By Bob Williams and Jason Mercier, Evergreen Freedom Foundation
"The worst strategy in the world would be a strategy of partisanship right now," Rep. Luis Gutierrez (D-Ill.) said in the wake of the September 11th terrorist attacks on our nation. "I think we've gone past 'bipartisan' to 'nonpartisan' here."
His sentiment is echoed throughout the nation’s Capitol as Americans join together to defy the terrorists who specifically targeted the pillars of our national economy. It should also echo in our own state capitol.
Our state’s latest revenue forecast sends a loud and clear message: State government must tighten its belt.
The official September state revenue forecast shows slower than expected growth in June for both the national and state economy. Anticipated revenues for Washington’s 2001-03 biennium dropped by $119 million.
Prior to this bad news, state officials already had planned to spend $640 million more than expected revenue in the next biennium, making up the shortfall by using emergency reserve funds.
Do the Math (in millions)
2001-03 Budget
$22,783.2
Revenue Forecast
$22,021.8
Shortfall
$761.4
Then came the terrorist attacks on New York and our nation’s Capitol, followed by massive layoffs announced by Boeing. This, and the loss of thousands of other jobs directly or indirectly related to the tragedy, will cost our state economy hundreds of millions of dollars.
Washington state is in need of an aggressive, strategic economic recovery plan – a plan that has its foundation in core free market governing principles – a plan that bridges partisan divides. We must generate a climate for growth. This requires deregulation allowing private industries to flourish and provide the jobs and commodities we need for a strong state and local economy. A comprehensive state economic development policy should address:
Existing sectors of our economy: high tech, forest products, agriculture, aluminum, aerospace, ship building, small businesses, and tourism.
Barriers that are delaying or deterring private sector construction projects.
International trade and natural resource markets.
New industries.
Employee qualifications needed to meet the new demands.
Here are our recommendations for Governor Locke and the Legislature.
For Governor Locke
Call a special session of the legislature in October to provide an opportunity for our state’s leaders to develop an economic recovery strategy.
Look for ways to reduce expenditures immediately, thus allowing taxpayers to keep more money to care for their families and to reinvest. Shift the focus of state administration to reducing spending and streamlining programs.
Clearly outline the core functions of government and see to their excellent and efficient delivery, competitively bidding services whenever possible. New York City, Indianapolis, Chicago, Philadelphia, Cleveland and the state of Virginia have been able to achieve meaningful savings through competitive bidding, without laying off significant numbers of state employees.
Follow former Governor Lowry’s lead and implement performance-based budgeting to get the most out of every dollar.
De-layer the huge bureaucracies surrounding social services, transportation, K-12 education and higher education. These are bureaucratic monsters that are gobbling up taxpayer dollars with little or no accountability for results.
Increase state reserves for emergencies from around 2 percent of the current General Fund appropriations to 5 % – a figure long recommended by EFF and many national financial analysts.
Require all agencies to keep health care costs (the fastest rising cost in the state budget) at or below the current level through June 2003. Require that monthly reports be sent to the governor and his budget director concerning personnel health care costs in each agency, and then set up a management group to track and manage these costs.
Implement an immediate hiring freeze and set up a system to examine each vacancy. Ask the necessary questions: Can the agency's mission be accomplished by eliminating that position or combining it with another?
Set up an evaluation committee to thoroughly examine state spending. The budget is full of programs which are wasteful, redundant, outmoded, or no longer necessary. Millions of dollars could be saved by eliminating these programs, but the state has no system set up to review them. A state commission with powers similar to the federal base closing commission could help break this gridlock, and the legislature should be required to conduct an up or down vote on the commission's recommendations.
For the Legislature
Ten important issues need to be addressed in our state’s economy:
Energy: We need a coherent and aggressive energy plan which will provide incentives to energy companies to come into our state or expand current operations. Increasing energy producing options in conjunction with energy conservation incentives will signal to businesses and consumers that the state is serious about providing the power necessary to begin a serious economic recovery.
Water: Rather than waiting for the findings of various councils on the need to revise the state’s water permitting process, immediate action should be taken to streamline the permit process. Currently, obtaining a permit can take years.
Transportation: Lawmakers must agree on a responsible plan to provide and improve the transportation infrastructure our state needs. Performance-based budgeting and performance audits must be tied to any tax increases that may be necessary to bring about the needed construction of new roads and maintenance of current roads. The very first step towards addressing the transportation quagmire is to assure that all existing taxes on automotive items are dedicated solely to transportation needs.
Taxes: Business tax rates should be decreased to provide necessary capital funds.
Unemployment Insurance: The state’s Unemployment Insurance program needs to be reformed to relieve the heavy tax burden businesses bear. Rather than providing higher wages and benefits, and in some cases additional jobs, employers are forced to pay into a system that provides perverse incentives to remain unemployed.
Regulations: With almost 16,000 pages of agency-created rules facing businesses in our state, time that could be devoted to improving the economic climate in Washington is wasted in attempts to comply with these detailed regulations. Unnecessary restrictions must be abolished immediately.
Growth Management Regulations: Our state’s land regulations are strangling businesses in our rural counties and artificially driving up real estate values. Local governments must be given much more flexibility.
Mitigation fees: The last thing businesses need in these uncertain economic times are tack-on taxes in the form of mitigation fees. Total elimination of these unnecessary taxes would send a strong signal that we value our businesses and do not want to punish them for desiring to expand their economic venues.
Health care: Along with the health of our economy, the most pressing concern for our citizens is the health of their families. As a result of the state’s disastrous 1993 attempt to co-op the health care industry in our state, insurance remains unaffordable for many of our residents. As we now strive to improve our economic well being, consumer concerns about health care can be addressed by passing measures to hasten the return of private insurers back to the state.
Labor: State government’s embrace of prevailing wage laws and Project Labor Agreements has removed any semblance of objectivity in hiring. Both should be scrapped to allow competitive bidding, which is a win-win for current state employees and taxpayers.
An EFF publication called the Stewardship Series outlines many of these recommendations in detail. The series is available on our website (www.effwa.org) or upon request. We will be glad to work with the Governor or legislators on these proposals.
The Evergreen Freedom Foundation firmly believes President Bush’s sentiment that, "Our enemies have failed, America is strong." It is through our unity of purpose and "nonpartisan" resolve that we will emerge stronger economically than we were before the cowardly attacks on our nation. Now is the time for our state leaders to come together and demonstrate the American strength and decisiveness necessary to provide the roadmap for our economic recovery.
Bob Williams is president of the Olympia-based Evergreen Freedom Foundation. Jason Mercier is the Foundation’s Deputy Communications Director. They can be reached at (360) 956-3482.
Living Liberty is the Evergreen Freedom Foundation's monthly newsletter. It provides updates on the issues and projects EFF is currently working on. You will also find commentary on state and sometimes federal government issues.
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Contact: Jason Mercier, Deputy Communications Director, (360) 956-3482
At a March 23, 2005, House Appropriations hearing on a bill to gut the voter-approved I-601 spending limit, Rep. Jim McIntire (D) asked a supporter of I-601’s two-third supermajority requirement for the legislature to raise taxes the following question:
"Can you name a time when we [legislators] have actually not just set it [supermajority requirement] aside by majority vote? I mean, this is in many respects a procedural motion that has no bearing. It’s a statutory constraint that cannot constrain any legislature that chooses as a majority to set it aside . . . have we ever used a supermajority [to raise taxes]?"
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