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Opinion

Sun., June 7, 2015

Smart Bombs: State remains rigid on revenue

The House issued a revised budget proposal for the state of Washington last week, and simple math shows that it moves that chamber a lot closer to the Senate’s budget. The new plan would erase a proposed business and occupation tax surcharge, end a bid to close some tax breaks and drop a tax proposal for some out-of-state Internet sales. All told, the House reduced its tax package from about $1.5 billion to $550 million.

In a news release, Sen. Michael Baumgartner ignored this $950 million compromise, choosing to focus on the single tax proposal that remains: a capital gains tax that would affect 32,000 well-off Washingtonians. He calls this a “roadblock” to a deal, and he attributes it to the “rigid structured ideology” of House Democratic leaders.

Baumgartner’s reasoning is that the Senate would never agree to this tax, so why keep it? That presumed “never” is itself uncompromising, but it isn’t surprising. Republicans have worshipped at this altar since President George H.W. Bush reneged on his no-new-taxes proclamation a quarter-century ago. It’s a lesson the party has over-learned to the detriment of public services.

So why a capital gains tax? Because the poorest households in Washington pay an average of 16.8 percent of income in state and local taxes, the middle class pays 10 percent and the top 1 percent pays 2.4 percent. The difference between bottom and top in Idaho is 8.5 percent vs. 6.4 percent. In Oregon, it’s 8.1 percent vs. 6.5 percent. It’s embarrassing.

Plus, the only way the Senate can balance its budget is to hold back money for local governments, overestimate the haul from marijuana taxes and sweep money from accounts set up for specific purposes – a gimmick Republicans routinely complained about when in the minority.

Protecting the wealthy is a higher priority than protecting the services that will go begging. It’s part of the GOP’s rigid ideology.

The new normal. The brighter revenue forecast was a “holy cow” moment for Sen. Andy Hill, the chief budget writer for the Republicans. So, with talk of tax dollars sloshing around, it bears repeating what a beating the budget took from the Great Recession.

But first, a gentle reminder that the tax burden has actually shrunk over the past 20 years. In 1995, general fund revenue was nearly 7 percent of personal income. In 2012, it dipped below 5 percent and that decline is projected to continue, barring new taxes, according to the Washington State Economic and Revenue Forecast Council.

To balance budgets during the recent recession, the Legislature cut deeply into services. People were kicked off health care rolls, the mentally ill were warehoused without proper treatment, workers were laid off, and pay and benefits were frozen or cut for the rest. The Discover Pass replaced free entry to state parks. College tuition climbed to ridiculous levels and, of course, basic education continued to be underfunded.

The cuts were called “painful.” New and higher fees were “unavoidable.” The courts compelled greater spending on education and mental health, but otherwise smaller government seems to be the baseline going forward. Strange how that works.

short leash. The Legislature has sidestepped its duty to fully fund basic education for more than three decades. Holy cow, that’s a lot of money lawmakers failed to appropriate. Holy cow, that’s a lot of kids who were hurt.

Furthermore, after every session in which they shirked their duty, budget writers patted themselves on the back and declared that all essential priorities were met. It wasn’t until the state Supreme Court grabbed them by the lapels that they snapped out of it.

So it’s fine to be skeptical when lawmakers pronounce a final deal. They have a record of coming up short.

Associate Editor Gary Crooks can be reached at garyc@spokesman.com or (509) 459-5026. Follow him on Twitter: @GaryCrooks.


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