Search Results for: inflation

Fed slashes interest rates half a percent. Man… I am such an idiot.

UPDATE:
Shorter Bonddad: “Fuck inflation.”

The Seattle Times doesn’t much like the rabble calling bullshit on one of their editorials:

Legislators, a local think-tank intellectual and an Internet fulminator all declared we were flat wrong about SB 5498, and that it did not silently transform anything.

By “Internet fulminator” the Times is of course referring to me, and while I wouldn’t mind being derided as an “intellectual” once in a while, if this is the type of fulmination it takes to coax the Times into engaging in a higher level of discourse on complicated issues of tax policy, well then, fulminate I must.

The Times stands by its take on SB 5498, and I stand by mine. At issue is a vaguely worded memo by a midlevel Department of Revenue staffer that seems to interpret one provision of the bill contrary to the stated legislative intent. The Attorney General’s office has been asked to review the DOR memo, and that is the opinion that will ultimately count. But my dismay with the Times original editorial extends far beyond dueling interpretations of a couple paragraphs of obscure legalese.

Coming just days before a handful of crucial levy votes, the Times original editorial was irresponsible in both tone and timing, attempting to speak authoritatively on an issue that was far from settled and on which they apparently lacked much authority. The Times’ efforts to impugn the motives of legislators were unfounded and uncalled for, its discussion of levy lid lifts muddled and contradictory, and its alarmist headline, “Warning: New taxes will be permanent,” was flat out wrong, regardless of the AG’s pending interpretation. A temporary lid lift raises both levy capacity and taxes; even if the new law makes capacity increases permanent — and the legislators who wrote the law continue to maintain that it does not — the tax increase itself would still expire at the end of the levy. District officials (councilmembers, commissioners, etc) could vote to increase regular levies to the limit of the new capacity, but they would be held accountable to voters for any perceived abuse of their taxing authority.

While I applaud the Times for following my lead and presenting a more in-depth discussion of lid lift basics in their new editorial, they still fail to make an adequate distinction between increasing statutory levy capacity and actually raising taxes, and they totally avoid a conversation about permanent versus temporary lid lifts. And perhaps most importantly, they refuse to address the issue that creates the need for frequent lid lifts in the first place, the totally inadequate and arbitrary 1-percent limit on revenue growth… well below inflation let alone growth in demand for government services.

… the law needs to be restored to what it was. In passing Initiative 747, the voters of Washington imposed a 1 percent limit per year on how much a taxing district can increase its gross collections from existing properties.

I-747’s 1-percent limit was vindictive and unsustainable, and a responsible editorial page would point this out instead of sticking to the meme that initiatives to the people, no matter how stupid, are somehow inviolate. The state constitution does indeed grant special status to initiatives, protecting them from being overturned by an act of the Legislature for a period of two years. But once that two years is up an initiative is the same as any other law — and the only thing more irresponsible than a dumb-ass (and possibly unconstitutional) initiative designed to cripple the ability of local governments to function, would be a timid Legislature refusing to address the problems it created out of fear of an editorial backlash.

No doubt the Seattle Times editorial board doesn’t like taxes, as evidenced by the sarcasm they ooze in commenting on Tuesday’s decisive approval of the two King County Parks levies:

Yes, yes, everyone take a bow and gush over how much we need parks and how much we use them. It is all true, but that doesn’t make it any wiser that the county has become dependent on levies to run its park system.

Well, yeah, I think most tax structure experts would agree that it isn’t particularly wise to depend on dedicated levies to run our parks or anything else. But rather than presenting a constructive discussion of the circumstances that have led us to this situation, the Times merely adopts the lazy, anti-tax meme of blaming elected officials for failing “to make other, unpleasant budget cuts.”

Such as? Over 70-percent of King County’s general fund goes to the criminal justice system — a number typical for counties statewide. Shall we empty the jails? Cut funds for the courts or the sheriffs department? Slash salaries in the prosecutors office? Where’s the fat?

The Times doesn’t know, and they haven’t bothered to look. The editors have the reporting staff of the largest newspaper in the state at their disposal, yet I don’t see the expose on all the waste, fraud and abuse apparently sucking King County coffers dry. And I also don’t see a serious discussion of the reason the county was forced to go to special purpose parks levies in the first place: I-747’s arbitrary and unsustainable 101-percent limit on growth in revenue from existing construction.

The Times continues to editorialize on local property taxes as if they understand what they’re talking about, but I see no evidence of this from the cursory and muddled nature of their discourse. By setting a limit factor on revenue growth well below that of inflation, I-747 intentionally erodes the real-dollar value of regular levies over time. Indeed, the whole point of the initiative was to force local taxing districts to resort to special purpose voter-approved levies like the type the Times now disses; this is exactly the kinda “direct democracy” that Tim Eyman professes, and that the Times sacredly defends.

In fact, the only way for a district to secure a stable inflation-adjusted revenue stream under existing statutes is to run a multi-year lid lift, like the parks levies, which not only permits the district to replace the 101-percent limit factor with a more reasonable growth index, but also specifically requires that the levy be dedicated to a special purpose, and not supplant existing revenue in the general fund.

Ask nearly any government budget writer what they’d prefer, the current system that routinely forces the district to run special purpose levies, or a more reasonable limit factor — say, inflation or 4-percent, whichever is lower — and dollars to donuts they’ll choose the latter.

That’s the issue the Times should be discussing. But they don’t. Or they won’t. Or maybe, they can’t.

It was the talk of conservative talk radio Monday and Tuesday, after the Seattle Times published an editorial Sunday with the dire headline “Warning: New taxes will be permanent.” Only problem was, the Times got it wrong. Dead wrong.

A change in the state law regarding property taxes has silently transformed what have been temporary tax increases into permanent ones.

