There’s yet to be a large discussion on how to shore up the 2010 state budget’s $2.6 billion deficit, but those in the Legislature’s Republican minority, and conservatives at a state think tank and Tim Eyman are already going after any potential talk of taxes.
Said Jason Mercier at the Washington Policy Center, in discussing today’s shortfall announcement:
Tax increases are not the answer and should be removed from the table as an option to help remove any distractions from making the necessary budget reductions.
Rep. Gary Alexender, R-Olympia, is the ranking minority member on the House Ways & Means Committee (chaired by our own Rep. Kelli Linville, D-Bellingham), and said that the Democratic Party and governor should be ready to take action within the first two weeks of the upcoming legislative session. Added Alexander:
While tax increases seem to be the subject talked about most often within the media and within the majority party as a way to solve the deficit, I believe the issue of priorities has not yet run its full course. We have an opportunity — an obligation — to focus on funding our priorities while turning other areas of government over to the private sector if possible.Rep. Alexander
His full press release will be below the fold.
And says conservative initiative promoter Tim Eyman:
Listening to today’s Economic & Revenue Forecast Council hearing, Gregoire and the Democrats in Olympia couldn’t have been clearer about their top legislative priority: raising taxes during the session guaranteeing an even longer recession.
His full release below the fold, too.
Rep. Alexander’s release:
Rep. Gary Alexander, R-Olympia, and ranking Republican on the House Ways and Means Committee, released the following statement regarding today’s updated revenue forecast:
“Today’s updated revenue forecast shows that the budget situation in our state continues to worsen. But I want to be very clear — it is not out of hand, yet. We can fix this! It’s going to take some rolling up of the sleeves and some give and take by all, but a solution is attainable.
“Budget leaders in the governor’s office and in the majority party need to be preparing now so that we can take action within the first two weeks of the 2010 session. Anything less is a disservice to the citizens and families of Washington state and will continue to cost us more money down the road.
“While tax increases seem to be the subject talked about most often within the media and within the majority party as a way to solve the deficit, I believe the issue of priorities has not yet run its full course. We have an opportunity — an obligation — to focus on funding our priorities while turning other areas of government over to the private sector if possible.
“I know what my priorities and those of my House Republican colleagues are: education, public safety, and protecting the most vulnerable among us. Those are the areas in which we would focus the available revenues. I have no idea what the priorities of the majority party or the governor are, as the priorities of government process has been abandoned in favor of bailout money, one-time money transfers and possible tax increases. This is ‘business as usual’ and it must stop.
“While the current budget shortfall of over $2.5 billion is daunting to those of us tasked to fill in the hole, I fear it is a drop in the bucket compared to what’s on the horizon unless we take serious and immediate action. There is no more Obama stimulus money; there are no more dedicated accounts to tap for one-time money transfers. The budget shell games have come to an end. We either make significant changes to state services and how they are delivered now, or we pay dearly in the future.”
Here is Eyman’s full release:
RE: Democrats in Olympia committed to raising taxes during the session guaranteeing an even longer recession
Listening to today’s Economic & Revenue Forecast Council hearing, Gregoire and the Democrats in Olympia couldn’t have been clearer about their top legislative priority: raising taxes during the session guaranteeing an even longer recession.
It is willful economic suicide but it’s what the unions demand (http://seattletimes.nwsource.com/html/politics/2010246447_democrats11m.html) and so the fix is in.
Republicans Ed Orcutt and Joe Zarelli were correct when they highlighted the insanity of this approach. Raising taxes will only hurt taxpayers and make the recession last longer. But the Democrats weren’t listening.
The person who said the emperor had no clothes was very likely very unpopular with the emperor — nonetheless, it’s important to note what caused this problem: Gregoire and the Democrats adopted completely unsustainable budgets and always counted on the taxpayers to bail them out. Now that the bill is coming due, they’re looking around to see who will pay it. But the taxpayers and the economy can’t afford it. And even if they could, what message does that send? That the government is too big to fail so let them get away with a taxpayer-financed bailout? Taxpayers are sick to death of bailouts.
Citizens understand that raising taxes will only make this bad situation worse.
Every newspaper has editorialized that raising taxes will only make the recession last longer.
Gregoire and the Democrats made this mess — they need to clean it up themselves with existing revenue.
They need to realize that by declining to support Initiative 1033, citizens gave government an extra $9 billion – over and above inflation-and-population growth – to resolve its fiscal challenges. Governor Gregoire and the Democrats who control the Legislature should simply say “thank you” and not push their luck by trying to take even more.
Best Regards, Tim Eyman, Jack Fagan, & Mike Fagan, Fighting for Taxpayers for Twelve Years, ph: 425-493-9127, email: tim_eyman@comcast.net, http://www.VotersWantMoreChoices.com
November 19th, 2009 at 4:27 PM
These severe budget shortfalls happen every time there is a recession.
