There's been a lot of talk about the revenue increases passed by the state legislature this session. And undoubtedly there will be more if initiatives to repeal them get on the fall ballot.
But there's a lot you might not have heard much about. Like what the increases are for. And how they compare with the increases passed by other states.
The approach legislators took in the face of the recession was reasonable. It was balanced, and according to a new analysis, it was on par with most states in the nation.
It's also important to remember there have also been major cuts. The state slashed $3.6 billion from the budget last year and slashed another $755 million this year.
In human terms, that means more than 40,000 people were cut from the Basic Health Plan, and the waiting list now approaches 100,000 people.
We're also cutting deeply into the education funding that voters approved to reduce classroom sizes, meaning Washington's kids will continue to learn in overcrowded classrooms. Colleges will get less money, and tuition is skyrocketing.
Though some say the state should have made cuts, the fact is the state did make cuts — deep painful cuts. The real question is what would have happened had lawmakers not taken the balanced approach of raising revenue, through a targeted package that closed tax loopholes and imposed largely temporary "sin tax" increases on non-essential items.For all the attention focused on raising revenue, it made up a very small part of our state's response the past two legislative sessions to the recession.
In January, the governor gave an idea of what an all-cuts budget would have looked like. They were cuts we're glad the governor and state lawmakers couldn't stomach.
This is what would have happened had we not raised revenue through such actions as paying a few more cents to drink beer or eat candy:
- The state would have had to eliminate health-care coverage for 16,000 lower income children. Kids would have ended up forgoing medical care until they got sick enough to end up in the emergency room.
- The state would have had to eliminate all college financial aid for 12,300 students, while also significantly reducing aid for the other recipients.
- We would have had to get rid of preventative dental care and life-saving support for vulnerable seniors.
- At-risk moms would have lost programs aimed at making sure their babies are born healthy.
The list goes on and on. Raising revenue meant not abandoning efforts to allow children born into low-income families to be able to succeed in school. We won't be cutting as sharply on child care assistance for lower-income families, a move that would have made it difficult if not impossible for parents to work.
What the revenue increases really bought was our ability to preserve our values during tough times.
For all the attention focused on raising revenue, it made up a very small part of our state's response the past two legislative sessions to the recession. In response to tax revenues going down, the state cut spending. That accounted for 37 percent of the steps the state took. Another 31 percent of the state's budget actions came from federal recovery funds and 24 percent from transfers and changes, including using the state rainy day fund.
Raising revenue only accounted for 8 percent of the steps the state took in response to the recession.
Recently, those of us at the Washington State Budget & Policy Center compared our state's actions to those of other states during the recession. Because of the recession, states have received less revenue at the same time that the downturn raised the demand for state services.According to a study by the Center on Budget and Policy Priorities, 32 other states took the same step as Washington lawmakers in response to the recession. To make ends meet, they raised taxes in 2008 and 2009, many by larger amounts than Washington State.
Nationwide, the CBPP study found that states raised taxes on net by 3.8 percent. In comparison, Washington state taxes were increased by about 3.6 percent of total state revenues in 2009 and 2010, according to the Washington State Budget & Policy Center.
The comparison is conservative because the number of states that have increased taxes during recession is likely to grow even larger after all 2010 state tax actions have been tallied. In addition, the 3.6 percent figure does not include Washington'ês tax cuts in 2008.
Like the other states, we decided that there had to be a balanced approach to dealing with the economic downturn. The alternative was more harmful cuts our values just wouldn'êt let us stomach.