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Tue., March 23, 2010

Editorial: Commitment to efficiency must outlast tough times

A hiker who stumbles over a cliff and plummets toward the ground may be relieved to see a tree in his path – not because the impact is going to be pleasant but because it won’t be with a rock.

Likewise, Washingtonians need to understand that however the Legislature decides to balance its budget, it will hurt.

By rejecting the idea of a sales tax increase, the House of Representatives has at least removed a boulder from the landing zone.

As Gov. Chris Gregoire has cautioned, raising the state sales tax rate has a dampening effect on construction activity. And Washington’s recession-wracked economy seriously needs construction to rebound and create jobs. In border communities such as Spokane there is an added risk because consumers have convenient alternatives for their retail purchases.

That’s not to say it isn’t defensible to extend the tax to certain products that are exempt now. The House plan would raise some $30 million by collecting the sales tax on bottled water. The House refrained from adding the tax to candy and gum, but including those items would add another $30 million without violating the spirit behind the exemption for purchases as essential as groceries.

It’s also reasonable to extend the business and occupation tax to out-of-state companies that do business in Washington. That’s fair, but the courts disallowed the Department of Revenue’s attempt to do it administratively. There’s $154 million to be gained if the Legislature does it properly.

Beyond that, the House would impose a modest surcharge on the B&O tax, odious as it is, especially for small businesses. It may be a hold-your-nose element that can’t be avoided, but when you’re trying to fix a $2.8 million problem, most solutions will be of the hold-your-nose variety.

Which is why lawmakers also need to go through the budget again and trim additional costs.

Once they defer enough promises and add enough revenues to send them home, lawmakers owe the state a commitment: As soon as the troubles end, so will the fixes.

Moreover, the Legislature needs to launch an earnest campaign to streamline state government. Downsizing and efficiency must be a commitment. Gregoire has talked about closing unneeded state institutions, which is a good start. Lawmakers should come back next year and take another look at privatizing liquor sales along with other ways to contract state functions to the private sector. And they must bring public employee salaries and benefits under control.

As it is, the House and Senate both count heavily this year on half a billion dollars in federal stimulus money. Those funds will expire soon, and replacing them will be a problem unless the state makes itself leaner.

Washingtonians need to accept for now that some taxes will have to rise and some promised services will have to be withdrawn. Our elected lawmakers need to do more than deliver us through this recession. They need to reposition the state to be healthier and more prudent in good times as well as bleak.

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