The Olympia Newswire is the only non-profit, public interest, online news site that I’m aware of that launched from a community fundraising drive based on small donations of $50-200 rather than from foundation grants or large donations from wealthy individuals. The majority of these donations were raised over the 2009 Winter holiday.

The Newswire was a pilot project. It started as a non-profit because I believe that the market undervalues public interest news, and so community donations will have to play an important role in creating a new business model for independent reporting on public affairs. But that business model will likely not rely upon small donations alone. It will also need to include foundation grants and large donations, and perhaps eventually online and print edition advertising. Pending the raising of more money for a re-launch as a permanent news source, the Newswire ceased operation in April, 2010.

After concluding its coverage of the 2010 legislative session, J-Lab awarded the Olympia Newswire with a $25,000 grant to re-launch. The Newswire was one of just 9 recipients of the grant out of more than 270 applicants. But to meet the grant’s expectation that the Newswire raise sufficient matching funds to successfully continue past the 2011 legislative session, I would have had to drop out of my PhD program. Given the choice between completing my PhD this year and re-launching the Olympia Newswire, I decided to finish my PhD, and so I returned the New Voices grant in July, 2010.

It’s possible that the Newswire will re-launch in 2011 or 2012. But it’s more likely that its archive and my experience will inform the development of other new media news projects that I’m currently discussing with others. If you have any questions about the Newswire’s past or future, the best way to reach me is via email at trevorg [at] u.washington.edu.

Thank you for your support,

Trevor

The culture wars no longer dominate American politics. Neither Christian conservatives nor multicultural liberals can win elections merely with their stands on issues of values, diversity, gender roles or the rights of sexual minorities.  No politician can win a contested seat right now without appealing to the economic populism of the moment, without a plan for putting Americans back to work.

If the Democratic Party had failed to pass health care reform, it would have ceded economic populism to conservatives. It would have appeared incompetent, incapable of governing even with a filibuster-proof super-majority in Congress.

The failure would have allowed Republicans to use this year’s mid-term elections to channel popular dissatisfaction with the economy into an anti-incumbent campaign that could have been a catastrophe for Democrats for two reasons. First, it would have mobilized conservative voter turnout by providing them hope that their devastating electoral losses over the past four years represent a temporary blip rather than a more permanent realignment taking place in the nation’s politics. Second, and just as importantly, it would have demobilized Democrats and their supporters by giving them no platform from which to articulate a vision for economic recovery.

High conservative voter turnout and comparatively lower liberal voter turnout—not, as conservatives would have you believe, some kind of “revolution” against “big government”— was the essential recipe for the 1994 electoral success of Republicans. But now it’s not so clear that we’ll see a rerun of that kind of backlash.

Nationally, Democrats have something to stand for: affordable health care for all. And Republicans have the unenviable task of either trying to change the subject or to explain why they opposed health care reform.  Both political parties have a legitimate claim to economic populism (which can go in left and right wing directions), leaving the future of a Republican Party backlash this year in doubt—especially if the Democrats successfully pass banking regulations that even provide token punishment to Wall Street.

The same holds true for Democrats in Washington state, albeit for different reasons.

The 2010 legislative session was a public relations fiasco for the Democratic Party in Washington state. With a super-majority in the state House and Senate, and control of the Governor’s office, the Party became self-indulgent and lost internal discipline. Caucuses expanded, personal rivalries grew, and the legislature spent three months deadlocked over how to pass a modest amount of taxes while still raiding various dedicated funds and cutting spending on basic services like health care and higher education. The legislature closed a few tax breaks for corporations, but left most of them intact. Meanwhile, it passed a series of taxes on people’s discretionary consumer habits that disproportionately target poor and low-income people: cigarette, candy, gum, soda pop, and beer. Ostensibly, these taxes were for public health reasons. But that doesn’t explain increasing the tax on beer but exempting micro-brews— supposedly because there are a great deal of local microbreweries. This made the legislature appear elitist.

All of these missteps might have been excusable had the legislature finished its business on time, with politicians claiming that they made the best of a bad situation. But adding an extra month of “special session” to a two month regular session to resolve internal party differences was reckless and self-indulgent. Even though the cost of that special session will make only a minuscule dent in the state budget, and the budget itself could have been much worse, Democrats struggled to govern, and that bungling image hangs over the legislature’s accomplishments this year.

As a result, the state’s Democratic Party entered the 2010 midterm elections like a basket-case, limping along with a series self-inflicted wounds. Its best hope was that people turning out to vote Democrat in national elections would vote Democrat in state races as well. But the results of the 2008 election provided little consolation to such hope. While only 40% of Washington voters supported Republican McCain for President, almost 47% supported Dino Rossi for Governor. Support for Obama didn’t completely carry over to Democrats in Washington state even in a presidential election year at the height of voter backlash against Republicans at the national level. In an off-election year, with mobilized conservative base and a demoralized liberal base, Washington state Democrats were facing serious trouble.

But what if liberals came out to the polls to support something other than the Democratic Party, but happened to vote Democrat along the way? That is what the introduction of the income tax initiative has the potential to do for the 2010 election. In a year when the state’s Democrats had done little to nothing to appeal to voter frustration with the state of the economy, a powerful group of Seattle liberals has put forward a ballot initiative to tax the wealthy to fund health care and education while eliminating taxes on small businesses and reducing property taxes.

