Is a state budget that was hacked by billions now the high-water mark? On Aug. 8, a day the Dow Jones dropped 634 points, Gov. Chris Gregoire directed agencies to plan for more cuts of up to 10 percent. The governor has a fiduciary duty. Now politicians must fulfill their leadership duty. And it points in a different direction.
Absent structural tax reform, state revenue will not recover sustainability for years, if ever. Gone are the days of an overheated housing market and consumer overspending. Because that former economy was based upon irresponsibility, there are aspects of it we should not miss. But we certainly miss revenue derived from it.
We can no longer debate on the margins. Simply suing to overturn Initiative 1053 will not change public perceptions of what a healthy state government needs to operate. Only leadership that educates and, yes, challenges, will bring change.
And where is that leadership when even a Democratic House speaker heralds as "spectacular" an all-cuts budget largely dictated by Republicans? If the public is spoon-fed a diet of pablum about how the safety net was “saved” (close your eyes to reality, folks), how are they to understand more is needed?
Whatever the outcome of the 2012 election, it’s now clear our Democratic state will go at least 20 years without a liberal governor. There’s no Mike Lowry on the scene. Both gubernatorial candidates have come out against tax increases generally, and an income tax in particular. Both opposed the high-earners' tax Initiative 1098. Democrat Jay Inslee was even one of just half of House Democrats to vote with most Republicans in favor of the no-new-taxes, all-cuts federal "debt deal."
We risk the only real budget debate being over how to cut. Yet history gives no example of cutting the way into prosperity out of a downturn.
The only poster-child tax loopholes that Democrats, including Inslee, are willing to question is one for banks lending first mortgages. In mankind’s history it’s likely no relatively trifling amount of money has been “spent” more ways than the revenue represented by this loophole. It would be like spending a penny in a grocery store and expecting to fill a shopping cart. Closing the bank loophole would bring in $105.8 million a biennium. Context: More was cut from Washington State University alone. The sum is but a fraction of the likely next revenue shortfall.
By exalting an anecdote over the big picture, we are, in effect, conceding the current, decimated state budget — plus $105.8 million — is about as good as it gets.
It’s time to really discuss, not run from, tax reform. And that discussion cannot wait until the next state revenue forecast on Sept. 15, which will bring news so bad it may force a second 2011 "special session" even before the traditional supplemental budget session begins in January. Failing to start this vital discussion will box our gubernatorial candidates into a self-defeating narrative and race-to-the-bottom.
“Happy to be here” political careerism needs to take a backseat to leadership. While it's worth arguing I-1053 violates constitutional majority rule, I can, as a plaintiff in the 1994 lawsuit against Initiative 601, which the Washington Supreme Court punted on, attest to the danger of wishing upon a star and hoping lawsuits vindicate democratic principles.
Whatever the I-1053 lawsuit’s outcome, vulnerable people will die in the interim and our economic future, through education, will be strangled. The only moral alternative is to give people revenue choices to avert disaster. For the Legislature to present such choices requires only a simple-majority vote.
To throw out a couple significant ideas: We could raise the business and occupation tax on services from 1.8 percent to 2 percent (it's been that high before), or implement a payroll tax to fund Medicaid long-term care in the same fashion Medicare is funded.
Unless rationality prevails, and progressives draw a line in the line in the sand now, our state’s economy may be largely unsalvageable. The governor’s race victor would be left without much of a state to govern. It may indeed be darkest just before the dawn, but it sure seems darker still if you keep turning the hour-hand back to midnight.
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