To Tax or Not To Tax - Swift Reactions to Revenue Forecast

Put me in the "not to tax" camp, as this morning's column makes clear.

Confronting a $2.6 billion shortfall - that's OFM director Victor Moore's estimate - the first reactions were both predictable and restrained. Democrats, who in the end will own this budget, said they may have to raise taxes. (That's how it's always expressed, isn't it? We may have to, as if tax hikes stem from some external power outside lawmakers' control.) Republicans say nope, it's the wrong thing to do.

Arun Raha, whose job is to deliver the news, not solve the problem, may be the only guy there still capable of cracking a joke. And this was a good one. Pointing out that his economic model had consistently overestimated revenues, he said:

"A model led me astray.  It isn't the first time a model led me astray, but I was younger then, and not married." 

Other than that, not much levity in a grim room. The Economic & Revenue Forecast Council posts the important documents on its website. Here's the press release and color and grayscale versions of Raha's presentation.

TVW's Capitol Record has reaction from Sen. Rodney Tom, D-Bellevue, vice-chair of the Ways and Means Committee.

Sen. Rodney Tom said he think the state will “be making cuts that we never dreamed of and considering revenue packages that we never dreamed of.”

He said the $2.6 billion can’t be made up easily through cuts — particularly since this is a supplemental budget year.

The Capitol Record also paraphrases an important comment by Rep. Ross Hunter, head of the House Finance Committee.

As for putting a tax measure on the ballot, [Hunter] said it would only have an impact on the last six months of the biennium. If something is passed during the legislative session, it would have 15 months. Translation: If taxes are to be increased, it would likely be done by the Legislature, according to Hunter.

Rep. Gary Alexander, the ranking Republican on the House Ways and Means Committee, had this statement.

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.

Sen. Joe Zarelli, Republican leader on the Economic and Revenue Forecast Council, called for a special session to address the shortfall. He added: 

There is nothing creative and innovative about raising taxes. However, I figure that’s where the majority is headed now that it’ll be able to do away with the Initiative 960 law, which got in the way of tax increases this year. Raising taxes would be a high-stakes gamble, but I just don’t think the commitment is there in Olympia to live within our means.

Anticipating the shortfall, the Vancouver Columbian editorial board called for no new taxes. The must-read editorial challenged the notion that 70 percent of the budget is off limits, untouchable, an assertion made by the governor and others.

Who says? Such an automatic assumption certainly doesn't apply in the private sector. Why can't the state touch the payroll or benefits or retirement programs of state workers, at least in future contracts? Politicians and government negotiators sound too much like MC Hammer. Can't touch this, it's state worker pay. Can't touch this, it's public employee pensions. Can't touch this, it's state worker benefits.

Times are tough. Let's start touching.

The Walla Walla Union-Bulletin agrees:

The economic recovery could be stalled by higher taxes.

Beyond that, higher taxes aren't necessary. The Legislature needs to reduce spending, which means freezing pay for state workers and purchases as wellas make strategic cuts to services. This has to be done sooner rather than later.

To this point, lawmakers have avoided dramatic cuts as they've plugged holes with one-time budget fixes such as stimulus money.
While that has kept people employed, it has also allowed state spending to continue at a pace that can't be sustained.

Yes. More later.