Did Olympia learn anything from the recession?

WHAT we are seeing in Olympia this year is a battle that will define the direction of state government for years to come. Now that the recession is over, should we return to the old way of doing business? Should we resume the time-honored practice of spending ourselves to the point where every economic hiccup becomes a crisis? During the recession, did we learn anything at all?

Three years ago, I was one of three Democrats in the Senate who, out of frustration with conventional politics, voted with Republicans for a budget that did not raise taxes. Within a few months, we formed a bipartisan coalition that enacted major reforms and put the state on a sound financial footing. We thought Republicans and Democrats ought to work together, avoid the distractions of traditional partisan arguments and emphasize the things that matter most: jobs and education.

It was easy to make a case for fiscal responsibility when the state was in desperate financial shape. The real challenge comes at times like today. The economy is roaring back to life, at least in the urban Puget Sound area. Without raising taxes, the state has $3 billion more to spend this year from all the new increased economic activity. And as inevitable as night follows day, many in my party are saying that isn’t enough — we ought to spend a couple billion more, and dramatically increase taxes to cover it. This argument is really about whether the old ways should resume.

I certainly hope not. I don’t hold office today, but I am just as interested in the outcome of this debate as are the 7 million other residents of Washington state. I am not surprised at how quickly people forget. But I am dismayed, yes.

During that miserable period just after the Great Recession hit, it was easy to see our mistakes. During boom periods, lawmakers assume times will always be good and there is no reason for restraint. In the four years before the recession, state spending increased some 33 percent, mostly for noneducational expenses — things that could not be considered the state’s most important functions. We spent every dollar we had and then some, using accounting gimmicks that would have made an Enron accountant blush. Even if boom times had lasted, we still would have needed a massive tax increase to support that spending — sucking money from the state economy and job creation to support the growth of state government.

The recession provided a necessary wake-up call. Reasonable people of both parties had to concede that things could not continue. The most important thing we did during this reset was to declare that education ought to be our first priority — not just as a rhetorical political statement, but as the centerpiece of the budgets we wrote. We also enacted the most important fiscal reform in state history: the four-year balanced budget law.

This law essentially says that when the Legislature increases spending during one budget period, there must be enough revenue to pay for it in the next budget cycle. The effect is that the state must live within its means and budgets must be sustainable into the future. The significance of this law seems to have been missed by many outside Olympia. For instance, a recent editorial in The Times criticized a no-new-tax budget proposal from the Senate Majority Coalition Caucus because it uses some one-time revenues and fund transfers. The way things used to work, that criticism would have been valid — such practices would have been unsustainable. But today’s budget-writers have to carefully account for spending and measure it against projected growth in the future. The Senate has proved, once again, that it is possible to write a responsible budget within existing revenues. The reforms we enacted really did change the rules of the game.

Today’s argument really isn’t about tax “fairness” and whether we ought to soak the rich or make polluters pay. These popular rallying cries obscure the fact that tax increases eventually affect everyone.

It also isn’t about raising taxes to pay for education. We have more than enough to fully fund basic education, improve early learning programs and reduce the burden high college tuitions impose on students and parents.

The true debate is about the general growth of state government — whether we should unleash the forces that got us into such serious trouble when the recession hit. Boom times don’t last forever; we should never forget.