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?
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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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