Love it or hate it, the income tax initiative will profoundly upset the Republican party’s plans for a major backlash in 2010 in two ways. First, it will provide voters with an alternative to right-wing anti-tax politics for expressing discontent over the state of the economy. One year after voters resoundingly rejected a Tim Eyman anti-tax initiative for the first time in over a decade (I-1033), an income tax initiative will provide voters with the opportunity to support an alternative to Eyman that the Democratic Party—still traumatized by its losses in 1994— has never done well.  Rather than ceding economic populism to Republicans, an income tax initiative sets up a knock-down, drag-out fight over the role that government should have in putting America back to work.

Republicans should fear that fight, and Democrats should embrace it. Republicans’ hold on economic populism is not nearly so firm as they’d like the media to believe. The essential recipe for conservative backlash is not just anti-incumbent politics, but low voter turnout, and the income tax could mobilize liberal voters to come to the polls in a way that would disrupt any kind of easy Republican party victories.

By virtue of their stand on the income tax, rather than their meager accomplishments, Democrats overwhelmingly stand to gain from the income tax initiative. The initiative will bring liberal voters to the polls, keep economic and not cultural politics at the forefront of the 2010 midterm elections, and connect state politics to government health care programs at the national level.

Imagine the small businesses engaged in their local communities, posting signs in their windows for an income tax that would eliminate their business and occupation taxes. Imagine all the community groups that mobilize to pass school levies every year turning their attention to support an income tax to create a dedicated fund to fund education and help them cope with recent state funding cuts. Imagine all the fiscally conservative middle class voters who’d like to see their property taxes reduced, and who think that the wealthy don’t pay their fair share of taxes.

Now, imagine all those people, excited by the income tax and not any political party, looking at their ballots and deciding which politicians to vote for. How many of them do you suppose will be voting Republican?

Some readers may object that the income tax will also mobilize conservatives to come to the polls. That’s true. But which anti-tax conservatives weren’t already going to be coming to the polls this year anyway?

Recent polling on the income tax initiative is eye-opening. There hasn’t been a serious campaign for an income tax  in Washington state since the 1994 Republican election victories, and a personal income tax hasn’t been on the ballot since 1973. A generation of Democrats has been instilled with the idea that an income tax could never win at the polls. In a normal universe, that would mean that the issue is dead. Yet an amazing 66 percent of voters polled by SurveyUSA on Thursday supported the initiative before any campaign or publicity on its behalf had even started. And, as I wrote in “Myths and Facts About an Income Tax,” polling over the past decade has consistently shown that roughly 50 percent of Washington voters have said they would vote for an income tax.

According to Sandeep Kaushik, spokesman for the income tax initiative campaign, “from our research and our polling and the work we’ve done, this is another issue where the public is ahead of the politicians and the conventional wisdom. There is a much greater sense among the general population that our tax system is unfair and is hardest on low and middle income people… There’s the conventional political wisdom and a kind of mindset among politicians [who are opposed to an income tax], but when you talk to the public you get a very different reaction.”

If that polling data continues to remain high, and the campaign for the income tax is well run, we may see it provide state Democrats with courage to embrace a left-wing version of economic populism that they’ve heretofore been incapable of doing. Of course, most politicians would prefer to keep their distance until they’re certain it will succeed, then jump on the bandwagon. But that bandwagon moment might not be as far away as previously thought. Already, Governor Gregoire has said that she would sign a petition to put the initiative on the ballot, and would likely vote for it.

Of course, there’s a big difference between having a debate over an income tax and passing it. Opposition to an income tax is likely to be formidable and passionate. But no matter which way the vote goes, simply having the issue on the ballot will itself transform the 2010 midterm election, and will hurt Republican plans to chip away at Democrat majorities in the state legislature.

Word went out on Tuesday, April 20 that “Bill Gates Sr. and Other Community Leaders” were about to formally announce the first major campaign to create a personal income tax in Washington state since 1973.

But other than Gates, the people who spoke at the press conference on Wednesday for the public launch of Initiative 1077 were mainly people who supported the initiative, not campaign leaders: Barry Faught, owner of Soho coffee and host of the press conference; Louise Chernin of the Main Street Alliance; Ruth Lipscomb, Board Member for the League of Education Voters (LEV); and a nurse from Everett. They gave testimony to the benefits of the initiative—its tax breaks for small businesses, and the dedicated fund it would create for health care and human services—more than they described who was behind the initiative.

The people who actually decided to launch the initiative— who did the polling, who did the strategy, who decided whether and how the initiative could raise enough money and gather enough signatures to get on the ballot, and whether the campaign could raise enough money to win in November— have so far avoided the spotlight.

There are two major reasons why. First, campaign organizers have preferred to emphasize the grassroots support for the issue than to emphasize the people pushing it at a time when any successful initiative requires a great deal of money and organization. Second, the people who played a key role in the discussions that gave birth to the campaign for I-1077 were largely participating in “discussions” as individuals prior to any organizational endorsement, so they aren’t able to formally or publicly commit their organizations to any particular level of support.

