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February 04, 2010
Bob William's Testimony to Protect I-960
February 4, 2010
SB 6843
I am Bob Williams, Founder of the Evergreen Freedom Foundation, a free market research group based in Olympia.
I am speaking in opposition to SB 6843, which guts the voter-approved supermajority requirement for tax increases and tax transparency. This bill is not the solution to the legislature’s out-of-control spending problems. The problems you face are due to unrealistically high levels of state spending, not to a lack of tax revenues.
You are breaking faith with the voters, who have repeatedly affirmed they want you to exhaust all your options before raising taxes and to limit state spending. Not only are you eviscerating the two-thirds requirement for tax increases, but you are cutting out the heart of I-960’s tax transparency measures. Since public hearings are usually scheduled with little notice, in most cases OFM will not be able to complete its tax and fee notices prior to the hearing, leaving members and the public in the dark. You are also denying the people a chance to vote on taxes.
Just a little over two years ago the voters passed I-960 when our economy was booming. By making it harder to raise taxes, they were asking you to limit spending. You ignored them and spent $1.3 billion more than the revenue forecast. If you couldn’t find a way to balance the budget at a time when the state took in record high revenues, as it did in 2007, it certainly is no surprise that you are unable to balance the budget today.
General fund state spending is up $7.2 billion, or 31 percent, since the 2003-05 budget. Total state spending, despite all the talk about a $9 billion shortfall, is up $1.3 billion since the last budget cycle. And despite all the complaining, you only managed to reduce Near General Fund spending by 3.2 percent.
Every budget Governor Gregoire has submitted to the legislature has spent more than the revenue forecast, but the legislature has made the problem worse by using accounting gimmicks, fund transfers, underfunding pensions etc. to allegedly balance the budget. Long-term solutions have been repeatedly pushed forward and the crisis is growing. You are already aware that you face a $2.8 billion shortfall next year, plus more than $3 billion in federal funding that will not be there.
Moody’s Investors Service now gives Washington a negative credit outlook, and almost everything you are doing will exacerbate the problem. Moody’s lists some of their primary concerns as: an increased reliance on one-time budget solutions, a protracted structural budget imbalance, and failure to adopt a plan to cover expenditures once stimulus dollars run out.
The Freedom Foundation has offered to work with you in the past and we offer again. Washington won a national award when Gov Locke worked on a bipartisan basis with Sen. Rossi to implement the priorities of government (POG) model which prioritized spending on an outcome basis and solved a $2.8 billion budget problem without raising taxes. If you raise taxes in a recession, you are going to collect less revenue than you believe. In addition, tax increases will result in a loss of private sector jobs. Businesses already face a 50 percent increase, or greater, in unemployment insurance taxes and a 7.6 percent increase in workers compensation costs.
I urge you to use POG to prioritize state spending. Patchwork tax increases of the kind this bill would enable are not the answer. They will hurt Washington’s families and businesses, and slow our economic recovery.
| Contact: Bob Williams | | | Founder and Senior Fellow | | | (360) 956-3482 |
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PO Box 552 Olympia, WA 98507, Telephone: 360-956-3482
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