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Originally published November 25, 2011 at 3:20 PM | Page modified November 27, 2011 at 9:30 AM

Washington lawmakers must embrace true reform, compromise and, possibly, a modest sales tax increase to solve budget crisis

As Washington lawmakers convene in special session, they should reject the proposal to cut higher education again. What's needed is true leadership on state reforms and then, and only then, a modest tax increase.

What our leaders need to do

Frank Chopp: Let some things go

The Democratic speaker of the state House, a champion of many social programs, needs to accept the death of some of them in order to preserve higher education. He also should allow alternative revenue proposals to come to the House floor, including a measure to renegotiate the privilege of tribal gambling so that the state earns revenue from it.

Ross Hunter: Push, push, push

The House budget chairman understands the state's financial problem better than anyone in his Democratic caucus. Some of them do not seem to get it. He needs to keep pushing until they do. A little pushing on Chopp would be good. Alexander, too (see below).

Lisa Brown: No gimmicks

The Senate majority leader, a Spokane Democrat, pushed for borrowing against the interstate revenue in tobacco a decade ago. She needs to hold firm against all such disguised deficit spending and other financial quackery, such as delaying the payment of millions in public-school money into the next biennium.

Joe Zarelli: Be open to new revenue

The Ridgefield Republican is the budget man in his party's Senate caucus.He was helpful this year working with the Democrats. He needs to do it again — this time offering a reasonable tax package, including some "loophole" closings, to be put on the ballot in exchange for Democratic concessions on state employee labor issues.

Ed Murray: Compromise on labor issues

The Seattle Democrat is his party's budget lead in the Senate. He needs to be able to accept reforms in state employee labor issues in exchange for Republican help on a tax package. Also, he needs to atone for his support of the SEIU's outrageous Initiative 1163 by lobbying his fellow legislators to suspend it.

Gary Alexander: Strive to be helpful

The budget leader for House Republicans needs to make his caucus helpful — not just of anything the Democrats want to do, but helpful of a reasonable outcome. Exactly how to do that we are not sure, but Zarelli did it, over in the Senate. Go talk to him.

Special interests: Give it up

The BANK LOBBY needs to give up on the first-mortgage loophole, and let the Legislature close it.

The TRIBES must be open to sharing gambling revenues with the state as other states do. No more free lunch.

The WASHINGTON FEDERATION OF STATE EMPLOYEES need to quit saying "no" to reopening employment contracts.

The FARMERS need to start paying standard tax rates. Meatpackers: This means you.

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WASHINGTON state cannot afford to gamble with spending on higher education. Lawmakers, who meet for a special session beginning Monday, must reject Gov. Chris Gregoire's proposed $160 million cut to colleges and universities.

That is a nonstarter. No more cuts to higher education, as we said on this page a week ago. Not a penny and certainly do not subject higher education to the whims of recession-weary voters — as the governor is proposing with a half-penny-per-dollar sales tax increase to restore those cuts and others.

The governor's all-cuts budget is dire to be sure, but it sets the wrong priorities. Besides more devastating disinvestment in higher education, she would cut levy equalization that shores up the budgets of property-poor school districts. At the same time, she funds an ill-considered and irresponsible-for-the-times initiative.

The proposal also contains a glaring budget contrivance that belies the reality that this pernicious recession-depression is forcing a permanent reset of the state, regional and national economies. A bookkeeping ploy to save the state $330 million simply by pushing forward one month of public-education expense into the next budget year only makes the next budget that much harder to balance.

This lingering downturn has taken its toll on Washington's private industry and governments. It is redundant to say this, but we will once more with feeling: State government requires a permanent reset that mirrors what has happened in the private sector.

The governor should continue moving state agencies toward Lean, the Toyota-developed approach that has served Boeing, King County and Virginia Mason so well. Creating a culture where managers and other employees work together to constantly analyze processes to enhance efficiencies is smart. The recent state auditor's report that showed the state had paid about $1.8 million for almost 6,700 cellphones not used, or used less than 30 minutes a month, suggests there remain budget blind spots that need to be rooted out.

