Published August 2005
Legislature
finally acted,
but at what price?
We’re well into the state’s new two-year
biennial budget approved by the Legislature last spring. But the budget
needs to remain in the public spotlight, according to independent watch-dog
groups who believe people should be reminded often of the impact of the
lawmakers’ decisions on our state’s economy, tax burden and efforts to
create a “business-friendly” environment. Consider these edited and paraphrased
views and statements made recently by a variety of local critics.
— John Wolcott, SCBJ Editor
Writing in The Heartland Institute’s Budget
& Tax News in June, Jason Mercier, a budget research analyst with the
Evergreen Freedom Foundation, said Washington state Democrats exercised
their complete political control by pushing through a record $26 billion
budget. The legislature relied on nearly half-a-billion dollars in tax
increases and one-time revenue sources and left $200 million in reserve,
less than 1 percent of the total budget.
To reach $26 billion in spending, legislators
resorted to creative accounting to artificially increase the spending
limit formula approved by voters in a 1993 initiative. They transferred
$250 million from the health services account to the general fund, then
appropriated $250 million from the general fund to the violence reduction
and drug enforcement account.
Then they transferred money back to the health
services account. When money is transferred into the general fund and
appropriated, the spending limit is raised. In this case, money was simply
moved among accounts, raising the spending limit even though no more money
was available.
Besides artificially increasing the spending
limit approved by voters in I-601, a statutory Taxpayers’ Bill of Rights
enacted in 1993, Democrats also approved a bill that redefined the remaining
taxpayer protections. Approved on a strictly party-line vote, SB 6078
removed the two-thirds vote requirement for the legislature to raise taxes
during the 2005-07 biennium.
The budget also redefined the spending limit
growth factor to allow state spending to grow at a faster pace than previously
authorized. This allowed Democrats to implement nearly half-a-billion
dollars in tax increases with a simple majority vote and without any Republican
support.
Supporters of the increase in the voter-approved
spending limit said the move was necessary to meet the funding requirements
of another voter-approved initiative to reduce class sizes in the public
schools, a measure approved by voters in 2000, after former Gov. Gary
Locke (D) promised the initiative would not raise taxes, Mercier wrote.
The state’s billion-dollar surplus disappeared
in 2001. With I-728 causing a drain of more than $800 million from the
state’s budget, Democrats voted to dedicate portions of an increased cigarette
tax and new estate tax to cover part of the education cost.
According to Bob Williams, president of the
Evergreen Freedom Foundation, overriding the voter-approved spending limit
to fund I-728 was unnecessary. “Democrats were not prevented from raising
taxes and spending at any level they want, but under the law, voters were
to be given the opportunity to approve expenditures in excess of the spending
limit,” Williams said. “By playing budget games, the Democrats simply
denied the people their right to reaffirm that the budget actually reflects
their priorities.”
Dann Mead Smith, president of the Washington
Policy Center, agreed. “Simply taking more tax money from citizens won’t
help, but budget reform — like spending limits, competitive bidding for
government services, and legal safeguards against tax increases — would
finally ease the chronic sense of crisis in state finances.”
Washington’s business community also voiced
disapproval of the Democrats’ budget.
“While the U.S. Congress is eliminating the
estate tax, Washington is embracing it,” said Erin Shannon of the Building
Industry Association of Washington. “This will have a devastating effect
on family farms and small businesses ... one more reason for family-owned
businesses to stay out of Washington State.”
And the Washingtion Research Council noted
that the budget signed by Gov. Christine Gregoire last month “includes
a lot of spending for programs with broad public or interest group support
— increased enrollment in colleges and universities, expanded health care
programs, better compensation for public employees, funding a pair of
popular education initiatives, and more.”
“Unfortunately, we cannot afford this level
of spending on an ongoing basis,” the WRC report said. “A recovering economy
gave lawmakers plenty of new general fund money to work with, nearly $1.7
billion ... Still, lawmakers raised a half-billion dollars in new taxes,
manipulated the voter-approved state expenditure limit, transferred funds
among dedicated accounts, dipped into reserves, punted pension obligations,
and hypothesized unlikely savings to support the largest increase in state
spending in a decade.
“The major consequence of this decision will
be a virtually certain billion-dollar budget shortfall in 2007 ... (when)
the Legislature convenes to write the (next) two-year budget. And that
may be the optimistic forecast,” the research council warns.
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