Search Results for: inflation

There are different kinds of laws.

There are the laws of nature. There are the laws of man. And some would argue that there are the laws of God.

But here in Washington state, we also have the laws of Rob McKenna.

HA regulars are well familiar with our Attorney General’s efforts to redefine both the scope and obligations of his office, so it should come as no surprise to see McKenna’s imaginative approach to the law applied to more mundane issues, for example, our state’s formula for calculating increases in the minimum wage:

The state Department of Labor and Industries asked Attorney General Rob McKenna if the state would be able to increase the minimum wage if inflation increases, but not above the level the current rate is based upon. In an opinion issued Wednesday, McKenna said no.

See, in accordance with 1998’s Initiative 688, Washington state’s minimum wage is increased annually by the rate of inflation, specifically the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Last year the CPI-W actually decreased, so the minimum wage remained flat. This year the CPI-W is expected to increase slightly, but not by the amount it decreased the previous year. So McKenna says no minimum wage increase.

But what does the law actually say?

(b) On September 30, 2000, and on each following September 30th, the department of labor and industries shall calculate an adjusted minimum wage rate to maintain employee purchasing power by increasing the current year’s minimum wage rate by the rate of inflation. The adjusted minimum wage rate shall be calculated to the nearest cent using the consumer price index for urban wage earners and clerical workers, CPI-W, or a successor index, for the twelve months prior to each September 1st as calculated by the United States department of labor. Each adjusted minimum wage rate calculated under this subsection (4)(b) takes effect on the following January 1st.

I’m no lawyer, but the language seems plain… so plain that it actually describes a mathematical formula that a software programmer might express as something like this:

if (CPIW > 0)
then mWage := mWage + (mWage * CPIW);

The if statement is necessary because the statute specifically uses the word “increasing” not “adjusting” or something like that. I suppose one might theoretically argue that the plain language of the statute permits increasing the minimum wage by a negative amount, but that’s not McKenna’s argument; if it were, then the minimum wage should have decreased from 2009 to 2010. It didn’t.

No, in his opinion, McKenna argues that the tension between the words “maintain” and “increasing” makes the statute’s language ambiguous, going to great lengths to confuse the matter by engaging in a bunch of mathematical gobbledygook, culminating in his adoption of an entirely extra-statutory “index-ratcheted calculation.”  McKenna also asserts that the statute does not define an actual formula for adjusting the minimum wage, when in fact the use of the word “by” in constructing the sentence clearly denotes a course of action: “by increasing the current year’s minimum wage rate by the rate of inflation.”

Q: How shall L&I “calculate an adjusted minimum wage rate to maintain employee purchasing power”…?
A: “by increasing the current year’s minimum wage rate by the rate of inflation,” that’s how.

That’s what the word “by” in this context means; the clause following it describes the method for achieving the intent stated in the clause that precedes it.

mWage := mWage + (mWage * CPIW);

Perhaps there is indeed a tension between the stated method and the stated intent, but the method is perfectly clear, despite McKenna’s elaborate effort to distract the reader with formulas and graphs… so clear that Oregon, which modeled its statute after ours, has already announced that its minimum wage will rise. One could even make a perfectly reasonable argument that the statute should behave as McKenna claims it does… but if so… well… that’s the sorta stuff that happens when we legislate via citizens initiative, and if the Legislature agrees that the statute needs to be fixed, they are always free to do so.

But Attorney General Rob McKenna should not be free to reinterpret the law by fiat.

If you haven’t already read it, you might want to celebrate this Labor Day by reading Citigroup’s infamous 2005 Plutonomy memos, in which they advise investors that America is no longer a democracy as much as it is a plutonomy in which “economic growth is powered by and largely consumed by the wealthy few.”

At the heart of plutonomy, is income inequality. Societies that are willing to tolerate/endorse income inequality, are willing to tolerate/endorse plutonomy.

That pretty much describes the United States in the 21st century. The rich continue to get richer, consuming a larger and larger chunk of the GDP, as wages for working and middle class families continue to stagnate or drop, largely due to the global labor pool keeping wage inflation in check, and profits rising. And according to Citi, it’s only getting worse (or in their eyes, better).

But it’s not inevitable.

RISKS — WHAT COULD GO WRONG?
Our whole plutonomy thesis is based on the idea that the rich will keep getting richer. This thesis is not without its risks. For example, a policy error leading to asset deflation, would likely damage plutonomy. Furthermore, the rising wealth gap between the rich and poor will probably at some point lead to a political backlash. Whilst the rich are getting a greater share of the wealth, and the poor a lesser share, political enfranchisement remains as was – one person, one vote (in the plutonomies). At some point it is likely that labor will fight back against the rising profit share of the rich and there will be a political backlash against the rising wealth of the rich. This could be felt through higher taxation (on the rich or indirectly though higher corporate taxes/regulation) or through trying to protect indigenous laborers, in a push-back on globalization – either anti-immigration, or protectionism. We don’t see this happening yet, though there are signs of rising political tensions. However we are keeping a close eye on developments.

“One person, one vote.” That’s what the very wealthy fear most… that one day “labor will fight back” against the growing economic imbalance that is destroying our nation for the other 99% of us. Chew on that as you’re enjoying your Labor Day BBQ.

