Lawmakers passed up easy way to collect funds
Washington legislators are back in Olympia this week, searching for revenue. The search might have been a little easier if they had jumped at an attractive recommendation they got last year from the state auditor’s office.
Included in the auditor’s “State Government Performance Review,” issued in December as most lawmakers were packing their bags, was an explanation of the U.S. Treasury Department’s state reciprocal agreement program.
It’s a long name for a simple concept that works like this: If the federal government owes money to someone who has an outstanding tax debt with the state of Washington, the feds deduct an amount equal to the delinquency and send the state a check. That sounds too simple to pass up.
But the Legislature did pass it up, failing to enact enabling legislation.
No, the reciprocal agreement would not come close to resolving the $2.8 billion challenge that daunts the lawmakers this week, but given the scope of the problems and the sluggishness of the economy, Washington is in no position to turn up its nose at any added dollars.
In a test comparison of state and federal accounts, the Treasury Department predicted Washington would collect some $5 million in the first year of such a program. The estimate would have been higher if the state Department of Revenue weren’t forbidden by law from participating in the test match.
The program isn’t without overhead costs, including technology upgrades and the federal government’s administrative fees, but those would be modest compared with the potential gains. When pilot programs were conducted in Maryland and New Jersey, according to the auditor’s report, both states realized substantially more in collections than the Treasury Department had forecast. Both also recouped their up-front costs in one to three months.
As the Legislature probes for a way to enact new taxes or raise existing ones, we wonder why that’s better than using the federal government as an affordable collection agent to go after those who have reneged on existing tax obligations.
Even though it wouldn’t generate enough money to eliminate the current problem, it would have eased it. And it might even have reassured a skeptical public that elected representatives want to exhaust reasonable alternatives before raising taxes.