What Gov. Gregoire should say on taxes
She lived up to her pledge not to raise taxes. But doesn't she have a higher obligation to the state's welfare?
So Dino Rossi was wrong. The 0-for-2 Republican gubernatorial candidate had noisily predicted that Gov. Gregoire would break her no-new-taxes pledge and the Democrats would enact, or pass to the voters, a tax increase this session. Maybe in part because Rossi was so vocal in his prediction, the Governor held fast, and the Democrats (despite lots of trial balloons) also resisted the temptation. Sometimes, even cynics can be wrong.
For now, that is. Several things may change the political calculation as time passes. The full extent of the cuts will become apparent, possibly leading to marches on Olympia and greater pressure for relief. (Odd how, this past session, about the only protesting came from the Tea-Bag brigade, protesting existing taxes.) Secondly, once Tim Eyman's I-960 (requiring a super majority to raise taxes or a vote by the people) turns two years old, the Legislature can amend it by a simple majority. Third, most think the revenue forecasts for the state have not stopped getting worse. Fourth, a citizens' group is busy putting together an initiative, tying an income tax to funding for the newly expanded basic-education requirements.
The wild card is whether Gregoire herself might finally fulfill Rossi's prediction. Any post-session post-mortem by the Governor and her political team would have to notice that her new-taxes-over-my-dead-body stance has gravely jeopardized her standing with the Democratic caucuses, who think she is more interested in protecting her political future than helping other Democrats to do the right thing. She might start calculating how much of her other top agenda items will get through if she sticks to her guns on taxes. And polling might start to show that Sen. Lisa Brown, the Senate Majority Leader who made a quite public case for a soak-the-rich state income tax, is capturing the liberal interest groups and closing off Gregoire's chances for a third term.
Imagine Gregoire having a fireside chat, leveling with the people in this fashion:
Fellow Washingtonians. Tonight I want to talk to you candidly about the mess we are in. I agree that I am partly responsible, and that we Democrats went on a spending spree in my first term, when times were good and we thought they were only going to get better. My bad. But let's also remember that we have a chronic problem in this state, brought about by the Tim Eyman initiatives, where steady and fair revenues have been taken away from the state, particularly the MVET or the car-tabs tax, which costs us about $2 billion in the coming biennium. And we have a patched-together tax system of mostly bad taxes like the sales tax that magnify any downturns. Our bad.
When I ran for reelection in 2008, the looming deficit for the next biennium was about $5 billion. I'll stick by my pledge not to raise taxes to close that gap, but instead to balance the budget by belt-tightening. That we might have done, without doing too much harm to the public sector. But when we did the full $9 billion this way, we had to use the universities as a surrogate rainy day fund — slashing them horribly in order to balance the budget. Probably no state in the nation has inflicted such savage cuts on its public colleges and universities. It will take a decade or two to recover, particularly in the competitive world of top research jobs.
After my election the revenue shortfall got worse, far worse than any of us, including my political detractors, foresaw. We thought we had reached the bottom when the deficit was $9 billion, but it's going to get even worse. It's shaken me, I must admit. So here's where I now stand. I feel I have lived up to my obligation on the $5 billion deficit I knew, but I also have an obligation to shape a smart new tax package to cope with the $4 billion-plus I did not know.
A bipartisan citizens' group, including Bill Gates Sr., has some good ideas for an income tax, targeted to education. My colleague Lisa Brown has some good ideas, which she bravely put into the public arena for discussion. The smart people of this state will have still other good suggestions. I want to orchestrate the effort to find a solution, and all good ideas are on the table. My parameters are these: the new tax should only deal with the deficit beyond the $5 billion; it needs to be a better tax (in terms of stability and progressivity) than the ones we now have; we should all pay our share, not just the rich and not just businesses; and this new proposal should be voted on by the Legislature and by the people.
I'm ready to roll up my sleeves to do the right thing for the state we all love. If it is the politically wrong thing, so be it. I can stand the heat; I'm heading into the kitchen.
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Comments:
Posted Mon, May 4, 6:37 a.m. inappropriate
She lied about the deficit, she knew the facts far in advance of what she admitted and she failed to react. Why would anyone believe her now? So she didn't raise taxes? Really? Well I suppose if you carefully crafted your life to avoid a college education, consumption of any of the myriad of "sin" taxes and perhaps stopped using electric power.
Posted Mon, May 4, 7:55 a.m. inappropriate
That's just what your candidate, said, you pinbrain, and just what you rightards have been repeating over and over again, as if repetition somehow confers credibility.
The voters didn't buy what you lot were selling, and they aren't buying it now. Brewster is absolutely spot on with this article. The Legislature has to pass all these "sin" taxes because the basic tax system in this state favors the rich and screws the middle class and the working class.
You know this and you continue to lie about it. So why would anyone believe *you* now?
Posted Mon, May 4, 8:30 a.m. inappropriate
The state's welfare? What could be more conducive to the welfare of the state and its citizens than to be free of burdensome, over-reaching government and its confiscatory taxes. This notion that the state serves a higher good than its people is what got us into this mess. State government grew 30% in the previous two sessions. "My bad" doesn't cut it for the greed and thirst for power in Olympia. Roll that expansion back.
