The truth about WA’s revenue deficit

As I have repeatedly stated, there is no state budget deficit, despite the claims of Dino Rossi and his (perhaps unwitting) collaborators in the press. Our current budget is actually running a small surplus, and the next biennium budget will be balanced, as is constitutionally required.  The question facing voters is not if the budget will be balanced, but by whom, and based on what priorities.

To call a revenue forecast a “budget deficit” is thus inexcusably misleading, as when one thinks of budget deficits, most voters think of the enormous federal deficits (only made even more enormous by the Bush administration) in which our government borrows money to pay for expenditures that far exceed tax revenues.  That can’t happen here in Washington state, under any administration, and to suggest otherwise, even through semantic inference, is simply irresponsible.

And it is equally irresponsible and misleading to suggest, as the amen editorialists at the Seattle Times relentlessly insist, that this projected $3.1 billion revenue deficit—the difference between projected growth in state revenues and projected growth in state expenditures at current levels—is the result of profligate spending on the part of Gov. Chris Gregoire, when in fact, as the chart above clearly illustrates, it is simply the result of declining state revenues.

According to a policy brief prepared by the Washington State Budget & Policy Center, while remaining relatively flat for the past decade, state spending has declined from 6.6% of personal income in 1995 to 6.1% at present.  Meanwhile, state revenues as a percentage of personal income will decline from 6.6% to a projected 5.6% by 2011.

Yes, our revenue deficit has been exacerbated by a worsening economy, just as the problem was masked by the boom years, but the real culprit here is not out of control spending, but rather a long-term structural revenue deficit that results from a tax system that overly relies on a steadily shrinking segment of our economy: the sale of goods.

This is a fact—a fact that is constantly and conveniently ignored in press accounts of this issue—and unless we eventually fix this structural deficit, preferably by shifting to a fairer tax system that doesn’t leave WA the most regressive state in the nation, our state government, and the services it is able to provide, will steadily shrink, regardless of which party controls the legislature or the governor’s mansion.

If the Times is looking for a legitimate budget issue on which to attack the governor, it is not state spending, which during her administration has thus far grown in virtual lockstep with growth in revenues and growth in our state economy.  Rather, the most substantive critique of Gov. Gregoire comes from the left, where she has disappointed fair tax advocates by failing to take the lead on much needed tax restructuring.

Comments

  1. 1

    John spews:

    “To call a revenue forecast a “budget deficit” is thus inexcusably misleading, as when one thinks of budget”

    Cool then a state dept. asked to get $900,000.00 in budget increases and the legislators only give them $450,000.00 we can stop calling this a cut can we (d).

  2. 2

    ivan spews:

    Rather, the most substantive critique of Gov. Gregoire comes from the left, where she has disappointed fair tax advocates by failing to take the lead on much needed tax restructuring.

    Yeah, right, Goldy. This post was fine but you had to drop that little turd into it, didn’t you?

    Repeat after me: She won by 133 FUCKING VOTES! and now she HAS TO GET RE-ELECTED! Does anyone not named Josh Feit seriously expect her to call for an income tax or something under those circumstances?

    There’s nothing wrong with a fairer tax system. We all can say we want it (right-wing trolls don’t count). But try to have some realistic expectations, will you?

  3. 3

    Don Joe spews:

    Yo, Pudge. Before you decided to comment here, be sure you read the vertical axis on the graph first. I’m just sayin…

  4. 4

    Mark1 spews:

    Keep clicking your heels together Goldy-your “spin” attempt here will fool no one. Just admit the Queen’s mistakes and incompetence with money. The truth will set you free!

  5. 5

    horsesasswhole spews:

    Please, please, please keep this up. I can only pray that your Queen will follow your lead and start spouting this bullshit more publicly and further undermine her rapidly eroding credibility.

  6. 6

    rhp6033 spews:

    I’m not going to blame Gregoire (yet) for not addressing the need to reform our tax structure. Considering the close vote which put her into office, and the difficulty of the re-count battle, I think it is important for her to confirm her position in the current election first. After all, you can already see the “she’s going to raise your taxes!!!” vitriol being thrown at her (without any real foundation), can you imagine if she proposed a state income tax?

