Initiatives foreclose options

The ballot is brimming with initiatives that will directly affect Washington state’s budget, so let’s say the anti-tax arguments carry the day. What will this mean for lawmakers the next time they convene?

The latest projection is that lawmakers are facing a $4.5 billion budget hole, which is much deeper than the $3 billion abyss they were already staring down. Gov. Chris Gregoire’s across-the-board cuts are needed to close an immediate $520 million budget hole. Some of the biggest reductions, according to preliminary estimates, will be at the Department of Social and Health Services, which will cut $280.3 million from programs for the state’s most vulnerable citizens; higher education will cut $84.6 million; the Department of Corrections, $52.7 million; and public schools, $36.4 million (largely in reduced levy equalization funds).

That still leaves a massive shortfall.

Lawmakers could raise taxes, but voters – via Initiative 1107 – would have just repealed the temporary taxes on candy, soda and bottled water that were to net about $352 million over five years. Plus, any tax increases would have to meet the approval of two-thirds of the members in the House and Senate, thanks to Initiative 1053. True, legislators could send tax increase proposals to voters, but they just repealed some, so that doesn’t sound promising.

The $11.16 billion in revenue over five years that would come from an income tax on high earners would be an enormous boost, but under our anti-tax scenario, Initiative 1098 would be shot down.

So now what?

Haul out the budget ax – and be prepared to sharpen it multiple times – because that’s all that would be left. The “easy” cuts have been made over the past two years, so no precision would be required. Entire programs would be lopped off; thousands of people laid off.

It’s true that raising taxes is unwise in bad economic times, but adding to the unemployment roles is a depressant, too. An all-cuts budget would be detrimental to the economy and devastating to the most vulnerable citizens. That’s why neither party offered one last session.

If voters choose to hem in legislators, we’ll get to see just how ugly that looks.

thumb on the scale: Shouldn’t an initiative that calls for supermajorities for tax increases also have to pass by a supermajority? It just seems right that proponents face that hurdle at least once before calling it fair.

Implicit in I-1053 is that taxes are too high. Meanwhile, spending cuts only need simple majorities to pass, because they are deemed too high. Normally, the acceptable levels of taxing and spending are made as part of the running battle of politics. This measure implies that this hasn’t been a fair fight, so we need to give one side deadlier weapons because they have fewer soldiers.

In essence, Initiative 1053 says to voters: You’ve failed in choosing up sides.

Follow the money: The Great Recession has delivered more depressing data. The poverty rate has reached its highest level in 16 years, and the Census Bureau reports that median income has fallen by 4.2 percent since 2007. A couple of weeks back I noted that between 2002 and 2007, the top 1 percent of earners in this country had a very different experience from their fellow Americans. They saw their income rise 10 percent per year (adjusted for inflation). The top 0.1 percent saw their share of national income triple. Everyone else shared an increase of 1.3 percent a year.

When looking at this expanding wealth gap, President Barack Obama’s plan to end the Bush tax cuts for households making $250,000 annually (dual earners) and $200,000 annually (individual earners) seems quaint. These folks are relative paupers compared with the tiny slice of Americans who are pulling away from everyone else.

This suggests that if we want to maintain a progressive federal income tax code, we need a new top tax rate that only taps those in the rarified air of the upper income stratosphere. This tax change wouldn’t be motivated by envy or class warfare. Instead, it would reflect a simple truth.

That’s where the money went.