Sandeep Kaushik, a campaign consultant for liberal Democrats who most recently served as spokesperson for the Rebuilding Our Economic Future Coalition during the 2010 legislative session, handled the press inquiries for the I-1077 press conference. Asked afterward who was actually running the campaign for I-1077, he responded, “It’s hard for me to answer very concretely,” but he did note that “there are a lot of organizations that have expressed interest, certainly LEV, SEIU, and other labor organizations.” Kaushik added, “they have not gone through the endorsement process and they have to do that.”

Some investigation into the campaign committee filed with the state’s Public Disclosure Commission, plus a host of on and off-record conversations, gives some sense of the group of the group of Seattle liberal community leaders whose discussions gave birth to the initiative campaign. Though there’s a big difference between conversations and coordination, and the details on the organizational structure of the campaign—to the degree it has one at all—remain murky.

One of the more formative events that provided the seedbed for coalition building around progressive tax reform in Washington state came in 2003, when the state Legislature completely ignored the recommendations of the Washington State Tax Structure Study Committee. The committee, tasked with investigating inefficiencies in Washington state’s tax structure, was chaired by Bill Gates Sr. and included State Senator Lisa Brown (who has since become the Senate’s Majority Leader).  The committee’s 2002 report, “Tax Alternatives for Washington State,” criticized Washington state’s tax system for being overly reliant upon the sales tax and for being too regressive (meaning that poor and low income people pay a much higher percentage of their income to state and local taxes). But the report’s recommendations, which included the income tax as part of a range of options for creating a more balanced system that taxed Washington state residents at a more equal rate, were considered dead on arrival by politicians.

Afterward, according to John Burbank, Director of the Economic Opportunity Institute (EOI), a liberal economic policy think tank, there were “discussions over the last 6 years in a relaxed fashion” over how to restructure the state’s tax system in ways that either voters or the state legislature could support. Burbank explained EOI’s leadership on this issue by noting that “we’ve always felt that one of the biggest problems with our tax system is that it’s inequitable, regressive, and doesn’t bring in the goods to provide enough revenue for public services. One way to remedy this is to institute an income tax.”

But the state legislature’s failure to raise taxes, let alone promote tax reform in 2009, transformed those informal conversations. The legislature enacted $3.4 billion in budget cuts and made no major reforms that would prevent further cuts in the future if the economy continued to sour, which it did. In response, those informal discussions about tax reform turned into more regular meetings, and the task of promoting reform, for the liberals involved in the conversations, became much more urgent. “We finally realized last year,” Burbank says, “that even in dire circumstances, the legislature was not going to enact tax reform. That made us pull in a group a year ago to discuss what would be possible.”

Who was part of that group? According to Burbank, it included elder statesmen such as Bill Gates Sr. and Aubrey Davis. According to Kaushik, former Seattle City Councilwoman Phyllis Lamphere was also part of the discussions. The discussions also began to include a number of powerful individuals in Seattle’s liberal community, though technically not as representatives of the organizations they came from. “This has been a thinking and iterative process,” says Burbank. “I don’t think it’s right to attribute organizationally.” Nonetheless, an incomplete list of people who participated in the discussions in some form includes:

• John D. Warner, a former Boeing Vice-President who serves as a Trustee for Western Washington University and was formerly on the Board of the Seattle-based Alliance for Education;
• Sarah Jaynes, Executive Director of the Progress Alliance, a left-leaning, Seattle-based foundation that seeks to promote progressive issues;
• Jabe Blumenthal, a former Microsoft Executive who now serves on the Board of the Bullitt Foundation, Climate Solutions, and the Progress Alliance;
• George Scarola, the Legislative Policy Director for the League of Education Voters and former staffer for Speaker of the House Frank Chopp;
• Nick Hannauer, a businessman who co-founded and serves as co-President of the League of Education Voters, and serves on Boards for numerous other organizations, including the Cascade Land Conservancy, the University of Washington Foundation, and the Seattle Alliance for Education;
• And legal advice from Knoll Lowney, a progressive environmental attorney and anti-Eyman activist; Hugh Spitzer, a UW Law instructor who for 17 years has been associated with the view that a strong legal case can be made for the constitutionality of an income tax in Washington state; and Michelle Radosevich of Davis Wright Tremain.

According to George Cheung, the Director of the Win/Win Network, which was itself launched by the Progress Alliance, Kristina Logsdon, who serves as the Director of Win/Win’s Washington Ballot Initiative Network, was also part of the conversations.

According to Burbank, the group “did some public opinion polling and focus groups… Then we started to figure out what are the different elements of the policy we would like to see. It’s grown from there and we hope that it will be embraced by the people and we expect it will.” The Oregon experience was also eye-opening. “Last January,” says Burbank, “the conventional wisdom was that [increasing] the income tax would not be approved in Oregon.” Not only did Oregon voters end up approving the tax increase, but, according to Burbank, polls showed that “the people who would have been taxed more in Oregon, the majority of those voters voted for the income tax.”

