WashACE Blog

State Unions Renogiating Contract

I wonder how this will affect the budget. After the governor scrapped the collective bargaining agreement, wisely, because it cost too much in these straitened times, the unions sued. The governor won. And now labor is back at the table.

Jerry Cornfield reports there are some hard feelings: They call her Gov. Union Buster.

But at labor's rally yesterday, legislative leaders were effusive. No hemming and hawing about if there will be tax hikes.

[Senate Majority Leader Lisa] Brown told the Labor Council, Washington's largest union advocacy group, that its members will have to help lawmakers sell a tax package to the public? a game plan that has become widely accepted in Olympia.

"We're going to need your help to put this thing forward in a productive and fair way," she said.

Rich Roesler does a nice job of sorting through the mechanics of a tax vote and some of the tactics to expect.

And in the PI story, Brown sets her sights on the state's Unemployment Insurance Trust Fund.

"Washington state has a healthy unemployment trust fund. We can utilize these funds to expand benefits and training," she said.

Nationally, the unemployment benefit provisions of the federal stimulus plan have been controversial. For a good overview of who's taking what, read this Stateline.org piece.

Zarelli's Useful Budget Perspective

Talk of an $8 billion budget hole got you down? Feeling defeated by the fiscal crisis? Worried about mammoth tax hikes?

Sen. Joe Zarelli offers another way of looking at the problem. Earlier we wrote about the "yes we can" campaign. Yesterday Zarelli issued another of his useful "budget tidbits," laying out his alternative take on the problem. Download the file and read it.

Here's Zarelli's explanation of the $8 billion hole.

The deficit has been characterized as $8.3 billion. This is composed of:

A $1.3 billion deficit in the current biennium, which ends June 30th;

A $6.5 billion shortfall next biennium if we do not address the current biennium deficit, continue doing everything government currently is doing, plus do new policy enhancements;

An assumption of the need for a $500 million ending fund balance.

But keep in mind about this figure:

$1.4 billion represents proposed policy enhancements and compensation increases, including maintaining employees' health care benefits at 12% and providing COLAs and step-salary increases.

It assumes the current-biennium budget deficit remains unaddressed. Some savings have already in fact been achieved with passage of a mini-supplemental budget (ESHB 1694) last week.

It assumes no federal money is available to reduce the deficit. Likely, there will be around $3.1 billion available to the operating budget.

It assumes the constitutional rainy day fund, which will contain $700 million, is not utilized to address the problem.

The first step in solving the budget problem is a correct diagnosis. The second step is believing that the problem can be solved. Zarelli's views are helpful on both counts.

"So, How's the Legislative Session Going?"

Time was when Ed Koch, as mayor of New York City, famously and frequently asked folks, "How am I doing?" Keeping it simpler, perhaps, legislative leaders recently let reporters know that they think they're doing just fine.

"I am feeling very good about the progress made this session," said House Speaker Frank Chopp, D-Seattle.

And Senate Majority Leader Lisa Brown, D-Spokane, shrugged off Republican criticisms that the Legislature is moving too slowly in writing a supplemental budget for the remainder of 2009.

"I feel good about the speed we've moved already with respect to the unemployment benefits and early reductions bills, and we will soon have a federal transportation stimulus bill on the governor's desk," Brown said. "We need to do more reductions. We will make those decisions after the caseload forecasts in March. ... We always wait until after the March forecast to do a supplemental budget."

The News Tribune's Joe Turner offered an unusually sharp counter. I won't summarize it here. But you should read it.

Balance the Budget Without Tax Hikes

Good advice for state legislators from the Columbian this morning: Read her lips. Referring to the governor's stated opposition to raising taxes to balance the budget, the paper notes

If the governor can keep that pledge and write a budget during horrific economic times? which she did two months ago? then so can the Legislature.

And forget about sending a tax proposal to the voters.

Legislators should stop wasting time wondering if voters? many of whom are joining the growing ranks of the unemployed? would approve tax increases. Instead, budget writers, just keep cutting.

I made a similar observation in The Herald of Everett yesterday.

Senate Republicans Plan to Balance Budget without Tax Hikes

Although heavily outnumbered, Senate Republicans expect to be heard on the budget. And, as Brad Shannon reports in the Olympian, they're saying "yes we can."

They just had large campaign-style buttons made up with an Obama-esque color scheme? mainly blue with white letters and a swash of red. "Yes we can!" the buttons say, with an asterisk followed by the words, "balance the budget without raising taxes."

Senate GOP caucus spokeswoman Rebecca Japhet was handing out the buttons early this afternoon, and members should start popping up with them on lapels. Click here to see the button and a 17-page explanation from Republican Sen. Joe Zarelli of Ridgefield and his colleagues about how the budget-balancing feat can be accomplished.

Clever. You can also download the Republican plan here.

In The News Tribune Michelle Dupler identifies points of conflict.

Republican leaders say Democrats are painting too negative a picture of state finances in an effort to impose a tax increase.

Democrats are firing back by saying Republicans are oversimplifying the state's problems to gain support for cutting important programs.

Meanwhile, the state jobless rate climbs to 7.8 percent.

Can't Count Coal Out

Don Brunell's column this week offers up another of what used to be called inconvenient truths, until Al Gore made it such a tired cliche we don't say it anymore. Brunell points out that coal will long be an essential element in our nation's energy supply.

..coal provides more than half of our nation?s electricity and will for at least the next 20 years. There won?t be enough alternative energy for decades? if ever? to replace it.