As Cienna reported yesterday on Slog, $98 million dollars has now been pledged toward the $131 million cost of replacing the South Park Bridge:

King County ($30 million), Washington state ($20 million), city of Seattle ($15 million), State Transportation Improvement Board ($10 million), Port of Seattle ($5 million), Senator Murray’s Federal DOT-HUD funding bill ($3 million), and PSRC ($15 million).

On the one hand, it’s terrific news to see the region finally getting its shit together on replacing such an absolutely essential, if unglamorous piece of local infrastructure. On the other hand, our political leaders should be absolutely ashamed that it took the bridge’s closure to finally get them to act. How many small, local businesses in the district surrounding the bridge are going to fail during the couple year closure? Or does it not really matter when it’s the wrong type of businesses closing?

Put perhaps more importantly, from a pure public policy perspective, what an incredibly fucked up way of funding local infrastructure!

$20 million here, $15 million there, $3 million in loose change from under the cushions on the couch… really? That’s how we fund road construction around here? I mean, since when did the Port of Seattle become a road-building agency? And yet the Big Bore tunnel, let alone the South Park Bridge wouldn’t be possible without hundreds of millions of dollars from the port. The port, for chrisakes. How fucked up is that? And honestly, how dishonest?

It’s all taxpayer dollars after all; the county and the port, for example, share district boundaries and tax exactly the same people. So why do we have to go through this incredibly stupid charade of raising money from seven — count ’em — seven different taxpayer funded governmental entities?

Why? Because our region has become paralyzed by the politics of something for nothing.

There was a time when the county and city had the taxing authority to maintain their own roads without resorting to begging or special levies or, well, laundering taxpayer dollars through the Port of Seattle. But no more. Not since Tim Eyman’s I-747 vindictively capped property tax revenue growth at an absolutely ridiculous one percent annual growth, a limit our cowardly governor and legislature ridiculously reimposed after it was thrown out by the courts.

One percent! Not enough to keep up with inflation, let alone our region’s growth. Are we really that stupid and irresponsible? (Are we, Seattle Times editorial board? Are we?)

I’ve got no problem with state and federal contributions to local projects — it’s always worked that way — but here’s a novel idea: how about giving the city and county sufficient taxing authority to take on the primary responsibility of maintaining city and count roads, instead of relying on such an incredibly convoluted and stupid-ass funding goulash? Wouldn’t that be more efficient? And since the money is all coming from the same people, wouldn’t it be dramatically more honest and transparent?

Or are we really better off sacrificing the South Park business district for the sake of hiding from taxpayers what basic services really cost?

Watching the recent fireworks in the Minnesota gubernatorial race, where presumptive Republican nominee Tom Emmer is under increasing fire for supporting a lower minimum wage for restaurant workers, I can’t help but be reminded of Washington state’s 2008 gubernatorial contest, in which a similar statement by Republican nominee Dino Rossi arguably proved to be the turning point in a race that had appeared to be tilting in his favor.

By the end of September 2008, in the midst of the short-lived Palin bounce, polls showed challenger Rossi closing the gap on incumbent Democratic Governor Chris Gregoire, and perhaps even taking a small lead. Republicans were ebullient and Democrats more than a little nervous as the rematch of our bitter, statistically-tied 2004 contest headed into the homestretch.

And then everything changed.

As evident in his current senate campaign, Rossi rarely makes the mistake of clearly addressing issues on which he is out of step with voters, but during a candidate debate near Blaine WA, and perhaps flush with overconfidence from recent events, Rossi finally tripped up.  As first reported by Josh Feit in his pre-PubliCola, exclusive election coverage here on HA, the candidates were asked if the minimum wage was supposed to be a “living wage,” and whether either candidate would consider scaling it back.

“I don’t know of anybody getting rich on the minimum wage,” Gregoire told the hostile crowd (the debate was sponsored by the Association of Washington Business and the questions came from their membership). “The people of Washington are struggling. They go to the gas pumps and can’t afford to fill up the car, they go to the grocery and can’t afford to put food on the table…Washingtonians need to be able to provide for their families. Plenty of people are working minimum wage jobs that need to provide for their families, and I want to stand with Washingtonians.”

She said she supported the voter-approved minimum wage, $8.07 an hour. She also said she supported training programs for teen workers.

Rossi took the opposite point of view. Touting his Washington Restaurant Association endorsement (the most adamant opponents of the minimum wage), he said:   “The minimum wage was not meant to be a family wage. It’s meant to be an entry level wage.”

Josh went on to write about a conversation he’d had that night with a Blaine convenience store clerk who had just sold Rossi a can of beans, some Certs and a Red Bull. “I’m a Republican. I like the Palin thing,” the clerk told Josh, explaining why he planned to vote for Rossi. But when Josh recounted the candidates’ exchange over the minimum wage, the suddenly not-so-star-struck clerk got pissed off:

“If he lowers it,” he said, “I don’t want to vote for him. I’d be cutting my head off. I don’t want to demote myself.”

