Looking for the Least Bad Alternative to Resolve State Budget Shortfall

In today's Puget Sound Business Journal, I have a column on the budget endgame. The piece was written before the House and Senate budget plans came out this week. But I think it holds up. The Senate revenue plan includes a 0.3 percentage point hike in the sales tax rate. The House continues to struggle with its work, having twice postponed release of a tax package. They may have one today, or maybe Monday. Least bad alternatives face stubborn opposition.

However they resolve the situation, there will be another crisis next year. Here's how I characterized it in the PSBJ:

A depressing inevitability haunts Olympia. Tacky rhetorical sunshine no longer brightens the dome. A “crisis too good to waste” has been wasted. The multibillion-dollar shortfall failed to spur innovation and restructuring.

Timing plays a role. Major reforms take time to implement. Savings are rarely realized immediately... With another shortfall expected next year, it might make sense to plan ahead.

But this has been the session of the here-and-now. Fiscal reforms — privatization, restructuring, right-sizing the state payroll — don’t get much attention. Why offend favored constituencies, like state workers, when doing so won’t solve the immediate problem? Even going after a minor giveback like furlough days, which will capture savings now, sparked a major union hissy fit. Overreacting to small stuff works well for powerful lobbies, who find they then have little to fear from major challenges to their hegemony.

Thirteen days remain in the regular session.

The Seattle Times has a good account of the tax discussions. The Everett Herald offers a thoughtful assessment of the tax plans that have been introduced. They also note the lack of restructuring during the fiscal crisis.

The state will likely continue doing things it shouldn't — such as distributing liquor — and state employees will avoid many of the pay and benefit cuts private-sector workers have been making for years. Meanwhile, important priorities like education will suffer.

This will be the key issue in this fall's legislative elections.

What do you think?

Comments

[Jeff]

The part that is so frustrating is there doesn't need to be a "least bad" solution.

I work for a company (Clarion Care) that created process which can cut the deficit by 42% by changing the benefit structure but likely improve benefits and employee health - here is the link to the posting by Forbes about this:

http://www.forbes.com/feeds/prnewswire/2010/02/16/prnewswire201002160815PR_NEWS_USPR_____PH55073.html

As usual, the private sector is using initiative, innovation, and hard work to find and develop answers to hard questions. In the case of Clarion Care we've invented an entirely new way to manage benefits that will save the State Billions. So there is not a least bad option, there is a great option.

If anyone asks you, "What can be done?!" you can pass along the link to Forbes.

Thanks for considering my position. I understand it is self serving but it is also the right solution, and we can all agree avoiding tax increases serves us all.

Best,

Jeff Cunio, CEO
Clarion Care