Perhaps, it is time we end our reliance on sales taxes and implement a state income tax instead. That way we would have a far more stable and reliable source of state revenue that is less subject to the rather wild fluctuations we often see in consumer confidence and spending.
November 19th, 2009 at 4:46 PM
Uhm Todd, the state income tax would flucuate during recessions as well because people would be losing their jobs.
My main concerns about moving to an income tax are twoflold:
1. Loss in tax dollars contributed by visitors.
2. Increased costs involved in setting up and administering an income tax (including having to file every year and taxpayer costs related to filing)
Also, we should do whatever possible not to end up with both an income and a sales tax. Even if they promise to lower the sales tax drastically having both just makes it easier to slowly turn up the heat on tax payers 1 tenth of 1 percent at a time.
It would be interesting to see how we would have been affected if we had had a state income tax during this current recession. I know several people who have either lost their jobs or had to take pay cuts and/or time off without pay. That would definitely have resulted in fluctuations in tax “revenue” coming to the state.
November 19th, 2009 at 5:02 PM
As a native of Idaho, I find the debate about income taxes vs. sales taxes, etc., in Washington very interesting. Idaho is by all measures far more conservative than this state, but they have both an income tax and a sales tax. The first time in my life I didn’t file both a state and federal tax return was when I moved here. I still get thrown off each year in filing when I realize I don’t have a tax form from my Washington employer I need to file.
November 19th, 2009 at 9:02 PM
You could all go to Oregon, where the debate starts from the premise that Oregon has only an Income tax, and that all would be well if only they had a sales tax.
We’re in a recession, and tax revenues have fallen.
Maybe we should cut spending.
What a concept!
November 19th, 2009 at 9:03 PM
Todd2,
Gimme a break.
You don’t really believe that, do you?
November 19th, 2009 at 10:50 PM
We have a majority party who can’t say no. I see a state income tax as giving the legislators the green light for insidious ever upward rate increases. As long as the well has water in it they will draw it out. Very soon it will be dry. For an entity that has no marketable porduct, Government has become bloated and unwieldy, siphoning off good money to go into some wretched black hole instead of seeding enterprises with growth and prosperity potential.
So, no more taxes - we are taxed enough already. Decreasing or abolishing the B and O tax would be a very good place to start. No one wants to float a new business in a punitive tax environment. It would be wonderful if our government actually set out to serve people according to the Constitution, rather than obstruct initiative at every turn.
November 19th, 2009 at 11:39 PM
Our services have been Eymaned to death. Why do we want so much for such relatively little?
You may not consider it a marketable product, but the times we come together to actually provide for the comfort of our people, such as what we strive to do with health care, trumps any dogma affinity I have for the present capitalist model.
You may not consider it a marketable product, but I’m pretty happy to be able to drive down the road with signage if I get turned around. I like that the sewage does not just float by in a ditch. I like knowing my food is not going to kill me as fast as it could. I like being able to turn on the tap or the switch. I like having lights on the streets, buses on the routes, parking, sensible traffic controls, not having to fear a crazy neighbor past a certain point, I like that the drunks are discouraged from head-oning me; that children don’t have to walk to school in the rain or exposed to traffic. I like that we educate our children in public schools. I like the attempts at community, like Clean Green, the Village Green, Concerts in the Park, talent at the Mt. Baker. I don’t mind subsidizing that. I like the art the city has placed around. I like the library, the museum,the parks and walks and bridges and trails and I like to see it all kept up. I look at my life and the comfort and the things I take for granted that my government provides and I don’t feel we’re getting shafted there. Tax tobacco into oblivion and that’s 5×5 here.
I look, however at the corporate influence and the corruption that accompanies it and the war machine that always needs a new war and a lot of the stuff that is the stuff of empire for the big money….well there I get a little tightened up. We have built our economy primarily to support a military might to press our empire and a police state to maintain the status quo. There is a dark side to America, but it’s not on the side of the services and benefits we enjoy. Unless maybe in that it is the bribe we take for allowing the rest of it….the selling of our humanity. Maybe that’s where we need to search to cleanse our souls.
But a little here and there for the common good is fine with me.
November 20th, 2009 at 10:04 AM
I’d like to see taxes raised to support services at their present levels and better.
November 20th, 2009 at 10:13 AM
An income tax raised that is,
not the regressive sales taxes we have now.
Taxing income in a progressive way,
including all passive investment income,
will surely be the trend of the future to make the costs of government services fairly distributed among all citizens.
November 20th, 2009 at 10:38 AM
Madbee - the main taxes they’re discussing increasing so far are sin taxes on alcohol and tobacco and not much more. They’re also discussing the closing of various tax loopholes. They’re saying an increase to B&O taxes would be a last resort because it wouldn’t likely be beneficial during the recession.