Suddenly, WA’s highest in the nation minimum wage became one of the hottest issues in the campaign, and within days, the governor had cut a new ad bashing Rossi with it.

It didn’t take a convenience store clerk or a focus group to tell you that this was a bad issue for Rossi. Washington’s minimum wage was tied to inflation via a citizens initiative that passed by a two to one margin only a decade earlier, a policy that remains widely popular with nearly everybody except, well, restaurant owners and other low-wage employers. But rather than attempting damage control, Rossi’s people only stepped in it deeper.

When the state Dems sent an operative to stand outside a Rossi rally in Ellensberg, holding a sign criticizing Rossi’s support for slashing the minimum wage, Rossi’s top economic adviser, Kittitas County Republican chair Matt Manweller (known here on HA as “the Nutty Professor”), simply went ballistic. Prof. Manweller vehemently defended Rossi’s position while angrily attacking the young protester and the 300,000 minimum wage workers he claimed to represent.

“You and those 300,000 people are dumber than a post,” Manweller yelled. Go ahead, watch it. It’s kinda stunning.

The minimum wage remained a focal point throughout the remainder of the campaign as Gregoire gradually pulled into a commanding lead. When the ballots were tallied, Gregoire had won by a comfortable 195,000-vote margin (6.5%), compared to her disputed 133-vote victory in 2004.

No doubt there were other factors that led to Gregoire’s victory, but the minimum wage provided an invaluable toehold at a time when she was quickly losing ground, and proved a potent message for differentiating the two candidates on economic issues at a time of great economic uncertainty.

And it provides a lesson you’d think that Emmer and his fellow Minnesota Republicans might want to learn.

Bad news for Republicans hoping to ride a wave of economic discontent into office this November:

A flurry of reports out Wednesday suggested that many Americans are feeling better about the economic rebound.

Retail spending rose sharply and more than expected. Consumer inflation remains all but invisible. Businesses are boosting their stockpiles in anticipation of higher shopper demand.

Still, it’s not all gloom and doom for the Prefers GOP Party. While most economists expect a sustained recovery, Federal Reserve Chairman Ben Bernanke cautioned that it would not have “enough strength to quickly reduce unemployment much.” That leaves plenty of opportunity for Republicans to exploit the well-justified anxiety of the job-insecure… which perhaps explains why they’re so eager to exacerbate this suffering by opposing an extension of unemployment benefits.

I’m embarrassed to admit that I kinda like Seattle Times editorial columnist Bruce Ramsey… you know, as a person, not as an editorialist for chrisakes. But I’d like him a helluva lot more if he were a bit more consistent.

For example, today Bruce is outraged over legislative attempts to reform the initiative process (reforms that are brought up every session, yet predictably never get out of committee). Applying campaign finance limits to initiative campaigns? Spiteful. Requiring paid signature gatherers to register with the PDC? Punitive. Raising the $5 filing fee from its 1912 cost to something approaching an inflation-adjusted value (about $110)? Well… um… Bruce defiantly stamps his foot down:

[T]he state constitution declares that the people’s right of petition “shall never be abridged.”

Really, Bruce? Huh, I don’t remember you coming to my defense when your own editorial page urged a Thurston County court to bar Initiative 831 from the ballot, and I sure as hell don’t remember you pontificating about my “right of petition” when the judge issued a wholly unconstitutional order barring me from filing my petitions with the Secretary of State.

No, I guess denying me and my tens of thousands of supporters our right to petition our government was okay, because we weren’t taking the initiative process seriously enough for civic leaders like you and your fellow editors. Besides, I guess I should’ve been satisfied enough, having “successfully placed the phrase ‘horse’s ass’ into dozens of family newspapers.” As if I held a fucking gun to your heads.

In the end, a humorless assistant AG and a humorless Superior Court judge denied me my constitutional rights, knowing full well that I lacked the resources to file an appeal. Written in the form of a resolution, the AG argued that I-831 was not legislative in nature because it failed to amend the RCW, and thus was outside the scope of the initiative process. And so for only the second time in our history , the state stooped to pre-ballot review to invalidate a proposed measure.

And you and your paper cheered them on.

So here’s your chance to make amends Bruce. An initiative was recently filed seeking to change our state’s official seal to that of “a tapeworm dressed in a three piece suit attached to the taxpayer’s rectum.” I’m the last person to come out against the use of the initiative process for satirical purposes (even if it’s totally misguided considering that WA hasn’t raised a single tax since 2005), but I’ve read the initiative, and while it seeks to direct the Legislature to change the seal, like I-831, it doesn’t actually amend the RCW itself. Thus under the precedent set in Goldstein v. Gregoire, that should place it outside the scope of the initiative process.

So if you want to be consistent in your advocacy for the integrity of the initiative process, I would expect you and your editorial board to urge the AG to deny this initiative a title, and if it ultimately goes before a judge, to editorialize in favor of denying this petitioner the same fundamental rights that were denied to me.

Or… would that run counter to your impassioned defense of initiative sponsors against any and all obstacles?