    Personally, the ideal scenario would be for there to be a long-term push for tax reform, including considerable efforts at voter education by heavyweights in the state scene, and bi-partison support, followed by a referendum. Given that a state income tax is considered to be the “third rail” of Washington State politics, there’s no way to get enough votes in the legislature to do it without independent voter approval. But it needs to be done.

    Personally, I’d like to see (after the election) for Gregoire and other state leaders to pay a visit to Bill Gates, and to make the case for a personal and corporate income tax in the state, and convince him to publically endorse it.

    I could see that such an endorsement, from someone who would obviously be most affected by such a tax, would carry a lot of weight, especially if he’s willing to help pay for, and appear in, ads where he looks into the eyes of the voters and says “I’m Bill Gates, and I want you to tax me”. He could point out that he stands the most to lose by an income tax, but he’s convinced that it is the fairest and most efficient method of sharing the tax burdon in this state, and that it’s needed to pay for a world-class education system here.

    The key, of course, is convincing voters that for the great majority of them, the tax change will not result in any total increase in taxes for them. That might be difficult, considering how easily the Republicans have muddied the waters about the Obama tax plan. Likewise, the business owners have to be convinced that an income tax is better than the B&O tax. I don’t think that should be as hard to do, since most small business owners already know how unfair and unreasonable the B&O tax structure is. The ones most hurt by the replacement of the B&O tax with a corporate & personal income tax would be the very big businesses who already receive favorable treatment under the existing system.

    Finally, any income tax plan would need to have simplicity on it’s side. The tax form should be about half a page long, and simply take the numbers from the Federal Income Tax form to calculate taxable income, and then multiply by the state tax rate. Such a form can be completed in ten minutes or less. But politicians have to resist the impulse to tinker with the state income tax for their pet projects, which would unnecessarily complicate the form.

  7. 7

    rhp6033 spews:

    The other side of this is we have to ask why state revenue is falling. Of course, the answer to that is the current financial crisis for which we can thank the Republicans on a national level (despite their feeble attempts at deflection).

    So why should we, once again, turn to the Republicans to solve a crisis which they created? Rossi might not have been among Republicans in national office who are primarily responsible, but he’s certainly of their same political philosophy, and his gut “hands off” approach to big business regulation & oversight are just as likely to create a crisis in Washington State as it did in Washington D.C.

  8. 8

    spews:

    Remember what I taught you people. Goldy is unethically or ignorantly leaving out the word “projected” from the admitted projected budget deficit to set up his straw man argument.

  9. 9

    Politically Incorrect spews:

    No income tax for this state! Never, never, ever!

    We should be moving towards eliminating the federal income tax, not trying to institute another income tax here in WA.

  10. 10

    spews:

    If the state wants to tax my income, I’m going to go Jew on ‘em. I’m going to use every trick in the book to keep MY money in MY pocket.

  11. 12

    SeattleJew spews:

    @9 Politically Incorrect spews:

    No income tax ….! Never, never, ever!

    I like it …

    lets go the rest of the way ….

    No income tax for this state!
    No schools, no prisons, no roads
    Never, never, ever!

    No income tax for US of A!
    We’ll all just move to Palinstin and live of oil.
    Never, never, ever!

    No income tax for this state!
    Don’t clean the sound, police crime,
    Never, never, ever!

    No income tax for US of A!
    No more expensive wars or health research or space program,
    Never, never, ever!

    No income tax for this state!
    No subsidies for Boeing or Msoft, no jobs,
    Never, never, ever!

    No income tax at all,
    just legalize pot and sex. tax them all!
    Forever, forever, forever!

    BTW.

    McCain doe not have time for tommorow’s debates!

  12. 13

    SeattleJew spews:

    109 Hey Troll,

    Any time YOU want to “go Jew” call me and I will bring my swiss army mohel knife. All ypou need t do is trip to skivvies. I will do the rest. A snip here, a snip there, a barucha or too and no one will know you were once a dumb goy!

