Governor Inslee has called a 30-day Special Session to begin on May 13th so that lawmakers can complete their unfinished work on the 2013-15 state budget. One of the major sticking points in ongoing budget negotiations is the House’s controversial decision to propose more than $1 billion in job killing tax increases. This despite an estimated $2 billion increase in forecasted revenue growth, voters’ 64% statewide approval for the fifth time of the requirement for tax increases to receive a 2/3 vote, and Governor Inslee’s campaign promise that he would not seek tax increases. With that in mind, here are five things lawmakers should focus on as they work to finish the budget:
- Keep the promise that “temporary” taxes will be temporary. Lawmakers promised taxpayers in 2010 that several “temporary” tax increases they enacted would expire on June 30, 2013. Business owners across the state have built this into their financial planning and expect our political leaders to keep their word. Though Governor Inslee has sought to redefine the definition of “tax increase” to exclude breaking the promise of allowing temporary tax increases to expire, at a minimum making “temporary” taxes permanent breaks faith with Washingtonians and should be avoided.
- Listen to the clear will of voters on taxes. On five separate occasions over the past 20 years the people of Washington have consistently said they want lawmakers to agree on a broad-based bipartisan supermajority vote to raise taxes, or they should send proposed tax increases to the voters for approval. Regardless of the Supreme Court’s action striking down that restriction, the Legislature should at a minimum refer any tax increases that can’t secure a supermajority vote to the people for approval.
- Avoid budget gimmicks. To avoid the possibility of further action needed to re-balance the budget in the near future and to protect the state’s credit rating, lawmakers should avoid relying on budget moves like dedicated fund raids, agency reversions, and a small unrestricted ending fund balance. The focus should be on aligning ongoing increases in state spending with ongoing increases in forecasted tax revenue.
- Save the protected emergency reserve for a true budget emergency. Voters wisely created a constitutionally protected emergency budget reserve in 2007 because lawmakers were unable to restrain themselves from using it for non-emergency spending. With more than $2 billion in forecasted revenue growth and a still-tentative economy, now is not the time to raid the state’s small emergency reserve fund. Leave the emergency reserve for a true emergency.
- Adopt a performance-based budget that really balances over four years. The 2013-15 state budget is the first one that is subject to the state’s new four-year balanced budget requirement. Past budgets projected shortfalls the day after the regular two-year budget period ended. Along with linking spending to real performance outcomes (as several provisos in the House and Senate budgets currently do), lawmakers should ensure the final 2013-15 budget has a “clean” balance sheet with no gimmicks, defensible revenue assumptions and enough reserves to be truly in balance for four-years.