March 31, 2009
This is not the all-cuts budget

The Senate budget proposal released Monday will require a 2/3 super-majority vote to pass because it contains tax and fee increases. Thanks to Tim Eyman's team and Initiative 960 they can't increase taxes with a 50% majority. Senator Lisa Brown (D) sued us to overturn it, but lost.

The Democrat majority happily increased programs during the good times. While saying good words about caution for possible tighter times ahead, they created new programs that "have to be funded." The 2005-07 biennium increased spending by 17.8%.

They have been in idle session since early January; they still have the opportunity to set clear priorities and make structural changes. But it requires hard choices and confronting their big donors. As Stefan points out in his post, if they cynically cut in areas the voters support the most it puts pressure on the public to accept tax increases (which makes their job easier).

Spending increases - People who have read the thing say there are increases in state employee health care benefits (or reducing what they pay) and illegal aliens would continue to receive health care. They will surely find more.

Are you going to call your honorable representatives and demand they increase taxes?

Paul Guppy at Washington Policy Center says...

"The Senate Democrats' budget underfunds some core public services and relies on temporary one-time funding, while failing to address how the state got into such a deep financial trouble in the first place," said Paul Guppy, Vice President for Research at Washington Policy Center.

Failure to set clear priorities created a structural spending deficit by locking in past activities, regardless of importance, while leaving more urgent needs unmet. This results from the Legislature's habit of "reverse budgeting," in which routine government activities are funded first while high-priority needs are left in fiscal crisis.

Senator Joe Zarelli speaking for the Republicans points out:
"The state expects to take in as much revenue in the next two years as it will in this biennium, so it really does come down to priorities. Senate Republicans have shown how the Legislature could produce a budget that is balanced without higher taxes, protects services for the most vulnerable and does not repeat the mistake of relying on gimmicks or one-time money. Unfortunately the Senate Democrat proposal falls short on all of those fronts. It does almost nothing to produce the kind of farsighted change Olympia and our taxpayers badly need.

"Instead of making policy adjustments that will generate substantial ongoing savings, this proposal is about punting and doing temporary backfill that would put off the problem for another two years. It keeps spending artificially high by playing about 3 billion dollars in federal money plus some ill-advised fund transfers that include a raid on the capital budget.

"It's not whether you take the federal money, it's how you spend it. These are dollars we can only spend once - but this budget would use them to maintain programs and services. That is exactly the approach which started our state down the road to a deficit...

The Olympian - Olympia, Washington on the tax increases:
... The GOP has argued from Day One this legislative session they believe a balanced budget can be achieved without new taxes.

Budget highlights made public by Senate Ways and Means Committee chair Margarita Prentice show that 30 pending bills are needed to implement the budget that she, Tom, Senate Majority Leader Lisa Brown and two colleagues rolled out this morning. Here is a list of seven that call for tax increases and 10 that reduce taxes.

The tax increase list includes closures of tax exemptions such as Senate Bill 6062, which proposes to bring in $54 million by ending a break on the real-estate excise tax for banks that dispose of foreclosed properties. One other would bring in $36 million by ending a sales- and use-tax break for purchasers of hybrid-fuel vehicles.

Ten proposals would give new or larger tax breaks. The most expensive is $10 million for SB 5899, which proposes to let businesses with fewer than 10 employees to reduce business taxes by $2,000 to $4,000 for each employee they add to the payroll.

Cross posted at my blog Economic Freedom.

Posted by Ron Hebron at March 31, 2009 07:41 AM | Email This
Comments
1. What? They really expect they are going to collect as much in the next two years as they did in the last?

That assumption is way, way off.

Posted by: swatter on March 31, 2009 08:17 AM
2. "That assumption is way, way off."

No, I think the forecast equality is pretty good because the last two years began in July 2007 and include the current fiscal year until June 30, 2009. The forecast is for $27.9 billion in both two fiscal year bienniums; 2007-09 and 2009-11. The economy has until June 2011 to recover the losses in 2009/10.

The forecasts for each fiscal year are:

2007 - $14.4 billion (actual)
2008 - $14.6 billion (actual)
2009 - $13.3 billion
2010 - $13.5 billion
2011 - $14.4 billion

The real problem is that they even added to the current biennium spending one year ago so that before ESHB 1694 this year cutting about $600 million, they were spending $29.84 billion this biennium; $2 billion more than the now forecast revenue.

In last year's Leg. session, they added another $200+ million spending even though the revenue forecasts had been declining since Sept. 2007. Talk about having "egg on your face"!

Posted by: Gary in Olympia on March 31, 2009 09:26 AM
3. Nice. And I have to give it to the revenue forecasters.

However, this ain't normal. In my industry, we have experienced 80% unemployment. Obviously, it is the building trades and the biggest economy driver. With building down, how are these numbers ever going to be arrived at.

To complicate matters, Boeing is under pressure from discontinued orders. To further complicate matters, Microsoft Vista is a loser. Maybe they are expecting the new one coming out this summer to make up for the disappointing Vista.

Overall, I think the revenuers are overinflating the dollars coming in and falsely raising the hopes of the idle legislators. Neverbefore has a world recession occurred like going on now.

I mean, the French and other European socialist countries criticizing the Obama spending?

Posted by: swatter on March 31, 2009 10:01 AM
4. How could they be so irresponsible? A monkey could budget better than these goobers. How hard is it to say "We can only spend what we have and not what we haven't. So we will do that. If we make cuts, they will be the least affecting kind of cuts we can make."

I think most people here are quite capable of approaching the job in that manner. Why aren't they?

Posted by: Michele on March 31, 2009 10:48 AM
5. Perhaps they need to fund a methadone clinic for their uncontrollable addiction to spending money that isn't there.