I’m confused, Bruce. Perhaps you can explain why it’s so outrageous to, say, bar convicted sex offenders and identity thieves from being hired to gather our addresses and signatures, yet it’s okay to use the full legal resources of the state to harass a petitioner and bar his satirical initiative from the ballot? Or… would you argue that your ed board was wrong in advocating that I-831 be tossed from the ballot?

I await either an explanation or an apology.

I agree with Danny Westneat:

Let me repeat what he said, because you don’t hear it often: We don’t mind some reasonable tax increase.

I think that’s true. I’d guess people want to see more cutting, first. But they also would rather pay a little more, across the board, than see the schools or safety net or criminal-justice system go all to hell.

So, legislators, just do that.

Even with one of the highest state tobacco taxes in the nation, I don’t mind seeing it rise a little higher. Smoking is a dangerous habit that shortens lives and costs businesses and government billions of dollars in lost productivity and higher health care expenses. Increase the cost of smoking and fewer people will smoke; that’s a clear social benefit.

But as a primary means of addressing our state’s interminable budget crisis, well, that’s just plain cowardly and dumb.

Legislators love to over-rely on sin taxes because they tend be relatively politically palatable, but they’re also the most regressive, and by far. A $3.00 tax on a $1.00 cigar translates to a rate of 300%, whereas it only amounts to a 10% tax on a luxury cigar that would otherwise retail for $30.00. It’s easy to figure out which income groups are impacted the most by such a tax.

But just as importantly, from a budgetary perspective, sin tax increases just don’t produce enough revenue, and simply aren’t sustainable.

One of the arguments in favor of increasing tobacco taxes is that higher costs decrease consumption, undoubtedly a social good, but that also means that from a revenue perspective, higher taxes also produce diminishing returns. Combined with the fact that the real-dollar-value of unit-based excise taxes inevitably decreases over time as it is eaten away by inflation, and the economics simply don’t allow for the state to wring significant new revenues from an already highly taxed commodity.

So while from a social engineering perspective I’ve got nothing against raising tobacco taxes, Democratic legislators who think that this might somehow answer constituent demands for new revenue to fill a significant portion of the state’s current $2.6 billion revenue deficit, well, they’re smoking something else entirely.

On the heels of last year’s devastating all-cuts budget, another mostly-cuts budget simply isn’t a reasonable alternative to anybody interested in maintaining a level of government services and investment necessary to sustain the quality of life in Washington state, while moving our economy forward. And even if Washington receives the additional $700 million in one-time federal funds Gov. Gregoire’s proposals anticipate, that would do nothing to address the budget crisis looming in the next biennium.

As politically painful and unpopular as it may appear to be, legislators need to start debating a broader based tax increase that can produce significant new revenue now, and for the foreseeable future. And barring the courage (and time) to wade into the billions of dollars a year in under- and non-producing tax exemptions, the only realistic option for substantial short term revenue is a general sales tax increase, and/or an expansion thereof to additional goods and services.

A general sales tax increase and/or expansion must be on the table this session, and by “on the table” I mean publicly discussed and debated. Yes, this too would be regressive, an impact that could be partly addressed by fully implementing the Working Families Tax Credit. But at the same time we’re talking about a sales tax increase, we also seriously need to discuss and debate an income tax as part of any long term solution.

A bold, courageous and creative Legislature could simultaneously pass both a sales tax increase and the income tax that would supplant it. For example, a temporary, half cent increase in the state portion of the sales tax from 6.5% to 7.0% would generate an additional $500 million a year in new revenue almost immediately, but a high-earners income tax, which would take at least a year to implement and muddle through the inevitable constitutional challenge, could replace the sales tax increase while impacting only the top two percent of households. Raise the income tax a little higher, and we could even knock the state sales tax down to 6% or less.

There are budget solutions beyond endless cutting and praying for federal bailouts. We just need a few legislators willing to lead the way.

If the Republican caucus has a coherent strategy for narrowing the Democrats’ near super-majority in the state House, you wouldn’t know it from the steaming pile of crazy-ass bills their members have already introduced. Sure, there are always a few extreme or downright bizarre bills dropped each session from both sides of the aisle, but never before has one caucus gone so far off the deep end, and in such overwhelming numbers.

And if Democrats play their cards right, you gotta think that this is gonna hurt the Republican brand next November.

Exactly how crazy are we talking about? While how about HJM 4010, a House Joint Memorial sponsored by Representatives Condotta, Shea, Klippert, Kretz and McCune, that asks Congress to do away with both the Federal Reserve and paper money:

NOW, THEREFORE, Your Memorialists respectfully pray that the Congress of the United States, and particularly, the legislative delegation to Congress of the State of Washington, use all of their efforts, energies, and diligence to protect all the citizens of this nation from potential, unprecedented losses in the value of take-home pay, retirement income, insurance policies, and investments as a result of the Federal Reserve’s ongoing inflation of our unbacked paper money by passing legislation (such as H.R. 2756 to repeal our nation’s legal tender laws, H.R. 4683 “The Free Competition in Currency Act of 2007,” and H.R. 5427 the “Tax-Free Gold Act of 2008”) to help restore gold and silver money in accordance with the Constitution, then phasing out the Federal Reserve System and its inflationary paper money, the Federal Reserve Note (as in H.R. 2755).

