Politics & Government

Governor blasts revenue cap

Tim Eyman’s latest ballot measure could leave Washington in a position like California, cash-strapped with IOUs and unable to restore money needed for public schools, Gov. Chris Gregoire said Tuesday.

“You know, if we want to make things worse, then Eyman’s bill or initiative is the way to go. Why do we think California is in the position it is in? And you know what, I don’t want to follow the lead of California on almost any of this. I don’t want to be issuing IOUs, waving a … big knife. No thank you,” Gregoire said. “Eyman’s initiative is wrong for every level of government.’’

Gregoire, a Democrat who recently signed a budget that closed a $9 billion budget gap, was responding to a reporter’s question about her position on likely fall ballot measures, including Eyman’s latest, Initiative 1033, which qualified for the Nov. 3 ballot. Gregoire also hinted that a public discussion about tax increases is likely down the road.

I-1033 seeks to cap yearly increases in the general-fund revenues of cities, counties and state government. Eyman would let the cap rise by a factor of inflation and population growth, and he would shift any excess revenue above the cap into property tax relief the following year. He also would let the governments collect and spend more if they get voter approval, likening his measure to Initiative 601, which set spending caps for the state in the early 1990s.

Eyman argues that his measure allows adequate government growth by letting governments collect and spend more than the caps if voters approve. But Gregoire dismissed that, saying the ongoing recession might take years to recover from, and she compared the situation to Japan’s slow recovery, what some call the “Lost Decade” of economic growth there.

Putting caps on the state’s slow-recovering revenues would strap Washington’s ability to come up with money for education, Gregoire suggested. Lawmakers lopped education funding by hundreds of millions of dollars this year, which the governor wants to reverse when the economy rebounds.

“We have got to put more money into education. I believe it is the economic future for this state and for these kids. It’s not free. You’ve got to invest, from early childhood through college,” Gregoire said.

The governor told Stateline.org recently at the National Governors Association meeting that she expects the 2011 budget to be worse for states than the one she just signed into law for 2009-11.

On Tuesday, she explained that she is hopeful of getting more federal funding for Medicaid in 2011, and told President Barack Obama this. But she is not necessarily in favor of another federal economic stimulus. She also is not ready to call for higher taxes at the state level but she does want to boost funds for education.

“I don’t know how we’re going to do it at this point. We’re in a struggle,” Gregoire said. “Not now. Not right now. But there will be a time when we have to have that conversation with the public. But right now, good night, people are struggling.”

Eyman responded to Gregoire’s remarks, saying her comparisons were like “apples and oranges.’’ He explained that California has far more initiatives than Washington, and that its measures are far more binding, including constitutional limits on legislators.

Eyman also said that Washington’s majority Democrats have themselves to blame for some of the fiscal roller coaster of recent years, blaming them for removing the I-601 spending caps and replacing them with a more generous cap that allowed more spending in 2007-09, swelling the state’s $9 billion shortfall.

Eyman said that if taxes do need to be considered, “All 1033 does is make sure that the public is part of that discussion. … They are going to have a say in the matter.’’

Eyman also came under fire Tuesday from the activist Andrew Villaneuve of the Northwest Progressive Institute, who said Eyman’s claim that Washington’s state tax burden is No. 8 in the country is misleading.

Forbes Magazine cited that ranking by the Tax Foundation recently, but the state Revenue Department put a statement on its Web site also calling it misleading. Revenue’s posting said the ranking failed to account for state-to-state variances in local and state taxes, including the fact Washington provides state money to local schools that other states do not.

Using a fairer “state and local” tax burden, Washington ranks No. 19 in per capita taxes and No. 35 when measured against personal incomes — well into the bottom half of states.

None of that mattered to Eyman, who said: “People feel their tax burden is really, really high, and they are not nuts for feeling that way.’’

Brad Shannon: 360-753-1688