Still, as he points out proposed legislation threatens only coal-fired power plant. Here's how Sen. Craig Pridemore explains his position on YouTube.

Read Don's post. He's right. The senator is wrong.

About Those Economists Supporting Tax Hikes

Apparently, they're not all economists.

But I reckon they all would like to see "all options on the table," which has come to mean "raise taxes" in much the same way "tax reform" means "pass an income tax."

More Editorials Opposing Tax Hikes to Solve State Budget Woes

Two excellent editorial in recent days underscore the importance of balancing the state budget without raising taxes.

Yesterday, the Everett Herald editorialized that it is time for lawmakers to lead.

With the state budget gap now beyond $8 billion and widening, the buzz in Olympia is all about an inevitable public vote on tax increases to help close it.

Such talk, which the Legislature's Democratic leadership is doing nothing to quell, is premature and probably unrealistic. And, we'd argue, unwise...

Besides, voter approval of tax increases in this economic environment may be a longer shot than the Huskies winning the Rose Bowl next year. People and businesses are hurting, and while many are still doing what they can to help those in worse straits, good luck convincing voters to include state government on their list of favorite charities.

It's a good read, making solid substantive points, unlike the letter from tax-supported economists supporting tax hikes.

And the Seattle Times tells the legislature not to count on a taxpayer bailout.

There is the problem for Democrats who would send a tax package to voters. If their tax does the job, it will be an economy-killer. If it is a bearable tax, it won't do the job.

The remaining option is cuts. They are painful, but they will have to fill most of that $5 billion gap.

The state must cut, cut, cut.

Right. And sooner rather than later.

UPDATE Missed a good Union-Bulletin editorial (h/t Jason Mercier). Read the whole thing. Here's a taste.

As the revenue forecast for Washington state's government grows grimmer -- from a shortfall of $6 billion in November to $8 billion this month -- talk of raising taxes is swirling in the Capitol.

It's crazy talk.

A deep economic recession is not the time to raise taxes. Washingtonians are not in the mood to approve or accept a tax increase of any size.

Sensible.

Common Sense on the MInimum Wage...

... is more easily found on the business pages than in Olympia. Dan Voelpel's column in The News Tribune is a must-read. He looks at the state's highest-in-the-nation-and-ever-escalating minimum wage, brought about by a labor-backed, voter-approved initiative in 1998 and concludes:

Somehow we have bought into the misconception that the minimum wage should equal a family wage.

It isn?t. The minimum wage is a work force entry wage, a wage paid for a supplemental income, a wage for someone in the job temporarily rather than a career.

It has consequences, as a restaurateur tells Voelpel.

Duke Moscrip, the owner of Duke?s Chowder House restaurants, says the latest 48-cent bump will cost his company $50,000 more a year in wages, not counting the additional taxes and benefits he must pay on the higher wage rate.

Moscrip also gets the last, painfully accurate, word in the column. I'll give it to him here, as well.

?People down in Olympia don?t seem to have any understanding of the business world. They think this money grows on trees and the employees should be getting everything. What they don?t realize is if they break the back of businesses, and especially restaurants, there won?t be any jobs.ƒ�

Deeper Budget Deficit Increases Risk of Tax Hikes

Yesterday's special forecast council report undoubtedly stimulated the tax talks already underway among majority Democrats. The meeting handouts are now available and well worth reviewing (download the color version).

Raha places the state's recesion in a national context that includes "one of the worst 'bear markets' sinc WW II," the rapid decline of household net worth (down 19 percent from its peak in 2007), tight credit markets, lousy car sales, record-low consumer confidence, sluggish housing activity, and "plummeting" exports from our state (affected heavily by the Boeing strike).

He describes the problems in housing, banking, and jobs as a "three-legged stool of misery" and says that restoring the financial markets will be critical to any recovery. There's nothing in the data that suggests a quick turnaround.

Still, as this exchange from Curt Woodward's AP story reveals, rather than cutting now, legislative leaders want to wait.

Democratic leaders said they still must wait until March, for a more firm projection of revenue and state spending growth, before writing their budgets in earnest. The governor's budget director, Victor Moore, agreed.

Minority Republicans, however, reiterated their call for even more immediate spending cuts, saying the Democratic majority isn't moving fast enough in the face of a massive budget hole.

"I think still that there's an opportunity to do some things here and save some pain by moving earlier," said Sen. Joe Zarelli, R-Ridgefield.

And, while Democrats on the forecast council yesterday called talk of a tax package "premature," Andrew Garberreports,

Democratic leaders in the state House said earlier this week they'll likely propose sending a tax package to the ballot this year to help deal with the budget shortfall. And Senate Majority Leader Lisa Brown, D-Spokane, said she expects to bring ballot proposals to her caucus to consider.

Joe Turner writes in The News Tribune's political blog that labor groups are already designing the tax plans. 

Meanwhile, the shadow legislature of unions and other stakeholders is out their holding "focus groups" in communities. They're trying to figure out how much a tax increase (just a temporary one, I'm sure) the public can stomach, which taxes they would vote to increase or which tax exemptions they would vote to remove, which wholesome programs the money should be spent on to make the taxes more palatable (pay raises for state workers probably won't cut it, but warm, fuzzy stuff for school kids and colleges might) and, of course, how much money the tax increases should raise. $1 billion? $1.5 billion? $2 billion?

It's a tough job, but somebody's gotta do it. I'd tell you more, but most of the people involved are still either hiding in the shadows, refuse to talk to me or mumble a lot of indecipherable stuff when they answer me.

Legislative mumbles, taxpayer grumbles.