Let’s be absolutely clear about one thing: there is no state budget deficit. There never has been, and there never will be. Washington’s constitution simply does not allow deficit spending, so whatever the revenue forecast is when it is time to write the next biennium budget, and whoever is governor at the time, the budget will be balanced.
But that didn’t stop Dino Rossi from going on the attack during last night’s debate:
Rossi wasted no time blasting Gregoire’s record, accusing her of recklessly spending the state into a record deficit and presiding over a rising state unemployment rate. He also made note of her recent TV attack ads, which he said misrepresent his position on stem-cell research.
“She’s trying to distract us from the issues that most people in the state are talking about,” he said at the debate sponsored by the Seattle P-I, KOMO4 and the League of Women Voters. “Issues like this $3.2 billion deficit that she has created and she’s going to raise your taxes to solve.”
Again, there is no budget deficit, and both candidates have promised to balance the budget without raising taxes. As for rising state unemployment, we are in the midst of a national recession, yet Washington continues to buck the trend by actually adding jobs to the state’s payrolls:
Washington had an estimated net gain of 1,300 non-agricultural jobs in August.
The number of non-agricultural jobs in Washington in August 2008 was 41,800 higher than in August 2007, a 1.4 percent increase. Nationally, jobs declined by 0.21 percent over the past year.
That’s a lower job growth rate than we’ve been accustomed to in recent years, but the reason our unemployment rate keeps rising is that people continue to move here for our relatively robust economy compared to the rest of the nation. Meanwhile, our farmers are enjoying ample harvests and the best commodity prices they seen in years.
So all this talk about a $3.2 billion deficit is really misleading, and the media’s tendency to fixate on this number without thoroughly explaining it plays right into Rossi’s hands. It is a revenue forecast for 2010-2011, which currently falls $3.2 billion short of the revenue needed to maintain state spending at its current rate of growth. And as I’ve explained in the past, state spending has remained at about six percent of the state economy for more than decade, its growth more or less pegged to our state economy’s rate of growth, as measured in total personal income.
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 consumption of commodities as our income grows. Roads, sewers, schools, courts, public safety, public health… these and other government services are all things we consume more of the wealthier we become, and thus personal income, not population plus inflation, is the best measure for tracking growth in demand for these services.
You can argue with me on this if you want, and perhaps there are economists who can explain these concepts more clearly than me, but both academia and reality are on my side.
So any accusation of reckless spending on the part of Gov. Gregoire is simple hyperbole. During the Gregoire administration state spending grew at roughly the same pace as our economy, while managing to put hundreds of millions of dollars aside in a rainy day fund. And where did the bulk of her spending increases go? On education, where she fully funded two statewide initiatives calling for reduced class size and greater teacher pay… that is, she met the voters’ express demand for expanded government service.
And on taxes, well, both candidates promise to balance the budget without raising taxes, and I see no reason to believe one more than other. Rossi accuses Gregoire of raising taxes during her administration, and it is true that she did raise the gas tax and reinstate the estate tax… but both of these measures were subsequently and overwhelmingly approved by voters at the polls. If the argument is that Gregoire gave voters what they wanted, that’s a criticism she shouldn’t be shy of embracing.
And really, find me a Democrat who expects Gregoire to sign a tax increase… I betcha can’t. Hell if House Speaker Frank Chopp is going to risk his meticulously crafted majority by pushing through an unpopular sales tax increase, so that’s not going to happen, and neither would a B&O tax increase during an economic downturn. And I can tell you first hand that we fair tax advocates have pretty much given up hope of Gregoire embracing a sensible repeal of even a small fraction of the billions of dollars a year in questionable tax exemptions handed out to businesses and other special interests over the past decade.
And if you think that somehow Gregoire is going to embrace an income tax… well… I’ve got an eight-lane 520 bridge to sell you.
So what it comes down to in the end is not who will balance our next budget but rather, what will be their priorities. Do we want a governor who has made education and children’s health care their number one priority during their administration, or a governor who proudly claims a budget proposal that cut health insurance for 40,000 kids? Do we want a budget balanced by a governor who has made cleaning up Puget Sound one of the centerpieces of her second term, or by a governor who doesn’t believe in global warming, and who voted 99% with the orca-killing BIAW? Do we want a budget balanced by a governor who actually believes it is the government’s proper role to deliver the services voters want, or do we want it balanced by governor who fully embraces the failed anti-regulatory, anti-government policies of George W. Bush?
Rossi complains that Gregoire’s efforts to talk about actual issues is a distraction from the campaign, but it is his and the media’s obsessive focus a deficit that isn’t, that is the real distraction. There is no budget deficit. That is a fact.
But, of course, when have effective political campaigns ever been about facts?