That’s right… these Republican legislators want our currency to consist entirely of gold and silver coins. Yeah, that’ll get our economy moving.

Now I know what you’re thinking: there’s only five Republican sponsors on that bill. It just isn’t fair to categorize the entire GOP caucus as off their collective rockers based on this one joint memorial.

So how about HB 2709, the Washington State Firearms Freedom Act of 2010 (Shea, Ross, Kristiansen, Haler, Klippert, Taylor, McCune, Short, Hinkle, Course, Dammeier, Parker, Johnson, Angel, Bailey, Orcutt, Roach, Schmick, Fagan and Condotta), which attempts to exempt any firearm, firearm accessory, or ammunition manufactured and retained in Washington state from federal regulation.

Or HB 2712, the Washington State Sovereignty and Federal Tax Escrow Account Act of 2010 (Shea, Condotta, Kristiansen, Klippert, Haler, Anderson, Taylor, Short, Kretz, Crouse, McCune, Hinkle, Ross, Roach and Schmick), which requires that all federal taxes be remitted to the state, and held in escrow, and includes the rather startling threat that any action by the feds against a WA citizen for complying with the act (you know, like not paying the IRS your taxes) would be considered a “hostile and unconstitutional action against Washington state and its citizens,” against which the state would take “all necessary measures.”

And then there’s HB 2708, the Washington State Energy Freedom Act of 2010 (Shea, Condotta, Kristiansen, Haler, Klippert, Herrera, Taylor, Short, Kretz, McCune, Crouse, Rodne, Hinkle, Parker, Dammeier, Ross, Angel, Bailey, Roach, Orcutt, Schmick, Fagan and Smith), which exempts seeks to exempt Washington state from any federal fuel economy or greenhouse gas emission standards. That’s 23 of the caucus’s 36 members!

And all three of these clearly stupid and unconstitutional bills include the following clearly stupid and unconstitutional provision:

Any federal law, rule, order, or other act by the federal government violating the provisions of this chapter is invalid in this state, is not recognized by and is specifically rejected by this state, and is considered as null and void and of no effect in this state.

That’s right, nearly two-thirds of the Republican House caucus have signed their names onto crazy-ass bills that attempt to assert that state law trumps federal law whenever state legislators say it does. Which raises the question: what the fuck have they been putting into their tea?

Well apparently, “tea” is the operative word here. The crazy-ass teabaggers are rallying in Olympia on Thursday, and this apparently has Republicans running scared… so scared that they’re willing to make themselves look like… well… a bunch of crazy-ass teabaggers.

Republicans apparently fear that unless they appease the teabaggers with the kinda crazy, paranoid, right-wing, pseudo-constitutional bullshit that makes Ellen Craswell look like Dan Evans Lyndon LaRouche look like John Adams, they’ll face a Teabagger Party primary challenger… so much so that some Republicans reportedly plan to put “Prefers GOP/Tea Party” next to their names on the ballot this year.

How else to explain why, with the Legislature facing a $2.6 billion shortfall one year after passing a devastating all-cuts budget, the House Republican caucus has made redefining the Commerce Clause of the U.S. Constitution they’re number one priority this session?

One would have thought that with the crappy economy and the ongoing budget woes and the Democrats already having stretched their majorities to likely unsustainable numbers, the GOP might at least pretend to run to the middle in the hope of winning back a few swing districts. Instead, it looks like what’s left of their party is dissolving like a sugar cube in cup of hot tea.

Man, is this gonna be fun to watch.

Yeah, see, the thing about today’s front page Seattle Times article on I-1033 — “Tax limit complex; impact unclear” — is that it isn’t, and any fair and balanced effort to impartially explain the initiative to voters only does readers a disservice.

I mean, honestly, on one side you have a broad coalition of labor and business, backed up both by the expertise of the state Office of Financial Management and the real world experience of Colorado’s disastrous TABOR experiment, and on the other side you have, you know, Tim Eyman. Yet in the typical J-School fashion, the Times’ Andrew Garber labors to present both sides equally.

To what end?

The truth is, both the intent and the impact of I-1033 is painfully clear: it will make state and local governments smaller, both as a percentage of the total economy, and in their ability to provide services and build and maintain public infrastructure. I-1033 pegs revenue growth to population plus inflation, yet it is an indisputable fact that the cost of providing government services increases at a substantially higher rate than inflation as a whole. (As I’ve repeatedly explained, it’s all gotta do with the nature of productivity.) Therefore, under I-1033, government revenue would increase slower than its costs. That is a fact. It’s simple math. And there’s nothing unclear about it.

Neither is there anything unclear about Eyman’s intentions. He wants to shrink government… you know… to the size where he can drown it in a bath tub. He’s WA’s Grover Norquist, only taller, and not nearly as smart. (And Norquist, to his credit, is at least manly enough to look me in the eye.)

He’s also an admitted liar, barred by court order from ever serving as campaign treasurer due to his inability to keep his campaign funds separate from his personal accounts. So why the hell is Eyman given equal weight as, and considerably more ink than, say, OFM, in explaining how I-1033 works? For example, in dismissing the argument that I-1033 would hurt schools, Eyman disingenuously claims that, unlike Colorado’s law, his measure doesn’t touch schools at all… rhetorical bullshit that Garber dutifully echoes:

However, there are key differences between the two measures. Colorado’s applied to all governments including school and fire-protection districts. Eyman’s affects only city, county and state government.