November 20th, 2009 at 12:49 PM
Sam,
Could you explain what the difference is between increasing a tax and “closing a tax loophole”.
Right now we exempt food from the sales tax. Is that a loophole?
Taxes on alcohol and tabacco are already among the hightest in the nation and are leading to a black market in these areas.
A less partisan way to think about tax reform is to move towards replacing tax incentives with lower tax rates for all tax payers.
The Washington Policy Center has a blueprint to lower the the B&O tax rate in a tax neutral fashion. This includes eliminating B&O tax incentives currenlty enjoyed by some industry sectors. It is worth a look.
November 20th, 2009 at 12:57 PM
Rep. Ericksen makes a good point with his comment. What do others think - is closing a tax loophole in essence a tax increase?
Of course, I have no idea what specific loopholes they’re referring to, I just mentioned it based on what I read from our state media that covers Olympia (which I, unfortunately, don’t get to do a lot of, but would definitely love to! Thanks to the blog I get to do a bit more, but not much), including Curt Woodward’s AP story on the front page of our paper.
Still, curious what others think.
Rep Ericksen - while you’re here - could you share with us some of your thoughts on various cuts that Republicans would like to make to help shore up the budget, rather than increasing taxes? I know that’s a large part of the argument from the minority.
Is there more fat to cut in the state budget?
November 20th, 2009 at 1:04 PM
Is closing a tax loophole in essence a tax increase?
It is for anyone relying on that loophole.
Tax exemptions are not loopholes.
Loopholes are special circumstances usually left un-addressed by lawmakers,
and exploited in the dark.
November 20th, 2009 at 2:34 PM
Sam,
I am currently working on an op ed for the Herald on education funding.
I think that we need to move beyond talking about cuts to the budget and start talking about ways to change our method of service delivery. For example:
We are one of only 4 states with a state monopoly on workers compensation insurance. Before we cut a program, why not allow market forces to drive down costs in this program and eliminate a portion of state government that can be done by the private sector.
Before we talk about cutting GAU (General Assistance Unemployable) why not implement my 10 point plan to reduce health care costs–the current system is a huge driver of state budget increases.
Lets privatize liquor sales which will save tax dollars–by some estimates it will result in over $100 million per year of savings and new sales.
At the end of the day we can raise taxes or we can change how we delivery services. I am focused on the service that is delivered, not the method by which it is delivered.
And is there fat to cut? Yes. Just drive to Olympia and see all of the fancy new government buildings being built.
November 20th, 2009 at 3:08 PM
Privatizing liquor sounds like a step in the right direction–sell it in grocery stores. Decriminalize Pot and stop wasting millions in the courts and law enforcement chasing it. Then law enforcement can get back to the guys burgling houses, which is what most of us contend with.
I would like to hear more from Mr. Erickson about his health care ideas. I hope they’re not just more of the national talking points.
November 20th, 2009 at 5:34 PM
The math for privatizing liquor sales doesn’t add up since The State still sets the prices.
Unless Washington decides to get completely out of the booze business,
then increased consumption alone will need to make up all the difference in savings on overhead and our guaranteed mark-up.
That’s always been the best reason for leaving the status quo.
November 20th, 2009 at 5:48 PM
Jurgen, we agree, on booze, pot and robbers!
AFY!!thesheepdog!!!
November 21st, 2009 at 12:05 AM
Sam, my interest in the sales tax vs. income tax debate is also very high–I live in Washington and work in Idaho. I’m paying income taxes to a state I don’t even live in. I (aka an out-of-state worker) seem especially targeted for this: Idaho residents get $8900 of their income exempted; I only get $2500.
Even so, I find an income tax preferential to sales tax, not for my sake but for those at the extreme ends of the income spectrum. It would be relatively easy to set up–there’s already an income tax at the federal level that people pay.
November 21st, 2009 at 2:04 PM
Sam, How does WA fare compared to other states tax-wise, sales and income taxes combined?
November 21st, 2009 at 7:05 PM
I find it hard to compare income and sales tax combined. They are very different taxes, and impact people in different ways. State ‘A’ could have half as much tax revenue per person as State ‘B’ which may seem good at first glance, but if State ‘A’s revenues are mostly from sales tax, the tax burden may actually be higher for lower incomes than if they lived in State ‘B’ with its twice-as-high tax revenues per person from income taxes.
To actually answer your question, here are some statistics from an organization called the Federation of Tax Administrators:
Sales tax comparisons: http://www.taxadmin.org/FTA/rate/sales.html
Income tax comparisons: http://www.taxadmin.org/fta/rate/ind_inc.html
The sales tax rates are only for the state level, hence why it says Washington’s rate is 6.5% but most places in WA have above 8%.
While I’m unsure of the validity of this source, I did confirm it with WA and ID’s rates at the time these tables were created and they are correct.