Gov. Gary Locke, who accepted small increases in state spending for the past two years, now proposes one that is big and is funded in a questionable way. First, a few numbers:...
Gov. Gary Locke, who accepted small increases in state spending for the past two years, now proposes one that is big and is funded in a questionable way.
First, a few numbers: In the biennium now ending, state general fund spending is up 3.5 percent. That was a budget for a slow economy, and it meant no general increases for state employees and teachers.
The economy has picked up in the past year and employees are asking for raises. In the 2005-2007 biennium, tax revenue is forecast to increase 6.7 percent. That is deemed not enough, and Locke is proposing a tax increase on beverages so that tax revenue will increase instead by 9.7 percent. That is still deemed not enough, and Locke is asking for state general fund spending to increase by 12 percent.
A number of funds are shifted around to do this. Most troubling is deferring $360 million in payments to employee pension funds. This would not affect anyone’s benefits, but it would create an unfunded liability, a hole for future legislatures to fill.
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“We have been stepping up to our pension responsibilities for almost 30 years,” says Rep. Helen Sommers, D-Seattle. “This is a major step away from that. It is a very serious concern.”
A few years ago, legislators filled a budget hole by borrowing against tobacco revenues. That was deficit spending. So is this. Deficits are forbidden in the state constitution, and we should not be creating them through the back door.
Gimmickry may be a survival strategy at the bottom of a recession when everyone thinks the economy will turn around. But in the central Puget Sound region, there remains an employment gap — some 100,000 manufacturing jobs that have not come back. It is wishful thinking to expect they will reappear during the next two years.
That means this is not a crisis year; it is a normal year, a reality that needs to be accepted.
Whether current taxes will raise enough depends on whether the intended spending is enough. Gov.-elect Dino Rossi says it is. Candidate Christine Gregoire has been less clear about it, but she did not support the failed initiative to raise the sales tax by 1 percentage point. House Speaker Frank Chopp, D-Seattle, says his caucus is open to tax increases.
There is a dispute about taxes we are far from settling. It is enough to say now that Gov. Locke’s proposal to do tricks with pension obligations is unwarranted.