The discussions about whether to move forward with an income tax initiative in Washington state were done outside the Democratic Party leadership, and the campaign has so far emphasized this independence. But at least one state legislator was kept abreast of some of the conversations, and likely many others were as well. According to a confidential source, Win/Win staff have been in regular contact with Senate Majority Leader Lisa Brown about tax reform over the last year. According to Burbank, “Lisa has been encouraging. We met with her she thought it was a great idea and encouraged us to move forward with this.” (The Newswire called Senator Brown’s office late in the afternoon on Thursday but was unable to reach her)

The I-1077 campaign’s registration as a political committee with the state’s Public Disclosure Commission documents even further relationships between I-1077 and longstanding liberal groups, especially on issues of education advocacy.

The formal name of the campaign committee is Washingtonians for Education, Health Care, and Tax Relief. The group’s treasurer is Philip Lloyd, who not only runs an organization— Project Accounting Services— that has managed the finances of innumerable liberal electoral campaigns in recent years, but also personally serves on the Board of the League of Education Voters.

The PDC form also lists the group’s campaign manager as Kelly Evans, who, in addition to founding the consulting firm One Connection Away with Kaushik, has served as a campaign manager for a number of successful liberal electoral campaigns in recent years, including: running Governor Gregoire’s reelection campaign in 2008, the campaign against an elevated viaduct in 2007, the campaign against I-912 (which would have repealed gas tax increases) in 2005, and the campaign against R55 (which would have created charter schools) in 2004.

The political experience and resources of the individuals who helped shape the decision to put an income tax on the ballot this year is remarkable, no matter what one thinks of the initiative itself. The decision to launch the first serious campaign for an income tax in Washington state in a generation was clearly not made lightly, or by a group of idealists without the resources to follow through on their intentions. As campaign spokesperson Sandeep Kaushik put it, “we’ve done our due diligence on this. We’ve done research. We would not introduce this initiative unless we thought we had a reasonable chance of success.”

Bitttersweet may be the best description of the  legislative session, say advocates who spent the winter’s session at the  state capitol defending health and human services programs from a $2.8  billion budget deficit.

While cash assistance for poor individuals, General Assistance –  Unemployable (GAU), was recast as a housing assistance program to save a  projected $24 million [“Bill to save state disability program goes to  governor,” Real Change, March 24-30], a host of other programs emerged intact or were  only trimmed.

Some examples:
• Child care assistance to the working poor. While the state is  expecting some savings by changing the rules that govern how frequently  parents’ eligibility is reviewed, Working Connections avoided a $49  million cut.

• HIV/AIDS programs: With the passage of House Bill 2360, the state has agreed to consolidate services related to the  distribution of AIDS-related grants. The bill spells the end of the  state-run Early Intervention Program, which had numerous state employees  processing the medical claims of clients seeking HIV-related services.  Replacing that program will be the Evergreen Health Insurance Program, with administrative services provided under a contract with Lifelong AIDS Alliance. The state hopes to save some $1.3 million by transferring  clients from the earlier program to EHIP.

• Apple Health for Kids. The state and federally funded health program  will continue to be available for the children of families making up to  300 percent of the poverty level, which is equivalent to $38,000 for a  two-person King County household. Those who get food stamps are also  notified that their kids are eligible for Apple Health. At the same  time, the state cut $425,000 for outreach programs to make sure eligible  families apply for Apple Health — just months after a $7.5 million  award from the federal government recognizing the success of outreach to  date.

• Senior services, disability issues: The revenue package stayed  reductions in in-home care that had been proposed by the governor, along  with restoring a third of the reductions that had been enacted in 2009.  Also saved were major proposals to eliminate Medicaid optional services  (hospice, rehab, medical supplies) and Medicare Part B co-pays. In the  loss category: dental payments, which took cuts in maximum payments.

• Basic Health. Targeted for a cut in Gregoire’s original proposal,  Washington’s public option will get federal bridge funding to inch its  rolls upward from 65,000 to 69,000 by 2014, when federal health reform  arrives. According to the Washington State Budget & Policy Center,  approximately 93,000 people are waiting to join the Basic Health Plan.

Instead of gutting whole programs, the state snipped around the margins.
“We  did some things to save money temporarily, around the edges, rather  than make cuts programmatically,” says lobbyist Lonnie Johns-Brown. It’s  remarkable, she says, especially when a gap in welfare funding widened  by six times, to $80 million, over the course of the session. Lawmakers  “really stepped up to the plate” to avoid imposing waiting lists or  eliminating programs wholesale.

“They weren’t drastic,” says Monica Peabody of Parents Organizing for  Welfare and Economic Rights, or POWER. Still, “there are little cuts  that will hurt people.” Like:

• Welfare. Lawmakers preserved monthly  grants and resisted setting more time limits on WorkFirst, the welfare  to work program. In order to save money by not herding busy parents to a  job center, they eased back on work and job-search expectations for the  parents of children under age 6. They refrained from taking what’s  termed the child support pass-through: wages that flow from divorcees  to the state, which uses them to top off the families’ monthly welfare  check. But they kept for themselves tax rebates that flow in the same  way. “Now, who needs that money more?” says Peabody.

