Washington state budget crisis has Governor Gregoire looking for easy options, avoiding hard choices

In Olympia, the lights have been switched on and a fresh pot of coffee is being brewed in Washington governor Christine Gregoire’s war room. In light of the state’s $8 billion budget shortfall, the hostilities of political combat are set to commence with Gregoire triangulated between special interests calling for higher taxes and taxpayers demanding the opposite.

Because of Greogoire's campaign pledge not to raise new taxes, the governor has her work cut out to help legislators find a way of balancing the budget. Lucky for her that she has the handy loophole of bond issues available. Now Gregoire needs only to convince Washington voters that issuing bonds is just a bookkeeping trick to tax ourselves without breaking state budget laws?

As Gregoire begins to make the case for selling bonds to finance school construction, she will be challenged by public policy groups like the Evergreen Freedom Foundation, which is already engaged in a grass roots campaign – “Push Back! No New Taxes” – designed to put pressure on lawmakers in Olympia. The clash of plausible semantics and common sense will come to fruition next week as the budget process heats up in Olympia and it will one of those battles that could shape the short-term future of both parties. State economics will linked to every factor weighed by voters in ballots cast in each legislator’s next bid for re-election. Washington’s state of economic health will be traced back to the decisions made during this session.

For Washington’s sake, serious credence should be given to the idea of removing the current budget from its bindings, and handing out a box of red pens in the legislative and executive branches to slash spending. The governor’s wish list can be refined, line by line, including the 42% of spending she considers off-limits. There is a lot of junk wood on the state’s pile for whittling but instead of attacking that end of the problem, Gregoire is gearing up for a fiscal parlor trick by substituting the word bond for taxes when asking voters for more money.

Gregoire is already aware that when the state budget is in shortfall (as though $8 billion is a short fall in anyone’s opinion), without realistic expectations for increased revenues in the near future, floating bonds to pay for projects is just an inevitable step on the way to eventually raising taxes. Bond underwriters will not even stamp an offering until it has reliable revenue sources for repayment to investors.

Because the state is revenue-negative, raising money through bond sales is the large-scale equivalent of taking out payday loans to cover monthly expenses. If the money isn’t in the bank to cover them now, the only way to cover those expenses in the future is to make more money. You and I put in more hard work or get a second job to put more in the bank; Washington’s Democrat-led government raises taxes. Since it is conceivable the taxes that will eventually be needed to service proposed bonds can be phased in down the road, is this Gregoire’s subtle way of telling us that she will not be seeking a third term? The 2012 election will feature opposing arguments for differing arrangements of difficult-to-swallow solutions; two politicians will duke it out for who can tell us, “The state is buried under a mountain of obligations and we’re all going to suffer through it together.” That could be Gregoire’s legacy.

For the time being, as Gregoire pulls her heavily dog-eared “How to Smile Convincingly” workbooks down from the top shelf, a formidable gallery of special interests will be banging on her door to have her abandon the no new taxes pledge all together. Pinch-hitting for the taxpayers will be the Evergreen Freedom Foundation, Washington’s homegrown privately-funded public policy research group.

The EFF is sponsoring the “Push Back! No New Taxes” campaign, beginning with an online petition (to be presented to legislators in Olympia on March 17th) and rally at the Capitol on April 15th. The EFF is urging concerned citizens to sign the petition and make time to be a part of the rally. Anyone interested in signing the petition can go www.pushbacknotax.com where the EFF also has information posted for the April 15th rally.

News source: examiner.com

Below are the monthly archives: