Category: Uncategorized

Information Services Board

I serve on the Information Services Board, (ISB) a group of high-level state and private sector people who review and approve the state’s investment in information technology. Specific projects that are high risk get a lot of attention from the group. It’s interesting to me, and one of the few things I do that’s directly related to my previous life at Microsoft.

I wrote the following text as I sat in the meeting last week.

We are reviewing a number of programs:

FamLink, a replacement of an ancient dysfunctional system to keep track of outcomes for children in the care of the state in some way or another. We track cases of child abuse and other problems, plus placements of foster children, etc. The system handles payments and outcomes. They’ve done a reasonable job replacing the system. The first part went live in February 2009. Phase 2 of the project is a little late, and we’re giving them a few more months. (It’s not like we have any choice – the project is late.)

The old data about outcomes for kids is intractible and hard to translate into new formats. This doesn’t affect payments to vendors, but does affect the amount of information that’s available to people who track placements. They’ve done a reasonable job of releasing functionality one step at a time, and fitting it into the middle of complex web of accounting softare at the state. I’m comfortable with the risk choice here.

Another project we’re looking at is a system the Office of Financial Management (OFM) wanted to use to manage grants, loans and contracts across the whole state. This was a disaster, and we would up not delivering a system. We pulled the plug a while ago and today we’re hearing the post-mortem.

Unfortunately, it seems from the presentation that we’re paying the post-mortem vendor by the word. The short story is that OFM tried to do too many things in one system and didn’t ask enough specific questions in the planning. It’s not a huge system, but a painful lesson that we learn over and over again.

The Court system is the next presenter (this is a half-day meeting.) an aside during their presentation is that they are expecting 6000 new “infractions” a day as a result of the tolling methodology being chosen for the 520 bridge scheme. I had realized that there would be some interaction with the court as a result of all electronic tolling, but this seems over the top. I will investigate this and see if we can come up with a better system. (Later update: this was a big problem and is getting fixed. The interesting question is “How do we most efficiently allow people to pay online?” rather than “How do we give people tickets when they don’t pay in advance?” We are working on changing the approach.)

National Popular Vote

The national popular vote proposal is an interesting approach to changing the 222 year old way we elect US Presidents.The idea is to have a compact between states totally more than 50% of the electoral college. We would all agree that we would allocate all of our electoral votes to the winner of the national popular vote. It’s implemented in SB 5599. Bill details here.

There is concern from many people that small states have disproportionate impact on the election of the president, and that some states (the “swing” states) are the only places that are paid attention to. For example a lot of sugar cane is grown in Florida and we consequently have import quotas on sugar cane. This causes us to use a lot of high fructose corn syrup in products in America instead of sugar, because it’s cheaper only due to the quotas.

These are real concerns. The proposal lays out a scheme that I believe would actually work to elect the president by direct popular vote. Nevertheless, I’m really concerned about changing something that has worked for 222 years. Winston Churchill spoke (more generally) about democracy by saying “Many forms of Government have been tried and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of government except all those other forms that have been tried from time to time.” Speech in the House of Commons (1947–11-11)

I think we should be very, very careful about changing a system that, even with occasional hiccups, has done an amazing job of providing a stable government. America is an experiment in self government that worked.

“The full experiment of a government democratical, but representative, was and is still reserved for us.” — Thomas Jefferson to Isaac H. Tiffany, 1816

We have to think about the “representative” part. With the electoral college we are representative of small states. This was the great bargain between the small states and the large, the North and the South, the manufacturing and the agricultural. America is a very different place than it was 222 years ago, but I am not voting for this proposal yet. I may be more comfortable with the idea as more people think about it and write deep analysis of it, but for now I’m not comfortable enough to change something this fundamental in the American electoral system.

Tax Policy for the Internet Age

Tax downloads? What is he talking about?

Let me explain. Today if you buy a copy of “Gladiator” at Barnes and Noble you pay sales tax on it. If you rent it from Blockbuster you pay sales tax. Rent from Netflix? Pay the tax. Download it from Amazon? Pay the tax. However, if you watch the same movie as a stream that doesn’t stay on your hard drive you don’t. Why?

The same thing happens with games. Buy a game at a local store and pay the tax. Download the game from Amazon and pay the tax. Many new games have a significant on-line component. My son is a very serious pirate in “Eve Online,” a massively multiplayer online game. He pays $15 a month for this game experience which isn’t taxed, but a similar game he would download would be.

More concerning is the amount of data a corporation buys today that is a key element of how they run their business. The department of revenue and the business community disagree somewhat on how this will be taxed. This generates uncertainty and lawsuits.

This is crazy. There needs to a simple way to figure out what’s taxable and what’s not, and however we do it we shouldn’t have some business models create a loophole that other ways of buying the product don’t have. We all want to avoid paying taxes, but I would think we could agree that people buying the same product should pay the same tax, regardless of the form they acquire it.

The last time the section of law in Washington that defines sales tax for software was substantively overhauled is about 30 years ago, long before Al Gore thought up the Internet. The world has changed significantly since then. Currently we pretend that downloadable music is a “tangible personal product” in the tax law, something that is becoming more intellectually difficult to defend.

I’ve been working with the business community, including major game manufacturers, to try to simplify the tax treatment of “digital products” as they become more important in the future. A task force met for 18 months to try to resolve the issue and create a bill we could all agree on. We have that agreement today. The key goals we all agreed on were:

  • Revenue-neutral. The bill is not an attempt to raise money – it’s a balancing act to have a better-working tax system.
  • Technology-neutral. A product should either be taxable or not, and the tax treatment shouldn’t depend on the specific business model in which it’s distributed.
  • Protect Washington businesses. Whatever we do should not disadvantage Washington businesses, particularly our high-tech industry which generates many jobs.
  • Durable. The bill should be able deal with changes in technology over the next 20 years without big re-writes every few years.

House Bill 2075 mostly moves things around in the tax code – for example moving books, music and videos from the “tangible personal product” category to the “digital goods” category. The bill is designed to create a durable platform for taxation in the future. It creates as many things that are not taxed as things that are, and the current fiscal note shows that for the next ten years the bill actually reduces taxes slightly. It is not an attempt to raise new revenue.

Washington is a sales-tax state. We don’t have an income tax, and aren’t likely to have one any time soon. A successful sales tax program taxes products broadly so that the rate can stay as low as possible. This keeps the tax from affecting decisions consumers and businesses make. It’s not fair if a game that has a disk costs less than a game that’s accessed on-line, only because of the business model. Trying to keep this platform technology-neutral helps keep rates low statewide.

HB 2075 creates a sales tax platform for the 21st century, or at least for the next 20 years until the world changes again.

Differences between the House and Senate versions of Ed Finance Reform

The House and Seante passed VERY different versions of the reform legislation. Below is a staff summary of the differences in language that’s reasonably easy to understand, though still somewhat “inside baseball.” The Spokesman-Review in Spokane captures it in language that makes more sense to the casual reader when they say

What’s emerged in the Senate is a “We Love Education” bumper sticker.

The hollowed-out bill states an intent to really, really do something about this issue in the next biennium. The following have been removed: Core 24 (the state board of education’s wish to increase the number of required graduation credits from 19 to 24), all-day kindergarten, preschool for low-income children, an increase in transportation dollars, school accountability and changes in teacher certification, assessments and pay. Spokesman-Review full editorial

It’s too easy to demonize one side or the other in this debate, and difficult to come to an agreement about the most important thing we do as a state government. We’ll keep working on the overall plan and try to get to a final agreement that makes sense and does more than just move the ball forward.

quick-comparison-house-senate-march-10

Important Bills

The Legislature is a cyclical activity. We go through a phase where everyone creates proposed new laws and files them. This is call “dropping” bills, because you drop the signed pieces of paper into a basket called the “hopper.” The bills are heard in committee, and the ones that are not patently ridiculous are passed out of committee.

They are then referred to the rules committee, which approves bills that are uncontroversial (and therefore tend not to do anything) or that are IMPORTANT, and usually controversial.