• Medicaid. Incidental medical programs for the poor felt the ax’s edge.  An oral health care program for both adults and children received a  partial cut; a $2.5 million cut to dental enhancements also means a $3.8  million drop in federal matching grants, says health policy analyst Lan Nguyen of the Children’s Alliance. The state determined that it would  prioritize preventative dental services, especially for youngsters.

Throughout the session, says Nguyen, legislators were asked who needed  scarce services the most: adults or children? It’s always a hard call,  she says: “There’s a face behind each of these cuts.”

“I’m happy they  didn’t make some of these cuts they were discussing,” says Peabody. But  when a deficit appears “it seems like they always look to the poorest  of the poor.”

The report analyzes seven states without an income tax, including Washington state. It finds that states without an income tax do not spend less than other states that do– instead, they simply rely more heavily upon sales taxes and property taxes to make up the difference. Because federal tax breaks are skewed toward the 43 states that have an income tax, taxpayers in states without an income tax end up paying more taxes for fewer state and local government services.

“Uniquely among the major state taxes,” the report claims, “the income tax can be substantially ‘exported’ to the federal government due to a federal tax break al­lowing federal itemizers a deduction for their state and local taxes. This federal tax rule amounts to a matching grant from the federal government to states.”

As a result, a  “tax swap”—reducing state and local sales taxes and making up the shortfall with income taxes— could provide taxpayers with hundreds of millions of dollars in tax relief without cutting government services or increasing the size of government. For the seven states that lack an income tax, the report calculates, this swap could provide anywhere between $1.7 billion and $5.5 billion in immediate tax relief.

The report’s breakdown of the potential savings in Washington state is eye-opening. Our state government relies upon the sales tax for almost 50 percent of its revenue, while the national average remains closer to 23 percent.  Swapping some of that sales tax revenue with a 3 percent tax on all incomes would provide a total of $162 million in tax relief distributed to 60 percent of Washington state’s taxpayers, while increasing the taxes paid by the wealthiest 20 percent of the population. A graduated income tax between 4.5 and 6.5 percent would provide $652 million tax relief distributed to 80 percent of Washington taxpayers. Both tax swap options would not require any budget cuts.

Those who pay the largest share of their income to state taxes would benefit most from the tax relief plans described in the report.  Washington state’s poorest 20 percent currently pay over 17 percent of their income in taxes, and the bottom 60 percent pay over 10 percent of their income in taxes, while the top one percent pay just 2.6 percent.  A flat income tax would reduce that disparity somewhat, while a graduated income tax capped at 6.5 percent would equalize the tax burden much more dramatically, and result in 95 percent of Washington taxpayers paying between 8 and 10 percent of their income in taxes.

As the Olympia Newswire reported last month in “Myths and Facts About an Income Tax in Washington State,” recent polling in Washington state found that roughly 50 percent of state voters are generally supportive of enacting an income tax on high earners. But so far no popular movement has organized that populist sentiment at the state level, making it much easier for corporate lobbyists and free market think tanks– who, according to The Atlantic, provide the foundation for the modern “tea party” movement– to bankroll and channel popular discontent over the recession into specific demands for more and deeper cuts to government services.

The report, “Following the Money: How the 50 States Rate in Providing Online Access to Government Spending Data,” based its grades on whether states are adopting what PIRG claims are best practices in utilizing digital technologies to increase budget transparency.  Calling these practices “‘Transparency 2.0’— a new standard of comprehensive, one-stop, one-click budget accountability and accessibility,” the PIRG report rated states on various aspects of their “Web-Based Spending Transparency.”

Because PIRG’s grading method heavily weighted (40 out of 100 points) whether states provide “checkbook-level information about government expenditures online”—with detailed information about how tax dollars are spent— only states that provide such information had a chance to receive a passing grade from PIRG. Washington state does not provide that depth of information about its budgeting process online.

Glenn Kuper, Communications Director for the state’s Office of Financial Management (OFM), responded by saying that “The U.S. PIRG study focused on a narrow set of criteria, geared toward the availability of data on individual transactions… Although we do see value in sharing these individual transactions, the higher level data we provide supplies a better perspective on the behavior of state government.” The OFM’s budget web site, fiscal.wa.gov, Kuper noted, “shows expenditures on a monthly basis and compares this spending with adopted budgets to show if they are lining up. The site also provides information about numbers of state employees and the amount of revenue being collected.”

Only seven states received high marks from PIRG as “leading states”—including “Kentucky, Ohio, Texas, Illinois, Minnesota, Missouri and Pennsylvania.” Twenty five others were listed as “emerging states.” Whether the states had Republican or Democrat majorities had little impact on the grades they received.

Washington state is one of 18 states PIRG described as “lagging” and that it gave an F. Washington received partial credit for making budget information available online about different kinds of state activities, and for providing details on past budget activities, but was dinged for not making that information searchable by contractor.

But since such partial credit was not granted comparable weight to “checkbook-level web site,” Washington state only scored a 22 out of a possible 100 points. Its “aggregate spending numbers for departments and agencies” was deemed inadequate by U.S. PIRG, to the point that it gave the state zero out of 40 points. PIRG also claimed that the state provides “much less summary information on general contracts” than it should. “In Washington, citizens can view information on personal services contracts with consultants and other professionals, but not other contracts.”

