Year: 2011

Data on State Employee Compensation

I’ve answered a lot of mail in the past few weeks and one theme that threads through many of the emails is that the number of state employees is increasing rapidly, that they are paid way too much, and that their benefits are vastly greater than private sector workers. The conclusion is that we should be able to solve our entire budget problem with small adjustments in compensation.

Last year I supported a budget solution that would have required larger healthcare contributions from employees than we achieved in the final negotiations, but the general premise of this comclusion isn’t right. Let’s start with the numbers.

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Washington State and local taxes drop to lowest level in 50 years

The DOR released this as part of their “Revenue Update” for the month.

Washington’s state and local taxes (as a percent of personal income) dropped to their lowest level in 50 years in Fiscal Year 2009, according to new figures released by the U.S. Census Bureau.

Washington taxes dropped to $93.24 per $1,000 personal income from $105.49 in Fiscal Year 2008.  While many states experienced declines in taxes relative to personal income during that period, Washington’s decline was steep enough to change its national ranking to 35th highest among the states in 2009 from 30th highest in 2008. The national average for Fiscal Year 2009 was $102.10, down from $111.99 the prior year. The $93.24 figure, comprising $56.70 in state taxes and $36.54 in local taxes, is the lowest since the Department of Revenue began tracking this statistic in 1960, when the rate was the second lowest at $98.43. Taxes per capita also declined to $4,049 in 2009 from $4,354 in 2008, dropping Washington’s per capita ranking nationally to 21st lowest from 16th.  The national average in 2009 was $4,141.  More information on changes in rankings over the years and the factors involved is available in Comparative State and Local Taxes 2009, published online at http://dor.wa.gov/Content/AboutUs/StatisticsAndReports/2009/Compare09/default.aspx.

 

Post-Special Session Newsletter

Now that the “special” session is over I’ve been motivated to write a newsletter that answers many of the questions I’ve received in email. If you want to print it click here for the PDF version that’s better formatted for your printer (or at least for mine.)

As always, it’s an honor and a privilege to serve you in the Legislature. This will be my tenth year, which I find astounding. I never intended to do this – I thought I’d swoop in and fix school funding, then go back to the private sector. It turns out that some problems are harder to fix than you would think. The “great recession” is also making it a little more difficult…

Gov. Gregoire called the Legislature into special session Nov. 28 to deal with a significant decline in our expected revenue over the remainder of the two-year budget period, which ends June 30, 2013. She released her proposed revised budget Nov. 21.

We finished the special session on December 14th with the passage of a “down payment” bill on the budget, along with a handful of bills that were related to the budget or to creating jobs in Washington. The down payment bill saved a little less than 25% of the overall problem: $480 million. We still have about $1.5 billion to go.

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Internet Sales Growth Explosive, Compared to In-Store Sales

The following article was sent to me by the Streamlined Sales and Use Tax Governing Board, an organization representing more than half the states that charge sales tax. In it you see the shift to Internet retailing and the consequent loss of sales tax revenue for the state. We are attempting to convince Congress that they should require Internet merchants to collect sales tax for states in which they do not have a physical presence, something the Supreme Court said was too difficult for them to do 15 years ago.

There are several bills in Congress right now do do this – a Democratic bill, a Republican bill, and a bi-partisan effort that seems to have legs. Yesterday the legislature in our Washington passed a “joint memorial” (SSJM 8009) to Congress urging them to take action on one of the bills. I personally prefer the bipartisan act.

This act by Congress could collect up to $170 million in sales tax that is legally owed but not being collected today, putting a substantial dent in our budget problem. This would not raise taxes, just do a better job of collecting them.

Our membership in the streamlined sales tax group and this bill is supported by the business community in Washington State, including the Association of Washington Business, Amazon.com, the Retail Federation, etc.

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Budget “down-payment” will be heard today

OLYMPIA – A bipartisan plan to take a big bite out of the projected $2 billion state budget shortfall will be heard Monday by the House Ways and Means Committee.

The bill, sponsored by Chair Ross Hunter, D-Medina, makes $479.7 million in cuts to the 2011-13 budget, which was initially adopted last spring. Since then, continuing economic stagnation at the national level has resulted in a forecast that revenue will fall nearly $2 billion short of what’s needed to fulfill the budget and provide necessary reserves.

“This bill is a down payment on the overall solution we’ve been working on since September, when it became clear we would have to make major modifications to the budget,” Hunter said.

“It includes administrative cuts across broad areas of the budget, but other areas are left intact for now while we continue to work on solutions to more complex areas.”

