressive enough in raising revenues to save the safety net for its most vulnerable residents.
By George Howland Jr. on February 24th, 2010 at 1:36 pm
John–This piece is a hybrid, neither strictly an editorial nor a news article. Sometimes it is called opinion journalism, examples of that would be The Nation or Washington Monthly; sometimes it is called alternative journalism like Seattle Weekly or The Stranger (I was the news editor at both publications). My goal is to both present a lot of factual information so the readers can ultimately decide for themselves and to make my own point-of-view clear. Thanks for reading!