We are now passing the bills in the first category. These are important to someone, but in aggregate this seems like a silly way to do work. As an example, we are now working our way through the following bills:

  1. Minimum passing distances from bicycles. (I’ve been buzzed more often than I would like, so it’s important to some people.) The bills defines what “reasonable” means in the current code as 3 feet. There were 7 amendments, and the bill was argued for an hour. The amendments were what I would call “dilatory,” or designed to waste time. It worked.
  2. Impounding the cars (or bicycles) of people involved in prostitution. I was a little concerned about the civil liberties implications of this, but it’s pretty carefully worked out. If a person isn’t charged they get all their money (and their car) back. This took a bunch of time too.
  3. Creating a lottery fishing program at Spirit Lake. It seems that some people snuck a load of trout into Spirit Lake at Mt. St. Helens and have been sneaking in to fish for them. We passed a bill that creates a lottery program to give fishing license for the lake, and added a requirement that they sterilize their fishing equipment. This seems hard to enforce to me, but all the fishing people seem enthused about it.

I don’t want you to think that we spend all of our time working on small bills. It’s just that at 9:00 at night, on a Friday, it seems like we spend forever working on these bills. While this is going on though, I have been working with other members to work out details on larger issues, like our school funding bills and the proposal I have to work on city/county finance issues, digital goods taxation, and the other bills I’m responsible for in the tax arena. Of course, I recognize that other people may put the bills I care about in the “small bill” category.

Most of the substantive bills will be worked out next week.

Local Government Financing Plan

Final Report of the Washington State Local Governance Study Commission.

…the underlying structural problem for King County budgeting is the mismatch between tax base and service costs in the unincorporated areas. The solution to this, which is encouraged by the Growth Management Act, is to ensure that the remaining unincorporated areas within the urban growth area get annexed to an adjacent city

King County Budget Brief 2009 – Washington Research Council

The state has established a significant number of requirements for cities and counties over the years, but has not delivered a reasonable set of alternatives for them to raise the funds necessary to deliver on those requirements. The plight of cities and counties has been exacerbated by the recent changes in tax policy driven by initiatives that have reduced the growth of property tax and eliminated most of the money from the MVET, most of which was distributed to counties as revenue sharing.

In this 2009 legislative session I will not be able to deliver a broad, well-thought-through set of policies on this topic that balances the responsibilities of local governments with their taxing authority or other revenue sources. I will take this up in the interim when we have more time and fewer distractions. In the meantime, the state needs to provide some options for local governments to avoid fiscal disasters.

My strategy here is to propose a number of changes, some permanent and some temporary, that provide local governments with the ability to respond to this temporary fiscal crisis. In some cases this is the ability to generate additional local revenue, in other cases it’s the removal of rules about supplantation that provide additional flexibility to these governments so that they can respond to the needs of their citizens in these difficult times.

Continue reading “Local Government Financing Plan”

WACOPS Legislator of the Year

Ross is presented the WACOPS Legislator of the Year award.
Ross is presented the WACOPS Legislator of the Year award.

For some reason the Washington Council of Police and Sheriffs has named me their “legislator of the year.”

I’m always happy to be recognized for the work I do, and these guys are an important part of the fabric of our community. I’m receiving the award from Mike Pentony and Steve Lynch, two of Bellevue’s finest.

HB 1410 Introduced – Basic Ed Funding

Rep. Pat Sullivan (D-47), Rep. Skip Priest (R-30), Rep. Glenn Anderson (R-5) and I released HB 1410 today. We have 38 co-sponsors at this point. It’s scheduled for a hearing next week. The bill is a huge effort – 110 pages that completely re-write school funding formulas, teacher compensation plans, and almost everything else about how we fund schools. The Senate companion bill will be introduced tomorrow, and should be identical. Click here for official bill information.

We expect there will be many amendments, but we’re announcing our first big one at the hearing next week. In reaction to a series of studies on the achievement gap between white kids and kids from a variety of other ethnic groups we found some common themes, and want to start the work with help with outreach to parents and the community, improvements in the preparation of teachers to deal with diverse classrooms (something we hear about from young teachers all the time) and quicker routes for bilingual adults from immigrant communities to enter the teaching force. We have so few teachers in many language groups that we should work hard to attract more, and growing our own seems like the most effective strategy.

We’ve published a few documents to help explain the bill. Most readable is our 4 page intro pamphlet. Next is the 17-page outline of the bill’s changes to law, section by section. We’ll add more as we develop them.