Gov. Gregoire called the Legislature into a special session Nov. 28 to address the budget situation. She has released her proposals for $2 billion in reductions, including deep cuts in health, social services, higher education and public schools. The Legislature has been holding hearings on her proposals, taking testimony from people from across the state.

Reaching agreement among Democrats and Republicans in the House and the Senate on all $2 billion in cuts – including possible restructuring of programs and policies – will require action in the regular legislative session, which starts Jan 9. Hunter’s plan represents a major step toward that goal.

“We’re pleased to have worked out a way to tackle this problem that makes sense for right now,” Hunter said.

The hearing on the measure, PSHB 2058, is scheduled for 3:30 pm. For more details you can read the summary here. (PDF)

Slow-Motion Default in Wenatchee

I’m disappointed that the Legislature failed to address the slow-motion financial default in progress in Wenatchee.

7 cities and 2 counties got together and agreed to build an arena in Wenatchee. They used a stream of money from the state plus the expected “operating profits” from the arena to get a construction loan in 2008, and expected to refinance before December 1, 2011 when the balloon payment on the loan came due. Unsurprisingly, the arena isn’t generating enough cash flow to pay the operating costs, let alone any potential debt service.

The relationships between the 7 cities and the counties are complex beyond belief, but the long and short of it is that they failed to refinance and defaulted on the loan last week. I am concerned that this default will result in increased borrowing costs for other local governments and worked with the treasurer’s office to propose legislation that would have paid off the loan and forced the local governments to pay for it.

There’s been lots of news coverage of the issue, most concurring with my concerns about the impacts on other local governments. The proposal would not have impacted the state budget issue, would not have “bailed anyone out”, and would have made money for the treasurer.

The House passed the legislation but it got stuck in the Senate. This felt to me like the triumph of the edges of the political world over the center. We failed to make a practical decision that had bad politics. I hope this does not continue to be the case as we work through the budget situation.

520 Tolling to Start Dec 29

Ancient (1979) toll booth on the 520 bridge - courtesy WSDOT

WSDOT sent out the following press release today. You may want to get your Good to Go pass soon.The pass offers a significant discount on the toll.

Ross
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SR 520 tolling to start on Thursday, December 29
Today we announced that tolling will start on SR 520 on Thursday, December 29. If drivers haven’t already purchased a Good To Go! pass, which helps them get the best toll rate, they should take action now:

Purchase the popular $5 sticker pass at participating Safeway, Costco, QFC or Fred Meyer stores then activate it online. Visit www.wsdot.wa.gov/goodtogo/retail for a list of retail locations.

Buy any of five pass options online at GoodToGo520.org.
Visit a full service Customer Service Center or a Mobile Customer Service Center. Find locations and hours at www.wsdot.wa.gov/goodtogo/contacts.htm.

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K-12 Funding Proposal – Additional Data

I am posting CSV versions of the two data tables as several people have requested the data in searchable formats. We are typically careful about doing this as people can manipulate the data in ways that say different things than the original presentation did, and I’m hoping people are careful with it. The proposal will change over time, and the need to have current data with which to do analysis will be important.

Levy Options by school district Nov4 Table 1 (csv)

Levy Options by school district Nov4 Table 2 (csv)

 

K-12 Funding Proposal – Local Levy Swap

I’m stepping outside my role as Ways and Means chairman to put out a personal proposal for comment. The idea described below is a big one, moving around about a billion dollars in property taxes that are used for the support of public schools.

I’m giving a speech on this topic Saturday morning at the Washington State School Directors Association (WSSDA) conference, and the support files for the proposal are linked at the bottom of this post.

Making changes this significant in how schools are funded is a big deal, and the proposal will require a 2/3 vote in the legislature if it’s to be adopted. It’s revenue-neutral in the beginning, but grows more quickly than the current system does. That will let us step up our funding of schools as we recover from the economic troubles we have today. If enough members are interested in the idea it’ll move through the system. If not, we will be stuck with some very ugly budget choices.

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WA Budget – Proposed Agency Cuts Explanations

I used this document in a caucus discussion of the proposed agency cuts and thought it might be interesting to people. It’s a long PDF with a duplicate copy of the spreadsheet referenced in my last budget post. To understand the spreadsheet you need to read the earlier post first.

There are 6 pages here and it’s a little wonky, but you begin to get a sense of what some of the rather bland descriptions of the impact of proposed cuts actually mean.Click the document icon to the left for the actual PDF file.

This is the document I referenced in the League of Education Voters conference call this morning.