Seek true reforms

True reform will require reopening state employee contracts. To her credit, the governor asked state employee union leaders to reopen them — as many private-sector unions and most King County unions have. State union leaders have declined. Adamantly.

Lawmakers must take the necessary preliminary steps and declare an emergency that reopens and renegotiates state employee contracts.

The great reset of state government requires that employees adjust expectations about benefits they receive. Gregoire last year negotiated a modest increase in employee health-care premium contributions from 12 percent to 15 percent. We said at the time that was too small and it was. State budget shortfalls require a larger premium contribution, closer to 20 to 25 percent. Again, that is more in sync with the rates that private-sector employees — read: taxpayers — have had to pony up.

In K-12 education, the state could realize savings of about $30 million in the short-term, and possibly up to $100 million, if the state streamlined the 2, 000 separate health-care contracts held by education employees into a couple of plans.

Now a word about revenue. The governor's suggestion of a halfpenny sales-tax increase, in theory at least, provides an escape hatch for several distasteful cuts, including higher education, shorter school year, public safety and developmental disability programs and long-term-care services.

The increase would boost the sales tax in King County and a handful of cities in Snohomish County to 10 percent. The sales tax is regressive and everybody hates it. But the temporary increase would sunset in three years. If the Legislature or voters raise the sales tax, the state could avoid reducing the school year by four days, as currently proposed by the governor. Cuts to the Basic Health Program might be spared.

Make no mistake, that group of "buybacks" — including school days and higher education — was assembled to have the most appeal to persuade voters to tax themselves. The governor thinks, hopes, they would go for it. That is not a sure bet, by any stretch, and not worth the gamble especially for higher education and poorer school districts. Do not forget King County voters, who are generally less tax averse than statewide voters, rejected a two-tenths of a cent sales-tax increase for criminal justice last year.

Raise taxes in Olympia

Though this page has been skeptical of new state revenue increases, we are not necessarily averse to a modest sales-tax increase if true progress is made on the state reset. Better that is done through legislative leadership and true compromise rather than risked on the ballot. Yes, that means a two-thirds vote of the Legislature under state law, but imagine the credibility lawmakers will gain with voters if they pull this off within the special session.

In 2010 we urged voters to reject Initiative 1107, which repealed Legislature-imposed taxes on soda, candy and bottled water. Democratic and Republican lawmakers come to the special session with tactics for inflicting the relentless financial burden on the others' constituents. Members of each party must acknowledge the necessity of compromise. Special interests, ranging from big banks to agriculture to state employee unions to trial lawyers, must step up. Everyone must share the budgetary pain.

Political gridlock and stalemate are unacceptable.

Compromise will earn trust

Democrats will propose raising revenue by ending tax preferences, particularly on corporations. The idea that these loopholes are worth tens of billions of dollars is fantasy, but they do exist and some will have to end. The Joint Legislative Audit and Review Committee has a list of them. Democrats have been pushing to end the business-and-occupation tax break banks get on income from first mortgages. This should end, and some other breaks should also.

Republicans also propose renegotiating the state compact with Indian tribes so Olympia could tax gambling revenue. That is a workable idea and would produce money for worthy programs. But the state should not introduce slot machines at non-Indian casinos, because that odious expansion of gambling would cause more problems than it solves.

Both Democrats and Republicans should take the tough two-thirds vote not to fund recently passed Initiative 1163. Even though voters supported the measure to pay for more training for long-term-care workers, the state cannot afford the additional $15 million. It is not that the voters were confused, but they do not have the task of balancing a complicated budget.

There is a precedent for this. Lawmakers reached a two-thirds vote to suspend similar legislation in the last two bienniums after a similar public vote.

No one underestimates the amount of political courage this budget crisis demands. This special session can either be a dud or put the state on a healthier path.

Washington lawmakers must avoid the partisan impasse that made deficit reduction in Congress a spectacular failure. This works only if both sides make concessions — in order for the state to gain quite a bit.

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