  13. 14

    kirk91 spews:

    Isn’t Gates’ income zero now that he’s retired?

    The problem is years and years of brainwashing that government is bad coupled with the WA provincialism that doesn’t want to build the infrastructure for the folks who are already here because maybe they will move back to California.

    There are more than a few people who would be happy with a tax basis akin to a state like MS or LA, because they already are wealthy and have the means to send their kids to private schools and so on. Those people must be stood up to, but no political leaders have the spine to do that.

    If the state and corporate income tax was a one line form that said ‘state your income’ and then send us x%, I would be for it. The one time I filled out a state income tax form (OR) it was more complex than the Federal tax form.

  14. 15

    ArtFart spews:

    8 “Remember what I taught you people.”

    HA! Dude, you couldn’t teach your grandmother’s duck how to lap ashes.

  15. 16

    Rabid Republican spews:

    It would be unwise to repeal the inheritance tax given the gravity of the current financial crisis in WA.

  16. 17

    So we won spews:

    Um…I noticed the Republi-trolls have avoided the entire point (as usual). This state can’t run a budget deficit. It’s not technically possible. We’re just talking about projections vs reality. But again, Republican’s can’t do math (too much like satanic sciences they hate) so it’s hard to explain that spending goes “up” when your population increases and expenses (cost of construction for example) go up too. It’s usually not ‘out of control’ gov programs.

    Go back and just pray for the rapture and leave us adults alone to deal with reality to fix things. Bush and the Republicans (sorry Dino…GOP) have done ENOUGH damage to our country/military/economy for a few decades.

  17. 20

    spews:

    My God you people are dumb. Don’t you see what Goldy is doing? He’s taking the fact that there is a projected budget shortfall, and making it sound like people are claiming there there is a CURRENT budget deficit so he can debunk it. By saying there is no current budget deficit, and that deficits aren’t allowed, anyway, he’s building up a straw man in order to knock it down.

    In other words, Goldy isn’t proving or exposing jack shit. He’s twisting the truth of the projected shortfall in order to make himself seem smart in the eyes of his brown-nosing amen readers.

  18. 21

    SeattleJew spews:

    @29

    Troll

    You have not responded to my kind offer @13,

    I do have a brand new, very sharp swiss army knife. Just give me a time and place.

  19. 22

    spews:

    Goldy:

    As usual, you’re lying. You say we don’t have a budget deficit, because it WILL be balanced in the end, but then you insist we have revenue deficit even though … it will be balanced in the end.

    Damned linguistic hypocrite.

    The question facing voters is not if the budget will be balanced, but by whom, and based on what priorities.

    The question facing voters is whether they trust Gregoire to get us out of the mess she and the Democrats created.

    As Gregoire said, “Our state budgeting has been a roller coaster. We spend when we have a surplus and we struggle to make painful cuts when the economy slumps. It is time to even out the ride. While the roller coaster is fun at the amusement park, it is no model for state budgeting.”

    “By treating our budget like a Washington family budget — we will ensure stability and avoid tax increases or Draconian cuts tomorrow.”

    Gregoire said we should not increase spending to something we couldn’t afford without tax increases or painful spending cuts, but she did it anyway.

  20. 23

    Mark1 spews:

    @21:

    Careful asshole, bodily threats may warrant a call to the cops- but I suspect you are one of a million all-talk-and-no-bite pussies that hide behind the safety and anonimity of your keyboard. Watch yourself son.

  21. 24

    Steve spews:

    @24 Good grief, Borg. Fuck a goat, take some meth, do whatever it is you do to lighten up, son. Save the exploding head shit for November.

  22. 25

    Dave spews:

    The public education system in our state continues to decline. We do not adequately fund primary and secondary education. For higher education, we should have built a college for high technology years ago.

    Our tax structure is the reason our schools suck. And I have no faith that there will ever be the political will or leadership to revise the tax structure. And our kids suffer from an education akin to what you’d find in the Deep South.