Uh-huh. But see, the thing is, about three-quarters of K-12 funding comes from the state, an expense that accounts for the largest chunk of the state budget, so to suggest that limiting state revenues won’t limit education spending is patently ridiculous. Furthermore, local school levies are capped by law at no more than 24% of state and federal funding (up to 33% in a handful of districts), so as state education spending declines (inflation-adjusted or otherwise) so will the amount local school districts are allowed to raise via local levies. Again, it’s simple math: if school levies are capped at a percentage of state funding, and I-1033 limits state revenue, then I-1033 imposes revenue limits on local school districts.

So yeah, Garber is technically accurate in stating that I-1033 excludes local school districts, but by failing to put the very real (and mathematically indisputable) impact of the measure in its broader context, he only ends up misinforming voters. There will be voters who cast their ballot in favor of I-1033, wrongly (if honestly) believing that it will not impact their local schools, and some of these voters will undoubtably believe this thanks to Garber’s impartial reporting.

I’m not implying ill intent on the part of Garber or the Times, or any sort of ethical or professional lapse. But this is clearly one of those times when their devotion to the traditional journalistic paradigm allows the facts to obscure the truth, and ultimately, only serves to mislead the public.

During remarks last year before the Washington Policy Center, a conservative think tank funded by wealthy, right-wing donors, King County Exec wannabe Susan Hutchison took a moment to plug their Policy Guide for Washington State, a collection of policy proposals for key areas of government.

“I’d like to put in a plug for a book that you have on your tables. It’s called the Policy Guide for Washington State and it’s published by the Washington Policy Center. Let me tell you about this book. I have read it cover to cover and it is one of the most extraordinary pieces of work about Washington State and the policies that make our government run. It hits on 10 different subjects from health care, education, transportation, tax policy and others. But let me tell you, folks… if you started this book tomorrow morning and read it through you would be smarter by dinnertime tomorrow night. This book makes you smart. So I highly recommend that you take it and that you read it.”

So… what exactly are these “smart” ideas that have Hutchison so excited?

On transportation…

Manipulating transportation policies to force a particular behavior coerces people into abandoning their individual liberties in favor of a socialistic benefit where supposedly a greater collective good is created.

[…] Reduce spending on costly, ineffective fixed-route mass transit. Policymakers should change spending priorities that heavily favor mass transit systems despite chronically low ridership. Riders of these expensive systems, like light rail and the Sounder Commuter Train, are being heavily subsidized by automobile commuters, yet research shows that fixed rail does nothing to reduce traffic congestion.

[…] The problem is that transportation spending is based on other agendas rather than congestion relief. As a result, the cost of bringing goods to market rises and consumers end up paying more for products.

Sound Transit’s East Link proposal is a good example. Reconfiguring the center lanes across Interstate 90 (I-90) for light rail, as agency officials propose, would not only fail to reduce traffic congestion, it would, according to the state Department of Transportation, worsen traffic congestion by 25 percent.

On the environment…

Proclamations about the risks from climate change have been revised again and again, always downward, and other information has been shown to be more about politics than science.

[…] Eliminate the mandated “green” building standards for public buildings…

On science…

Even when the science is accurate, it does not indicate that the problem ought to be addressed or that particular policies should be followed.

On I-1033…

Adopt a constitutional amendment to limit the growth of spending to inflation and population growth.

[…]

Colorado’s spending limit, in contrast, was enacted as part of the constitution and has proved much more effective at protecting citizens from aggressive state spending. Passed by the people in 1992, Colorado’s Taxpayers’ Bill of Rights (TABOR) limits the amount of tax revenue the state can keep each year to the sum of inflation plus population growth.

That’s right, in enthusiastically embracing Washington Policy Center’s recommendations (and in giving them over $100,000 from the foundation she ran), Hutchison was for I-1033 before she was against it, only worse, as the Policy Guide calls for the population-plus-inflation limit to be cemented in the state constitution, just like Colorado’s disastrous TABOR measure.

Hutchison can talk all she wants about being a moderate nonpartisan, but these are the policies she’s endorsed, these are the policies she’s helped fund, and these are the policies we must assume she’d pursue. If Hutchison wins in November, right-wingers will hail it as a huge victory, because she is one of them.  But her only path to victory is to hide this fact from voters.

Tim Eyman accuses I-1033 opponents of spinning scare-stories around the initiative’s potential impact, but it doesn’t take much imagination to see how the measure would unravel funding for state services and infrastructure when we only need look to Colorado. There a similar TABOR initiative pegged revenues to population-plus-inflation back in 1992, and the results have been devastating.

Joining Washington state educators at yesterday’s No on I-1033 press conference (you know, the one that Timmy so rudely crashed) was Colorado Education Association President Beverly Ingle, who explained how TABOR has eroded education funding, both at the K-12 and state university level. And, as I explained yesterday, as state education funding shrinks, so will local funding, despite Eyman’s uninformed and insincere assurances.