Posted Mon, May 4, 8:34 a.m. inappropriate
A few observations to add to David Brewster's.
First, Gov. Gregoire pledged in her campaign for a first term that she would raise neither spending nor taxes and that, moreover, she would review the "tax expenditures" (loopholes and subsidies) extended to
favored companies, such as Boeing, and entire sectors which cut a huge hole in the state revenue base---many times more than the $9 billion
deficit. Gregoire and the Legislature raised both taxes and spending---but spending, on an unsustainable basis, far more than taxes. They removed no tax loopholes and added new ones. Much of the present $9 billion hole was filled with federal money, some also by postponing spending increases rather than "cutting" programs at their present level. The cuts that were real cuts fell on those least able to cope with them.
Second, our state tax code is a regressive mess. We would benefit from a shift to a code based on an income tax rather than sales taxes, a B&O; tax, etc. A campaign to institute an income tax, however, will be uphill.
Voters distrust the idea because they feel an income tax would not replace existing regressive taxes but simply would be added to them. They would have to be convinced that an income tax would replace, not supplement, other taxes.
A big overhaul of the tax code might be addressed by presenting a
comprehensive reform plan while, at the same time, presenting a comprehensive agenda rather than one limited to education. The latter might be seen by many as just one more effort by teachers unions to
push forward their agenda, which notably lacks provision for vouchers,
charter schools, and other reforms which have been successful in other states.
The basic problem is not Tim Eyman but the many-year expectations of governors, legislators, and interest groups that economic growth would continue indefinitely and, thus, keep churning out growing tax revenues to fund growing public expenditures. The present financial/economic crisis has forced public- and private-sector leaders, nationwide, to get real. There is no reason Washington's governor, legislators, and interest groups should be exempted from doing so.
Posted Mon, May 4, 11:08 a.m. inappropriate
A lot of the sales tax revenue seems to be generated by purchased paid for by debt, either public or private. Too late now, but we should have insisted income from more or less "one time" events like the sales tax on building a sports stadium be spent over a period of years, not just in the biennium in which the income was generated as seems to have been the case.
I do wonder if there was an expectation the revenue would continue, or a realization it might not but that there could be a game of chicken, to see who would grab the wheel and that "surely my interest would not pay the price. They'll always raise taxes, look at how many voter approved measures there have been."
So far no one has and higher ed has been stuck with the bill more than most.
Posted Mon, May 4, 6:05 p.m. inappropriate
Mr. Brewster -
Why doesn't she just say the following?
1. My administration has increased the size of state government so rapidly over its 5 years that these "cuts" that everybody is talking about are not really cuts at all? Even in this budget cycle, with all the "cuts," spending is increasing over the prior budget cycle.
2. Our tax system is so broken that state tax revenues in the current budget cycle are expected to exceed tax revenues in the past budget cycle, notwithstanding the recession.
3. States with high sales taxes and "soak the rich" income taxes (such as California and New York) have far worse budget problems than Washington does. For some reason, Sen Brown wants Washington to mimic those states.
If she (or anybody else) makes those statements, all of them true, do you think the voters will enact a state income tax?
Posted Mon, May 4, 11:18 p.m. inappropriate
About the income tax ideas floating around, I have no idea why somebody would pick a dollar number while Frank Chopp uses multiples of the poverty level when championing children's health care.
It reminds me of so many fees that fall out of date as inflation eclips their buying power.
There is a user pays, and a tax my neighbor attitude that pools up in Olympia.
The state sales tax is one thing, but my local sales tax is nearly half as much more. How does an income tax replace that state base and local ability to do raise local taxes.
I kind of understand why an income tax would interest but it is just not a replacement, it is viewed as an add on, because that is as good as it could be.
Back to the current situation, there is no point in raising taxes while it is pretty clear that the economy will not rise up to meet this level of spending in two years. There will be more cuts in two years at the current rate, so, tax increases are not something to do now, but in two years to meet this budget at its end.
That is what it looks like to me. What we should be looking at is projects beyond the two year window to keep the fake five billion dollar bubble callaps less of a cliff.
The governor may be right, now is not the time to be raising taxes state-wide. The levy-lid lift is a good idea. Making republicans beg for land tax poor districts to get socialism, uh, I mean school funding "fairness", is a bad thing. How that gets resolved in the special session should show us all just how prepared the legislature is to take on and openly debate major policy, a one day meeting resulting from two weeks of back room dealing.
The game is being fixed, and we are counting on it being fixed to our own personal interests.
Posted Tue, May 5, 11:35 a.m. inappropriate
The Vashon Orca surfaces again! The truth about the Governor really hurts doesn't it Ivan.
Posted Wed, May 6, 5:19 a.m. inappropriate
Why do Government aficionados and state employees feel entitled to an ever expanding 'stable' revenue stream for the Government? As citizens, our revenue isn't guaranteed or stable, much less expanding.
Maybe the State Government should get rid of stolid, rigid programs and hiring/staffing procedures, and figure out how to gracefully adjust spending down when revenues fall? Based on our history of rejecting state income tax proposals and voting to make it harder to increase taxes, its pretty clear that Washingtonians don't want to make it easy for bureaucrats to take more of our money - especially during an economic downswing.