Friday, April 22, 2011

Preserving State Wealth by Preserving the Wealthy? I've got a better idea.

My wife says that I get really morose on Good Fridays, and that probably explains this post.  Why else would I be writing about state finances instead of atonement?
I’ve been involved in an interesting exchange of e-mails with my state senator, a Republican who used to be centrist but has tilted farther to the right in recent years.  The issue pivots on how to restructure the state’s budget to be more fiscally responsible. It’s pretty much the same set of problems facing most states these days.  The State of Washington has a long history of significant operating fund deficits as measured by tax revenue against expenditures.  They have been financed, and the budget balanced, by a combination of federal monies and fund transfers.  With federal money on the decline, something has to be done to bring expenditures closer to locally raised revenues.  The last time they met was in 1997, and I haven’t checked to see if that was just a one time event.  
Washington does not have an income tax, so state revenues are dependent on sales taxes, a gross receipts tax on businesses, and various fees.  The state portion of the sales tax is 6.5%.  The gross receipts tax rate is around .005% except for services at about .02%.  No doubt someone will correct me if I'm wrong about these rates.  Anyway, buried in the tax code are a number of credits and exemptions enacted over the years to benefit particular industries and companies.
Washington also allows for initiatives and referenda, and an ultraconservative, small government character named Tim Eyman has mastered the art of authoring initiatives that not only cut taxes and fees, they also shackle the ability of local and state legislators to raise taxes except by super majority votes or public referenda.  His initiatives were an easy sell for several years.  As one of my friends once said; “Lower taxes? Who wouldn’t vote for that?  It’s a no brainer.”  He has less success these days, now that some of the effects have begun to show themselves in declining levels of service and maintenance.
Obviously it’s a tough issue that cannot be resolved without pain.  My argument has been that, unless the legislature is willing to look at both revenue and costs, the outcome is likely to lead the state down a hill that first hurts those who are least able to defend themselves, and then heads toward a lower standard of living for all.  My senator’s argument has been that our tax system is just fine, we raise enough money, and the various credits and exemptions are all job creating incentives that are working the way they are supposed to, so our entire focus must be on reducing expenditures.  I don’t know enough about the credits and exemptions to judge with certainty, but my guess is that’s a lot of baloney.  He’s also begun to spout the Wisconsin line that greedy, uncooperative public employees are the cause of our problems.  I guess he figures that will appeal to the right wingers, and he’s right, but, I think, morally wrong.
There’s a line going around on Facebook that nails it well.  It reads: Remember when teachers, public employees, planned parenthood, and PBS crashed the stock market, wiped out half of our 401Ks, took trillions in TARP money, spilled oil in the Gulf of Mexico, gave themselves billions in bonuses, and paid no taxes? Yeah, me neither.
Of course we need to rein in spending and use our available resources in a more efficient and intentional way.  It’s not that the state has wasteful programs.  To the contrary, it’s hard to find anything that is not contributing to essential needs.  But the legislature enacted too many good ideas with no clear idea of how they would be paid for over the long term, and with too much faith in a booming economy and federal revenue sharing.  
We also need to take a hard look at revenues.  I am among the few in Washington who favor an income tax as a far more equitable way to raise public funds.  It seems unlikely that will happen anytime soon.  But we could make an audit of the various exemptions granted to businesses with an eye toward making the wealthiest and most powerful interests participate with the poorest and least powerful interests in the restructuring of the state’s finances.  We could, but we won’t.  The legislators don’t have the courage to do it.  
What it all comes down to is that we are banking on the return of booming economy driven by Boeing, Microsoft and high wheat prices to raise revenues.  It’s worked before and it might work again.  In the meantime, small government right wingers are rejoicing in their opportunity to return the quality of life in the state to where it belongs, the late 19th century before radicals like Teddy Roosevelt started messing things up.
I’ve got an idea.  Why don’t we take all the sales tax revenue and bet it at the roulette tables in the Indian casinos!  Better yet, we could go down to Oregon and invest it all in Power Ball tickets!

2 comments:

Anonymous said...

The recurrent financial problems of the state of Washington, and of many other states as well, are easy to blame on the admittedly timid state legislators, but, to be fair, they are timid because the voters of the state will not take responsibility when they vote. They were given a chance in the last election to begin to be responsible with a cautious income tax proposal, proposed by a wealthy person who would be the first to be taxed himself, and they voted it down, resoundingly! All the electorate will support is more excise taxes on "sin" (but not on soda pop and candy, which they voted to repeal!), and to cut those expenses that would benefit the poorest (and least likely to vote citizens!). To paraphrase a remark by Churchill, in another context, the voters were given a choice between responsibility and shame. They chose shame.Dr B

Dianna Woolley said...

When are we going to pick up our powerball tickets? Thanks for reminding me - a little pocket change would come in handy! xo