If the restraint and moderation evident in Gov. Jay Inslee’s 2014 supplemental budget proposal wafts over the upcoming legislative session, things might go smoothly for a change. Legislators might even finish their work within the allotted 60 days and avoid another special session.
Inslee has proposed what he calls a “hold steady” budget. In practical terms, that means the governor is not proposing spending cuts that would upset Democrats or tax increases that would upset Republicans. It’s a budget designed to avoid the drama of last year’s triple-overtime battle with a Senate majority controlled by Republicans.
It’s a wise strategy to spend next year building relationships between the political parties, and the public, because the larger and more important fight is coming in 2015.
It’s also an election year, with half of the Senate’s seats up for grabs.
There’s a little revenue cushion for 2014, thanks to modest economic growth. That’s enabled Inslee to expand children’s mental health services (required by a lawsuit) and expand prison capacity. He also provides extra funds for early learning, teacher mentoring and programs in science, technology, engineering and mathematics (STEM).
But the 2015 Legislature will face harder problems. It will have to find another $5 billion to meet the state Supreme Court’s directive to fully fund K-12 education. And this year’s federal court ruling to repair the state’s culverts that are violating tribal treaty rights by blocking the passage of salmon is estimated to cost $2 billion over multiple years.
There is also rising pressure to fund cost-of-living increases for teachers and state employees, who have gone without raises since 2008. Inslee has promised to address both adjustments in the 2015-2017 biennium.
The state’s economy would have to boom in pre-recession proportions to generate enough revenue to cover those obligations, and that’s unlikely. Even closing obsolete tax loopholes, something Republicans have opposed in the past, may not be sufficient.
But the state is long overdue to review the lengthy list of tax breaks being enjoyed by businesses that no longer need them or for whom they were never intended.
Inslee says the state has a systemic problem. The state is growing faster than the current revenue-gathering system. He calls our sales tax-based system an outdated “jalopy” that isn’t designed for a modern service — and Internet-based economy.
In 1983, the state general fund revenue represented about 7 percent of Washington residents’ personal income. Around 1995, when online retailing got underway, it began a sharp decline. The percentage slid all the way down to about 5 percent in 2013 and it is projected to continue that trend.
In many ways, this budget represents the governor’s leadership style. Inslee believes if he continues to present factual evidence that people will eventually understand the problem.
When he points to the state’s economic realities that cannot be solved without more revenue than natural growth can provide, he sees “simple math, not ideology.” The challenge is whether some legislators can see beyond their political ideology.
We think Inslee is on the right path for 2014.