PRESS RELEASE

March 28, 2005

Senate budget ignores voter-approved spending limit

OLYMPIA—The Senate Democrats introduced a $26 billion 2005-07 budget today which ignores the voter-approved I-601 spending limit. The $2.8 billion spending increase over the current budget (12 percent increase) includes $482 million in tax increases. The Senate proposal exceeds the current I-601 spending limit by $900 million and the governor's proposed 2005-07 spending limit by $122 million.

"Based on the Governor's and the Senate's budget proposals, it appears the Democrats are unwilling to budget based on a priorities of government model," said Jason Mercier, budget analyst for the Evergreen Freedom Foundation. "Rather than use performance-based budgeting, Democrats are repeating their tax-and-spend mistakes from 1993. As happened then, the people may be forced to pursue another voter-initiated spending limit to reign in state taxes and spending."

Balancing the budget in three easy steps
Rather than ignore the intent of the voter-approved I-601 spending limit, Democrats should instead balance the budget by:

1) Repealing Initiative 728. This "free" class-size reduction initiative passed by the voters in 2000 is currently diverting $809 million from the general fund to the student achievement account. This means, if repealed, an additional $809 million would be available for the 2005-07 budget, bringing the total 2005-07 revenue forecast to $25.7 billion (an 11 percent increase). Voters were promised by former Governor Gary Locke that I-728 would not raise taxes or take money away from other programs. Last year voters defeated I-884 (which would have raised taxes to fully fund I-728, among other programs) by a nearly 2-1 margin. Former Governor Locke's priorities of government (POG) work teams recommended that Locke not fund I-728 in his 2003-05 budget.

2) Identifying a tax source for I-728 and referring it back to a vote of the people. The governor should meet with Washington Education Association (WEA) president Charles Hasse and allow the WEA to choose the tax source to fund the FULL cost of I-728. The measure should then be referred back to a vote of the people with the accompanying tax source. This would honor the will of the voters who initially approved I-728 (when it was "free"), but then chose not to fund it by defeating I-884. It would also allow the WEA to ensure that the tax source chosen is the most acceptable one it can identify. Voters will once again be able to state whether or not class-size reduction is a priority for which they are willing to pay more in taxes.

3) Using Priorities of Government (POG) to fully fund state pension costs while leaving a $1 billion ending fund balance. With the repeal of I-728, the state will have forecasted revenue of $25.7 billion for the 2005-07 biennium. Governor Gregoire could then either prioritize spending within the current voter-approved I-601 limit to include funding of the state's pension costs, or she could follow the I-601 procedure currently prescribed under law by requesting the people authorize expenditures up to the $25.7 billion in forecasted revenue to allow funding of state pensions. This would leave an ending fund balance of between $600 million and $1 billion depending on which option she chooses.

There is nothing prohibiting Democrats from spending at any level they want and raising any tax they choose, except for the fact that under the law they must first receive the voters' permission to exceed the spending limit. Since the state budget is supposed to reflect the people's priorities, no rationale exists for denying the people their right under the law to approve taxes and expenditures in excess of the I-601 limit.

Note: Along with reducing funding for the State Auditor's office, no funding for performance audits is allocated to the State Auditor in the Senate budget.

Contact: Jason Mercier | Budget Research Analyst | 360.956.3482

Evergreen Freedom Foundation P.O. Box 552, Olympia, WA 98507 Phone: (360) 956-3482, Fax: (360) 352-1874 Email: effwa@effwa.org