Editorial: Fiscal reform legislation long overdue

As budget writers in Olympia perform their usual shell games, a number of bills that would shut down the shenanigans and replace them with sound, sustainable practices require immediate attention.

If you’re not familiar with the sleights of hand employed to make budgets balance, the Washington Roundtable has compiled some examples.

For starters, there are unrealistic assumptions. A six-year outlook based on the governor’s budget, for example, assumes health care inflation to be no greater than 3.26 percent for 2014-2017. Partly due to the recession, the growth in U.S. health care spending for 2009 and 2010 was 3.9 percent, which was the lowest increase in 51 years. A Washington task force is working toward a goal of 4.5 percent health care inflation. The governor’s outlook also assumes a 176-day school year (four fewer days), no salary increases for vendors or state employees (except for teachers under Initiative 732), and revenue growth of 4.5 percent a year beyond 2013. None of these are likely.

The governor and Legislature also play another game: pushing spending commitments into the next budgeting cycle. This allows lawmakers to fulfill their constitutional duty to produce a balanced budget, but only on paper. This is one of the chief reasons deficits materialize as soon as each session ends. The “carry forward” into the current biennium was more than 19 percent of the total budget.

The hope is the economy will rebound enough to cover that, but it’s a false one.

A constitutional amendment, Senate Joint Resolution 8222, would restore the intent of the balanced budget mandate by calling for four-year balanced budgets. Another measure, Substitute House Bill 2607, would require the Office of Financial Management to produce a six-year forecast alongside each gubernatorial budget proposal. When the Legislature adopts a final budget, the six-year outlook would be adjusted to match revenue to expenditures. As it is, many legislators don’t know the consequences of their budget votes beyond the biennium under consideration. Long-term outlooks are typical for local governments. The state ought to have them, too.

Beyond reforming the process, other measures aimed at producing sustainable budgets would exclude overtime when calculating pension benefits for new workers (Senate Bill 6543), end early retirement incentives for new employees (Senate Bill 6378) and require that demoted employees be paid what the lower job classification calls for (House Bill 2484).

SB 6377 would repeal Initiatives 732 (annual teacher pay increases) and 728 (smaller class sizes). Voters adopted both initiatives a dozen years ago, but they’ve rarely been funded due to chronic revenue shortfalls. Fictitious budget entries that assume funding distort the bottom line; for the 2013-’15 biennium, projected spending on these two items is nearly $1.2 billion. Removing them – and other unfunded programs – would give lawmakers and the public a clearer picture of the state’s deficits.

Overall, these fiscal reform bills blow the whistle on chronic procrastination. While the magic tricks seem to produce solutions, they’re only an illusion.