This isn’t rocket science. I-1033 will shrink the size of state and local government, and quite dramatically. That’s Tim’s goal. And by shrinking government I mean it will reduce the quality and breadth of government services, and defer crucial infrastructure investments.

So, if what you think we need to do is spend less money on education, I-1033 is for you. Because that’s exactly its intended result.

Following up on yesterday’s post in which I explain for reporters why population-plus-inflation does not result in a stable revenue stream necessary to maintain government services at constant levels, I thought I’d quickly raise one more question in the minds of the press before they attempt to cover I-1033 in an objective and even-handed manner: what problem, exactly, is I-1033 intended to solve?

It can’t be because Washington is a high tax state. Even by the measurement of the conservative Tax Foundation, the organization whose stats Tim Eyman has long cherry-picked to support his tax cutting initiatives, Washington now ranks 35th in terms of state and local tax burden, and has climbed to 9th on the list of states with the best business tax climate.

And it certainly can’t be because government spending is out of control. Again, according to the Tax Foundation, Washington’s state and local tax burden (the percentage of one’s income one pays in state and local taxes, on average) has steadily dropped over the past 15 years from 10.4% in 1995 to 8.9% in 2008. And as I have pointed out on numerous occasions, per capita state tax revenues, adjusted for inflation, have also sunk to a 15-year low… and that’s before most of the impact of the Great Recession kicked in.

So what exactly is Timmy trying to fix? Certainly not out-of-control government spending. And certainly not potholes.

A No on I-1033 campaign staffer recently related to me a conversation he had with a local reporter, who repeatedly challenged him as to what was wrong with population-plus-inflation as a limit on government growth? “He was playing devil’s advocate,” the staffer explained.

Hmm. Maybe. Or maybe not.

This is a really complex issue, further complicated by the fact that population-plus-inflation does indeed sound like a reasonable and intuitive metric for maintaining government services at current levels, as it reduces spending to a simple per capita formula, that is easily adjusted for population and inflation: if we spend x amount of dollars per person in 2009, simply multiply x by the 2010 population, adjust for inflation, and voila… a new budget that reflects a constant level of per capita spending.

Rinse. Wash. Repeat.

In fact, this formula is so obvious and so intuitive, that rather than playing devil’s advocate, I think it a safe bet that the reporter in question was genuinely confused as to why population-plus-inflation, as implemented in I-1033, would steadily and inevitably erode government spending and reduce the level of services provided over time. So as a service to my friends in the media, I thought I’d attempt to explain the issue with a handful of bullet points.

I-1033 uses the wrong inflation index.
One of the core problems with the population-plus-inflation formula is the thorny question of how we measure inflation. I-1033 uses a broad measure, the Implicit Price Deflator  (IPD) for the gross domestic product, an index that both ignores regional variations in the inflation rate, and more importantly, dramatic differences between different economic sectors.

As I’ve previously explained the cost of delivering government services rises significantly faster than the general rate of inflation, largely because the kind of highly-trained, labor-intensive services governments tend to provide (doctors, police officers, teachers, etc.) do not benefit from the same sort of productivity gains that technological advances have bestowed on economic sectors such as manufacturing. The more accurate index would be the IPD for State and Local Government Services, which when applied to recent state budgets shows a precipitous decline in spending when contrasted with the Consumer Price Index.

Quite simply, providing a constant level of services per capita requires a constant level of purchasing power. I-1033 doesn’t provide that, and will inevitably result in steadily declining per capita revenues, properly adjusted for inflation.

Different populations require different services…
… And of course, different services carry different costs. For example, an aging population has higher health care costs, while a baby boom would increase the cost of providing public education. The population-plus-inflation formula simply cannot account for the associated costs (or savings) of demographic shifts, as it treats all individuals exactly the same. Likewise, the formula cannot account for changing behavioral patterns within demographically stable populations… for example the unexpected rise in public school enrollment during the current recession, as families sought to cut private tuition costs.

Consider this ironic Catch-22: if our current K-12 education reforms succeed in raising both graduation rates and the rate of college attendance, it would inevitably increase demand for slots in our heavily subsidized state college and university system. Quite simply, a well educated student becomes even more expensive to educate, a reality that I-1033 and its strict per capita cap, doesn’t anticipate. Lacking the ability to raise per capita spending to accommodate the increased demand its own policies helped to create, the state would be forced to either deny these students a higher education, or shift money from elsewhere… perhaps even K-12 budgets.

Growth in personal income is the measure that best tracks growth in demand for public services.
As explained in the Gates Commission report, and numerous other scholarly works on the subject, the economic number that most closely tracks growth in demand for government services is growth in total personal income, that is, total economic growth.  This is because (and perhaps counter to popular misconceptions) the majority of state and local government services are commodities, and we tend to increase our per capita consumption of commodities as our income grows.  Roads, sewers, schools, courts, public safety, libraries, parks, public health… these and other government services are all things we consume more of the wealthier our society gets, and thus personal income, not population-plus-inflation, is the best measure for tracking growth in demand for these services. It also is the best means of accounting for regional differences in the inflation rate, as wealthier states tend to have higher costs of living.