According to Jason Mercier, Director of the Washington Policy Center’s Center for Government Reform in Olympia, “Washington’s grade is harsh and doesn’t give fiscal.wa.gov the credit due for the info available… Improvements are needed but I wouldn’t say we’re failing.”

Mercier adds that, “Washington… is making progress toward meaningful budget transparency. My hope is to see agency performance information, contracts, salaries, and actual warrants (check book) added to the new budget transparency website in a searchable manner. The next step after this will be to provide the same level of transparency for state taxes.”

U.S. PIRG also sees state reforms as critical to creating standards for increasing government spending transparency at the county and local government level. Only 8 states currently provide that level of data.

According to Mercatus, a free-market think tank at George Mason University, it would cost the state roughly $300,000 to create a detailed online “checkbook” tracking individual expenditures which might eventually usher in similar transitions at the county and local level. But such an estimate seems to presume that Washington state already has the technology necessary to make a smooth transition toward more transparent budgeting.

That’s not the case, according to Kuper. “Our systems are unable to produce such data because they are fairly old and because we have a more decentralized system. We have been working to update our systems, and we should see some progress under the Governor’s shared services initiative, but significant funding would be needed. In these challenging economic times, the money is simply not there. The Governor and Legislature have prioritized spending on education and human services over these systemic upgrades.”

By Pamela M. Prah, Stateline.org Staff Writer [Originally published on Tuesday, April 13, on Stateline.org]

Riders of the New York City subway got an eyeful — and probably a little indigestion — when they saw billboard ads last fall that showed a sugary drink being poured out of a soda bottle that turned into globs of human fat. “Are you pouring on the pounds?” the headline asked. “Don’t drink yourself fat.”

Image courtesy of the New York City Department of Health and Mental Hygiene The ad, paid for by the New York City Health Department, aims to encourage consumers to drink less sugary drinks and gets to the heart of campaigns by New York Governor David Paterson and New York City Mayor Michael Bloomberg who want higher taxes on sweetened beverages to pay for obesity-related medical expenses.

The ad was paid for by the New York City Health Department, but it spoke to an issue that New York Governor David Paterson has been pushing for two years. Paterson wants Albany to approve a penny-per-ounce tax on sugary drinks, above and beyond the state’s normal 4 percent sales tax rate. The new tax would pour $1 billion into state coffers at a time when New York’s battered budget could use the revenue. But just as important, Paterson argues, the tax would discourage people from drinking the sodas, juices and energy drinks that many experts believe contribute to health problems associated with being overweight.

Paterson’s soda-tax plan is running into fierce opposition, however. Anti-tax activists call it a money grab by a government that they see as the one with the weight problem. Libertarians argue that Paterson’s reasoning is akin to Big Brother trying to dictate what they can drink. And the soda industry argues the proposed tax unfairly targets just one of the many foods or drinks that, if consumed in excess, can make people fat. “We understand that governments are facing tough budget challenges,” argues Susan K. Neely, president and CEO of the American Beverage Association. “But singling out one item for taxation completely misses the mark in having an effect on the national challenge of obesity.”

The soda tax idea got a jolt last month when New York City Mayor Michael Bloomberg publicly endorsed it. Although the tax still faces a tough fight in the Legislature, Governor Paterson is not giving up. “Someone has got to contribute to the $7.6 billion the state spends every year to treat diseases from obesity,” he told reporters last month.

Paterson’s push on soda taxes is part of a broadening movement among states to treat unhealthy foods in much the same manner as tobacco and liquor — as vices to be discouraged through the tax code. Another big area of activity revolves around candy. Illinois recently joined Florida and New Jersey on the list of states that have extended their sales taxes to cover Hershey’s bars, Snickers bars and other candy. In Colorado, the state’s 2.9 percent sales tax will begin to apply to candy and soda sold from soft machines beginning next month. And the Democratic governors of Massachusetts and Washington State both have proposed extending their states’ sales taxes to both candy and sugary drinks.

The proposals take a three-pronged approach, says Sujit M. CanagaRetna, a tax and budget expert at the Council of State Governments. They raise revenue, reduce health care costs and bring about healthier lifestyles. “States are in dire need of revenue,” he says, and the additional dollars can help with what he calls astronomical health care costs.

Obesity currently afflicts one-third of all adult Americans and rings up some $147 billion per year in health care costs, according to the federal Centers for Disease Control and Prevention. Of that cost, nearly $28 billion is picked up by Medicaid, the state-federal health insurance program for the poor and disabled.

At one point, Congress considered, but dropped, a proposal to tax soda to help pay for the recently approved health care overhaul. The idea, President Obama said, was worth exploring. “There’s no doubt that our kids drink way too much soda,” he told Men’s Health magazine. “Obviously there is resistance on Capitol Hill to those kinds of sin taxes,” he said.

Resistance is strong in the states, too. But with state budgets looking desperate in almost every state, the pull of a new revenue source also is strong. Colorado figures to bring in $3.6 million a year from taxing soda and candy sales. The plan to do the same in Massachusetts, if passed, would raise $51 million. The Center for Science in the Public Interest, an advocacy group, figures that states as a whole could generate $10 billion per year by levying a tax of 7 cents per 12-ounce can of soda. In fact, the group has devised a Liquid Candy Calculator to help states calculate the revenue they could raise from sales or excise taxes on sugar-sweetened beverages.