  23. 26

    Puddybud spews:

    Goldy wrote:”To call a revenue forecast a “budget deficit” is thus inexcusably misleading, as when one thinks of budget deficits,”

    Goldy, you’re a liberal so I’ll cut you some slack but Puddy Remembers.

    Back in 1995 when the Republican house leadership wanted to cut the growth of social programs from approximately 10% per annum to 7% per annum the House Donkey went all over the news and said the Republicans are cutting school lunches, WIC, Head Start, etc.

    So now, using similar worded attack tactics, Rossi is giving it to Gregiore. Looks to me the foo shits and you are complaining? What a crock!

  24. 27

    Puddybud spews:

    Dave, Public education in this state declines because of the WEA/NEA looking out for their next election cycle and not caring how kids get educated. Can a crummy teacher get the boot? Can a crummy administrator be put to pasture? Can headless lucy be fired from Seattle Skuul System? The answer to all three are NO! Well Obama said he’ll make sure that will happen. If you remember Puddy told everyone on HA he doubted the NEA would allow it.

    Check the blog tapes!

  25. 28

    Steve spews:

    This Republican sleazeball was charged with “73 counts of possession of child pornography, 45 counts of sexual assault in the first degree for allegedly having sex with a child under age 11, nine counts of use of obscene matter with intent to seduce a minor, seven counts of display of obscene matter to a minor and two counts of employing a minor to do sexually explicit conduct. He was sentenced to 80 years”

    http://www.times-news.com/loca l/local_story_079100823.html

    This has been another edition of “Puddy’s Heroes”.

  26. 29

    Puddybud spews:

    rhp6033 typed: “After all, you can already see the “she’s going to raise your taxes!!!” vitriol being thrown at her (without any real foundation), can you imagine if she proposed a state income tax?”

    rhp ol buddy, didn’t Queen Chrissy say she wasn’t goona raise taxes in 2004 and then she raised taxes just after being elected? We already have the “real foundation” made by her!

  27. 32

    Dave spews:

    @27, Puddy for brains advocates having the ability to fire bad teachers.

    I don’t have a problem with letting go of bad teachers, but I don’t think you realize that we get the teachers we pay for. The Seattle area has a high cost of living, yet our state is in the bottom of per pupil funding for education. We’re at the bottom of funding for teachers on the west coast. So go ahead and fire bad teachers. Then go out and hire more bad teachers to replace them.

    Our state cripples school districts with rules and restrictions. School districts in the greater Seattle area are too large. The reasons our schools suck are legion. But the quality of teachers is not the primary reason.

  28. 33

    Puddybud spews:

    Dave the moron@32 said: “Our state cripples school districts with rules and restrictions.”

    Moronic Dave, who rules the roost in WA State? Didn’t some HA idiot brag this was a blue state? Doesn’t the WEA run the education system here? And who do they support every biannum?

    Complain to your own kind Dave!

  29. 34

    Mark1 spews:

    Steve, you sound jealous of Puddy. Not sizing up well compared to other men in the locker room Stevie-boy? That kind of anger is understandable in your case.

  30. 35

    Steve spews:

    @34 My seriously deluded troll, perhaps one day you’ll be reality-based enough to realize that pedophiles, goatfuckers and self-loathing types are to the Republican party as stink is to shit. I should think you’d know this first hand. Just how much of a disconnect is there between you and reality?

  31. 36

    spews:

    Goldy: To call a revenue forecast a “budget deficit” is thus inexcusably misleading, as when one thinks of budget deficits, most voters think of the enormous federal deficits … in which our government borrows money to pay for expenditures that far exceed tax revenues. That can’t happen here in Washington state, under any administration, and to suggest otherwise, even through semantic inference, is simply irresponsible.

    Synonyms for “deficit”: shortage, shortfall, deficiency.

    Gregoire: “I’m expecting a shortfall and I’m preparing for it.”

    Goldy, why are you calling Gregoire irresponsible?

  32. 37

    spews:

    And hey Goldy, you got that graph from a web site that says, and I quote exactly, “The State Will Face a $3 Billion Deficit in 2009-11.”