Posted by: Andy on March 31, 2009 11:02 AM
6. Swatter...
I mean, the French and other European socialist countries criticizing the Obama spending?
+++++++++++++++++++++++++++++

Hey buddy, what does it say when socialist countires tell you your spending to much.

Just maybe were the main battery to the world econ.

Posted by: Medic/Vet on March 31, 2009 01:27 PM
7. Meanwhile over on Goldy's rag, they are even questioning whether the current level of spending is not in line with population growth. They basically say the spending levels are just fine, we just need to soak the rich...

Posted by: Crusader on March 31, 2009 02:42 PM
8. Never Forget.

Posted by: pudge on March 31, 2009 03:08 PM
9. Back on revenue projects.

How can an anticipated deficit in last August of 2.5 billion go to 8 billion to 9 billion now if the revenuers knew how to predict the amount of money coming into the coffers?

It will take three years or more after tax foreclosures before the state recovers about 10-15% of tax bills that won't be paid this year.

Also, the TIB (Transportation Improvement Board) has just announced they are not getting predicted gas tax revenues and several of their projects are going belly up.

So, again, Gary in Mecca, tell me again how the state is going to enjoy the same revenue streams these projections are made of?

Posted by: swatter on March 31, 2009 03:13 PM
10. I would like to know what the budget numbers would look like if they just dusted off the budget from 5 years ago before her highness took office and started jacking the budget and taxes. Would the last pre-Gregoire budget solve the problem?

Posted by: Scott on March 31, 2009 03:37 PM
11. I would like to know what the budget numbers would look like if they just dusted off the budget from 5 years ago before her highness took office and started jacking the budget and taxes. Would the last pre-Gregoire budget solve the problem?

Posted by: Scott on March 31, 2009 03:37 PM
12. From what I see on the ground as a businessman, there is no way that budget could fly if there were honest revenue projections. Gregoire, in my opinion, has cooked the books with respect to what they expect is coming in as revenue.

Everyone is looking right now at expenses and no one is quesitoning the incomes anticipated.

The building industry is silent and there is a huge excise tax with each sale of property. Car sales, which is another big time revenue generator is sucking and I already mentioned the big boys- Boeing and Microsoft.

I didn't do the math but my gut is telling me that we got problems.

The stimulus money isn't getting out there. No one wants it with all the strings attached.

As Obama's pastor has said, "the Democrat chickens have come home to roost".

Posted by: swatter on March 31, 2009 04:46 PM
13. Over at HA they make the ridiculous claim that the reason for the deficit isn't spending, but declining revenues. Seriously? I don't even know where to begin with that statement. So the democrats are telling me that despite the 5 cent and 10 cent tax increases on gas, the increase housing prices (and the associate revenue from the excise taxes), the growth in population, and business growth, the state took in less money?! Get real. Heck, if their argument is true, which would require the suspension of belief, then it demonstrates that tax increases don't bring in more revenue, so the prudent thing would be to cut taxes

For those interested, here is the link.
http://horsesass.org/?p=14523

Posted by: Thomas B. on March 31, 2009 05:27 PM
14. It's just another shell game by the Democrat controlled Legislature. There will be new taxes in spite of their claims, which will make them liars. I'm shocked !

Posted by: KS on March 31, 2009 06:52 PM
15. The $9 BILLION Deficit is completely phoney!
Watch Amber of EFF gut it on King5:

http://www.youtube.com/watch?v=I-qUwTJAgYw

Posted by: Mr. Cynical on March 31, 2009 07:30 PM
16. This state needs to cut ALL programs that offer benefits to illegal aliens immediately. Taxpayers are under no obligation to educate, feed, clothe, house or provide medical care to those in this country illegally. Send them home NOW!

Posted by: Saltherring on March 31, 2009 09:27 PM
17. I'd like it if they did not provide any services to illegal aliens, but do you really think the legislature isn't doing this on purpose ?

Of course they are, they are coercing the illegals that ACORN recruits for their vote, with the belief they will work that plan and it will work to the benefit of getting Democrats elected for the foreseeable future. This is coming from the top down... ACORN and Obama - diabolical scheme, because he had the audacity of hope and change.

And we elect these a-holes who fraudulently use our tax money and trample on the constitution ? Generally speaking, we elect who we deserve...

Posted by: KS on March 31, 2009 10:33 PM
18. I'd like it if they did not provide any services to illegal aliens, but do you really think the legislature isn't doing this on purpose ?

Of course they are, they are coercing the illegals that ACORN recruits for their vote, with the belief they will work that plan and it will work to the benefit of getting Democrats elected for the foreseeable future. This is coming from the top down... ACORN and Obama - diabolical scheme, because he had the audacity of hope and change.

And we elect these a-holes who fraudulently use our tax money and trample on the constitution ? Generally speaking, we elect who we deserve...

Posted by: KS on March 31, 2009 10:33 PM
19. Mr. Cynical, granted that the revenue forecasters are divining that revenues for the new biennium will be the same as the old, she is correct that spending is the key.

However, I still question how the economy is going to jumpstart even if by hocus-pocus of Obama and the Democrats somehow works. It takes time for the revenue stream to get back on track. I still question the revenue forecasts.

Posted by: swatter on April 1, 2009 07:29 AM
20. In New Orleans they call this Voodo economics.

I have a voodo doll here from New Orleans that I plan to put Lisa Browns and Margaret Haugans Pictures on.

Pins a plenty

We want to see Voodo I'll show you Voodo.

Posted by: GS on April 2, 2009 08:15 PM
21. Great site this soundpolitics.com and I am really pleased to see you have what I am actually looking for here and this this post is exactly what I am interested in. I shall be pleased to become a regular visitor :)

Posted by: Annenihoicymn on April 3, 2009 08:57 PM
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