Analysts at Yale University have developed their own soda tax calculator that shows the expected revenue a state could get by taxing sugary drinks at a rate of up to 2 cents an ounce. Their research suggests that a 10-percent increase in soda price could lead to an 8-to-10 percent drop in soda consumption.

The research is conflicting, however, especially when it comes to the efficacy of soda taxes. A study this month from RAND Corp. concluded that small sales taxes on soft drinks are insufficient to significantly reduce consumption of soda or curb obesity among children.”If the goal is to noticeably reduce soda consumption among children, then it would have to be a very substantial tax” says Roland Sturm, the study’s lead author and a senior economist at RAND, a nonprofit research organization.

Others who have looked at the latest wave of sin taxes raise different concerns. Experts at the Tax Foundation, a group that advocates for lower tax rates and a simpler tax system, argue that it’s better to tax all food at the same rate, rather than favoring one over the other.  “What is a food versus what is a snack leads you down to a rabbit’s hole of definitions,” says Bill Ahern, a spokesman for the nonpartisan group in Washington, D.C. For instance, he says, currently in New York, Tang is not taxed, but Gatorade and Hi-C are; Marshmallow fluff is not taxed, but candied apples are; sugar and nuts are not taxed, but sugar-coated nuts are, Ahern says. “You get to a point of absurdity.”

In the most shocking cut yet seen in the nationwide state budget cutting frenzy, 38,000 poor children in Arizona no longer have health insurance. Arizona policymakers eliminated the State Children’s Health Insurance Program–a first for any state–as a budget gap closing measure.

Like many governors faced with a budget crisis caused by the Great Recession, Arizona Governor Janice Brewer said she had a duty to cut this program in order “to preserve State government’s fiscal integrity and to ensure Arizona’s long-term health.”

But if the Governor really wanted to achieve these two important goals, she would have put the budget ax back in the shed.

This does not imply that state governments should stop looking for new efficiencies or dismiss concerns for frugality. These efforts must continue, as always.

Karen Kraut, Coordinator of the Tax Fairness Organizing Collaborative, a project of United for a Fair Economy

The problem is that budget cuts during a recession are counterproductive. They deepen the recession and stifle recovery by immediately putting people out of work, reducing public and private investment, and abandoning residents in their hour of need. At least 45 states have already cut programs ranging from K-12 and higher education to programs for the disabled and elderly, and more cuts are expected for the next fiscal year.

The long-term effects of budget cuts are also damaging: people become sicker due to lost health care coverage which means greater suffering, lost work days and productivity, and costlier medical treatment down the road. In the case of education cuts, kids learn in crowded classrooms with fewer resources, receiving a lower quality education, which leads to a less-skilled workforce and higher unemployment.

Calls for a more “balanced” approach—that mixes some cuts with some new revenue—steer us wisely away from a cuts only vicious cycle. However, with many jobs, essential public services, and the fate of the economic recovery hanging in the balance, even a balanced approach falls short by allowing for continued budget cuts that help no one.

Since budget cuts are harmful, do states have another choice? After all, states, unlike the federal government, are limited in their ability to engage in “deficit spending”—spending more than the money they raise each year.

Yes, there is an alternative. The best choice is progressive tax policy– not “progressive” in a political sense of being generally pro-tax, but in the economic sense of taxing individuals and businesses based on their ability to pay. Progressive taxation raises revenue, underwrites critical public investment, stimulates additional private investment, and maximizes job retention and creation. These are the remedies for achieving the twin goals of closing budget gaps and enhancing economic recovery. And to boot, progressive taxation results in long-term budget stability and more widely shared prosperity.

Progressive taxation is the centerpiece of several pragmatic approaches for closing state budget gaps delineated in a new report, “Solutions for Main Street: Progressive Guidelines for Closing Recessionary State Budget Gaps,” authored by economist David Shreve for the Tax Fairness Organizing Collaborative, a project of United for a Fair Economy that brings together 28 grassroots organizations in 24 states.

The new report offers three key guidelines for closing deficits while simultaneously enhancing economic recovery:

1. Make More Money Available: raise new revenue in a progressive manner; borrow more widely to fund infrastructure investments; use rainy day funds in a timely manner; and build trust funds wisely.
2. Make Tax Increases and Tax Reform One and the Same – enact progressive tax changes and repeal unworthy tax expenditures.
3. Encourage Federal-State Revenue Sharing

We have a ways to go to build the political will to enact these common sense reforms. To the extent that state governments have raised taxes to close budget gaps, they have too often increased sales taxes, fees, and less visible excise taxes. These types of taxes and fees fall more heavily on low- and middle-income people. While sometimes better than eliminating important programs, they are also counterproductive to economic recovery, because partly like budget cuts, they stifle demand, investment and economic activity.

Some states have made strides in the right direction. In Oregon, voters decisively approved two ballot measures that raised income taxes on upper-income residents and corporations. In less nationally publicized decisions, Kansas suspended its film production credit for two years, and Tennessee eliminated a tax exemption on rental income earned by certain businesses. But these progressive reforms were often coupled with deep budget cuts.