    So the very people you’re quoting to make your case, you are accusing of being “inexcusably misleading.”

  33. 38

    michael spews:

    Pudge,

    What part of our state constitution not allowing deficit spending is so hard for you to understand?

    Our current budget is in the black and our next budget will break even or be in the black REGARDLESS of who’s the governor.

    The 3B forecast you’re sighting is exactly that, a forecast. It’s a forecast the state can’t follow because state law prohibits us from from going 3B in the red.

  34. 39

    spews:

    michael:

    Look. Goldy quoted a liberal, leftwing, web site to back up his claims. Goldy said it is “irresponsible” to call the forceast a deficit.

    That same web site said “The State Will Face a $3 Billion Deficit in 2009-11.”

    Gregoire said she expects a deficit.

    What part of that do YOU not understand?

  35. 40

    Mr. Cynical spews:

    Goldy–
    You continue to try to put a smiley-face on a…………………..PIG!

    Gregoire increased spending by over 31% or $8 BILLION. Average voters have been belt-tightening to pay the high cost of living in the Puget Sound area.
    Your shit stinks Goldy.

  36. 41

    Mr. Cynical spews:

    Oh and Goldy–
    “Wad up that chart and shove it up your a$$!”

    That is the message from folks struggling to make ends meet.

    Goldy wants folks struggling economically to feel happy about Gregoire’s mere 31% increase in spending.
    Not everyone has drunk your Kool-Aid Goldy.

    Gregoire/Goldstein==TEAM HORSESASS!!

  37. 42

    Mr. Cynical spews:

    36. pudge spews:
    “Synonyms for “deficit”: shortage, shortfall, deficiency.

    Gregoire: “I’m expecting a shortfall and I’m preparing for it.”

    Goldy, why are you calling Gregoire irresponsible?”

    Awesome pudge!!
    You out-wordsmithed KLOWNstein!
    OUCH!

  38. 43

    Pat Towner spews:

    Just asking,how big was the tax break Rossi gave the aerospace folks in 2003? 3.2 billion rings a bell

  39. 45

    spews:

    Pat Towner: first, it was approved in the Senate 42-1, and by Governor Gary Locke.

    Second, it was potentially $3.2 billion over 20 years, whereas we face a $3.2 billion deficit for the next biennium.

  40. 46

    Politically Incorrect spews:

    SJ @ 12,

    You are entitled to your Neo-socialist opinions. Why don’t you put your money where your mouth is and send the state revenue folks 20 or 30% of your gross income each year? If you talk-the-talk, then walk-the-walk, SJ.

    There are those us that don’t think the state (or the federal government, for that matter) has any right to know how much money we make or how much wealth we have. Income tax is an intrusive over-reach by government into our personal lives. I much prefer sales taxes, use taxes, property taxes, etc. to having the government looking into my private financial affairs.

    Let’s face it: income tax has survived because it has become a cash cow for lawyers, accountants, and the tax preparation industry. Is there anything more useless to society than than devoting so much time and brain power to what amount to filling-out government forms? What a horrendous waste!

    Income tax has survived because it gives politicians power to help themselves stay elected. It gives presidents power to meddle in other countries’ affairs. It gives socialists power to re-distribute wealth from wealth-producers to wealth consumers.

    Never, never, ever!!!!

    No income tax for WA, and let’s work to remove this heinous tax from our federal system!

    And SJ, WA has schools, police, prisons, roads, etc. without a sate income tax now, so don’t come to us with that shit about we can’t have those things if we don’t have a state income tax. That is a bold-faced lie!!!!

    No go away, silly person, or I will humiliate you a second time!!

  41. 47

    Mark1 spews:

    @35 Stevie-boy:

    That’s your comeback? Ouch! You don’t play well with others do you? I bet your Momma said there’d be days like these. How’s that G.E.D. coming along?

  42. 49

    spews:

    Pat Towner, if you’re talking to me, I never said it wasn’t Locke’s budget, nor that it wasn’t Rossi’s budget. Obviously both were prime movers in the passed budget.