This is why comparative studies of government revenue, spending and debt always focus on government spending, revenue and debt as a percentage of the GDP. Government spending as a percentage of personal income not only broadly measures the ability of government to meet the demand for public services, it also measures the ability of the economy to afford the government services provided. In this context, population-plus-inflation is virtually meaningless.

Colorado.
Yeah, sure, nobody in our state media has written at greater length or greater depth on tax structure and revenue issues than I have over the past few years, but still, I’m just some foul-mouthed blogger, so why should you believe me?

Well, don’t. Just look to Colorado where the experiment with TABOR has proven to be a complete and total fucking disaster. Population-plus-inflation simply does not provide government the revenue necessary to maintain a constant level of services. It didn’t in Colorado, and it won’t here. That’s a fact.

Population-plus-inflation also doesn’t provide government the flexibility necessary to respond to the changing wants and needs of its citizenry, but that’s a topic for another post.

Unfettered by the need to win votes from voters, interim King County Executive Kurt Triplett is making the tough budget cutting choices, choices that are unlikely to win him many friends outside of the local politicians who are currently using him as a human shield. Yet the toughest choice of all — what to do about the county’s chronic long term revenue deficit — well that, nobody’s allowed to even talk about, especially not during an election season.

Slashing budgets is hard, but not impossible, because unlike most tax increases, budget cuts don’t require the prior approval of voters, and there’s no automatic mechanism for vetoing them via ballot referendum. Sure, plenty of voters will be plenty pissed off by shuttering parks, eliminating animal control and raising Metro fares countywide, but there’s nothing any of us can do about any of it… at least not directly, and certainly not directly against Triplett. So with nearly three quarters of the county’s general fund dedicated to criminal justice, so-called “non-essential” services must necessarily bear the brunt of this year’s cuts.

And next year…?

The cuts would come on top of several years of cost-cutting. For 2009, the county executive had to close a $93 million general-fund deficit, and between 2002 and 2005 $137 million in deficits had to be bridged.

Without new sources of revenue, Triplett forecast general-fund deficits of $54.2 million in 2011 and $88.2 million in 2012.

“There’s nothing left to spare,” he said. “Counties have to be funded differently.”

Yeah, well, Triplett can say that, because he’s not running for office. But as for the rest of the county’s political and media elite…? Shhhhh… voters might hear you.

So if we’re not going to fix a revenue system that has been intentionally monkey-wrenched to prevent county revenues from growing as fast as even population-plus-inflation, let alone growth in demand for public services, what’s the solution?

Republican executive candidate Susan Hutchison is running on the tried and true “waste, fraud and abuse” platform, claiming she can save popular services simply by wringing greater efficiencies from bloated government bureaucracy, mostly at the expense of the evil unions. Whether she really believes this or not, I don’t know, because like most other issues, she’s not sayin’. But the point is it can’t be done, at least not to the extent necessary to keep county services anywhere near their current level.

It’s not that there aren’t inefficiencies in county government, and it’s not like our bureaucracies don’t need to be scrutinized, squeezed and reformed from time to time; that’s the nature of bureaucracies, both public and private sector. It’s just that, as I’ve pointed out before, expecting to address long term structural deficits via productivity gains is a losing and illusory proposition:

But researchers long have recognized that the services provided in the public sector, such as education, health care, and law enforcement, tend to rise in cost faster than many other goods and services in the economy in general. This analysis was first put forward by economist William Baumol, who pointed out that technology and productivity gains may make goods cheaper to produce, but the services that government provides are different. Baumol said public services typically rely heavily on well-trained professionals — teachers, police officers, doctors and nurses, and so on — and technology gains do not make these services cheaper to provide. It may take far fewer workers to build an automobile than it did 30 years ago, but it still takes one teacher to lead a classroom of children.

The problem facing county governments statewide is simple: they have been forced to rely on a tax structure that over the long run guarantees that revenue will grow at a slower pace than the economy as whole, at the same time that the cost of providing government services is virtually assured to rise faster than the cost of most other goods and services in the economy. No doubt there are some productivity gains to be had, and we should attempt to squeeze them out where they make sense, especially in these trying economic times. But relying on productivity to address our long term deficit is wishful thinking.

Since we can’t actually outsource parks, animal control, Metro buses and other services to China, that leaves budget writers with only two real options: cut services and or raise revenues, neither of which is particularly popular, but only one of which appears to be even possible given the revenue constraints placed on the counties by the Legislature, and of course, our friend Tim Eyman. Timmy and the rest of the anti-government crowd don’t really mind watching local governments slowly drowned in a bath tub… indeed, that’s their goal. But the majority of voters — you know, those of us who actually use and rely on these services (and admit it) — we’re going to be sorely disappointed if the budget debate continues to focus on spending priorities to the exclusion of tax reform.

County government simply isn’t sustainable, anywhere in the state, and no amount of focus on budget priorities is going to fix this over the long term.  At some point, voters are going to have to accept that the level of revenue they are providing simply isn’t sufficient to support the level of services they’ve come to want and expect. But we’ll never have that painful conversation until our elected officials are willing to start it.