In Washington state, politics have prevented lawmakers from embracing most of the Guidelines’ best practices for the current budget cycle. However, the state’s fiscal problems are not going away, and its tax structure remains the most upside-down and unfair in the entire country.

In the short-term, the Economic Opportunity Institute has put forth a variety of revenue proposals– some of which align with our Guidelines– that prevent $2.2 billion of budget cuts. These proposals deserve to be revisited in 2011 if they are not passed this session. In the long-term, however, Washington’s fiscal and fairness failures will only be fixed by enacting steeply progressive tax reform.

Because so many people’s lives are being upended by this recession, it is critical that states not settle for ineffective approaches likely to prolong the economic downturn or delay the recovery. Progressive taxation is a state’s most effective anti-recessionary tool. It gets money moving through the economy again, jump-starting the economic recovery that is the principal engine of state fiscal health.

Karen Kraut is the Director of the Tax Fairness Organizing Collaborative (TFOC), a project of United for a Fair Economy.

If all you consider is the conventional wisdom emerging from Olympia in recent weeks, the answer is “yes.” The argument goes like this: by repealing I-960, which required a 2/3 vote of both houses of the Legislature to approve a tax increase, Democrats angered voters and unleashed a right-wing voter backlash against tax increases that has jeopardized the gains that the party made in the 2006 and 2008 elections.

The reality is not so clear cut. The legislature’s repeal of I-960 may not have been popular (KPLU found 64% opposed it), but it does not actually appear to have altered the underlying factors that are shaping voter attitudes in 2010. The worst recession in 60 years and the resulting budget deficit faced by not only Washington State, but by four out of five states in the union, have combined to produce widespread discontent with politicians and a strong anti-incumbent mood. It’s the economy, Olympia, and the party that best convinces voters it can lead Washington back to prosperity will thrive at the ballot box in November.

It’s useful to compare voter attitudes in Washington State to its neighbors. State legislatures and governors in the three West Coast states are facing record low approval ratings. California Governor Arnold Schwarzenegger has a 71% disapproval rating, lower than his predecessor Gray Davis, who was recalled from office in 2003. Only 13% of California voters approve of their state legislature, and both that number and Governor Schwarzenegger’s low approval rating can be explained by the state’s $20 billion budget deficit at 13% unemployment rate. In Oregon, a KATU/SurveyUSA poll found 56% of Oregonians disapprove of Governor Ted Kulongoski. That’s about where his numbers have been for months – Governor Kulongoski had a 54% disapproval rate in February, 49% in January, and 53% in December.

Governor Gregoire’s numbers are worse, but show a fairly consistent trend. 65% of Washingtonians disapproved of her performance in a March 2010 KING 5/SurveyUSA poll. That was a dip from her February numbers, where 59% disapproved. But before one could argue that her signature of the I-960 repeal in late February caused voters to turn against her in significant numbers, consider that in January she had a 62% disapproval rating, a 61% disapproval rating in December 2009, and a 63% disapproval rating in November 2009. Any voter backlash to the I-960 repeal is little more than noise in the polls, which consistently show that until there is significant economic recovery, voters will remain in an angry mood with their elected officials, and with Governor Gregoire in particular.

The other element of the conventional wisdom that Democrats are facing a backlash in November is that voters are angry at tax increases. There is no evidence from either Oregon or California that this is the case. In April 2009 California raised the sales tax by 1%, to 8.25% (many cities and counties have add-on sales taxes that produce a higher local rate). This tax increase was barely noticed by the public, and has not figured into the race for governor this year. The tax increase did not appear to have caused any damage to the state’s economy, which was already reeling from the recession.

California’s tax increase was approved by the legislature and the governor — Oregon’s recent tax increase was approved by 54% of voters in January. That tax increase has become an issue in the gubernatorial race there, but there’s been no evidence of a flight of businesses and wealthy taxpayers from the state.

The polls don’t bear out the argument that Democrats on the West Coast face a voter backlash because they’ve raised taxes or made it easier to raise taxes. What they show instead is that incumbents in all three state legislatures were already facing a backlash from voters because of high unemployment and slow economic recovery. Even President Obama’s approval ratings have declined in Washington, Oregon and California since their mid-2009 highs.

President Obama’s national approval ratings have risen since the passage of the federal health care reform bill, and therein lies a key lesson for Olympia Democrats. Voter backlash is fueled more commonly by indecision and inaction on the West Coast, not by tax increases. The ongoing inability of the House and Senate to agree on a tax plan is likely causing more damage to their electoral fortunes in November than the actual content of the competing plans. The longer they disagree, the more time Republicans have to press their own claims that any tax increase will cause economic pain. Democrats can argue with some evidence that certain tax increases are preferable in a recession to spending cuts, especially cuts to health and human services. But until they are making that argument by selling a package of budget solutions that closes the state’s deficit, Democrats will be missing opportunities to shore up their position for the November election.

In short, inaction by Washington Democrats and their inability to sell themselves as agents of economic recovery, not the repeal of I-960, is the primary political problem they face in 2010.

Robert Cruickshank works for the Courage Campaign in California.