We say “silently” because the Legislature, which made the change, did not name what it was doing in the bill title or the bill reports. The change is something every voter should keep in mind as the election arrives Tuesday and more new taxes are proposed in November.

Hmm. You’d think before the state’s largest newspaper prints an editorial impugning the integrity and/or competency of the Legislature, it might have given legislators or their staffers an opportunity to explain themselves, huh? And you’d think just maybe, before warning voters that “new taxes will be permanent” — just days ahead of crucial levy votes in yesterday’s election — the Times might want to double- or even triple-check their facts, right?

But the Times didn’t. As a result, thousands of voters went to the polls yesterday angry and confused, and had any of the regional levy votes been close, the Times’ factual error and lack of editorial judgment could have flipped the outcome.

On the surface, Senate Bill 5498 allows fire districts and other special-purpose taxing districts to ask voters for multiyear tax increases. It is the same authority cities and counties already had.

That’s the one part of the editorial the Times got right, except for their implication that there is something nefarious beneath the surface. There is in fact nothing beneath the surface.

The nonobvious part of the bill changed the old rule that unless a tax levy said specifically it was permanent, it wasn’t. Under the old rule, after a levy expired, Washington’s 1-percent property-tax limit would be set as if the levy had never happened. If voters didn’t renew the levy, their taxes would go down.

And what makes this change particularly “nonobvious” is that it just isn’t there. Here’s the “old rule” the Times talks about:

(2) After a levy authorized pursuant to this section is made, the dollar amount of such levy shall be used for the purpose of computing the limitations for subsequent levies provided for in this chapter, except as provided in subsections (3) and (4) of this section.

That’s also the text of the new rule, except it now references subsection (5). What this means is that the default behavior of a lid lift is now, and always has been, to permanently raise the base on which the limit factor is calculated… except as otherwise provided. That was the default under the old rule. That is the default under the new rule.

Under SB 5498 — a governor’s-request bill passed by large majorities in both houses — unless a tax levy says it is temporary, its authority is permanent. So says the Department of Revenue in an official memo to county assessors.

A) It wasn’t a “governor’s-request bill.” It just wasn’t. B) If the Times’ editors don’t understand the difference between a “permanent” lid lift and a “temporary” lid lift, they really shouldn’t be editorializing on the issue without thoroughly researching the subject. All they’ve succeeded in doing is making an already confusing issue even more confusing, but I’ll try to clear things up.

The whole purpose of a permanent lid lift is to permanently reset the base on which the limit factor is calculated. For example, lets say a fire district levied $100,000 in taxes from existing construction in 2003, the year I-747 went into effect. Under the initiative’s arbitrary 101-percent annual limit factor, the maximum dollar amount the district could levy by 2007 would be $104,060. But due to inflation, the purchasing power of this revenue is really only equivalent to $91,920 in 2003 dollars. Year after year, the fire district would steadily lose purchasing power, and be forced to steadily cut back services.

Or, the district could put before voters a permanent lid lift with a dollar rate that would increase total revenues to $115,000 in 2008, a figure that would pretty much reset the district’s revenue to 2003 levels in inflation-adjusted dollars. The 101-percent limit factor would subsequently be calculated on this new base, but over the years, that too would be eaten away by inflation. Better than slowly starving to death, but not a stable means of securing a reliable revenue stream for longterm planning. And also, quite costly. According to public testimony, South King Fire and Rescue has spent over half a million dollars over the past six years running a string of successful permanent lid lifts.

Under the old rules, counties, cities and towns had an additional tool at their disposal. They could instead choose to put before voters a multi-year temporary lid lift (up to six years) which states a dollar rate for the first year (just like a permanent lid lift,) but also specifies an index to be used as the limit factor for subsequent years of the levy, superseding I-747’s 101-percent limit. Each of the parks levies passed yesterday did exactly that, raising an additional $0.05 per $1000 of assessed value in the first year, and authorizing annual increases on that amount indexed to inflation. The parks levies thus produce a stable revenue stream of inflation-adjusted dollars throughout their six-year term.

But these lid lifts are temporary under both the old and the new rules, and when they expire the basis for calculating revenue limits under I-747 reverts to the maximum amount it would have been had the parks levies never been passed. It appears the Times kinda-sorta understands this, but then at the same time kinda-sorta doesn’t:

To be deemed temporary, a measure has to say when the tax expires, and it has to limit itself to specific purchases.

Right, and the parks levies do both these things.

Otherwise, in the year after the last tax increase authorized by voters, the new tax limit is 1 percent higher. Even if voters don’t renew the levy, the taxing authority can keep pushing taxes up — at a slower rate, but still up.

Poorly phrased, but um… what’s your point? That’s what permanent lid lifts have always been intended to do. You know, the kind of permanent lid lift the parks levies are not.

King County Assessor Scott Noble, who drew our attention to this, has looked over the 11 property-tax measures that will be on county ballots Tuesday: two for King County parks, two for Redmond, one for a hospital district and six for fire districts.

“All of them are permanent increases in new levy capacity,” he says.

Um… no they’re not, and the Times being misled confused by Scott Noble being misled confused by a confusing DOR memo is no excuse for a string of sentences that clearly contradict each other. To be deemed temporary, a lid lift must limit itself to a period of time or a specific purpose, and the parks levies clearly do that. The new rules specifically state that “except as otherwise provided in an approved ballot measure under this section, after the expiration of a limited period … or the satisfaction of a limited purpose … subsequent levies shall be computed as if … the limited proposition … had not been approved.” The parks levies are temporary, and temporary levies by definition do not permanently increase levy capacity.

How can I be so sure? Well for starts I, um… read the fucking bill. And the RCW. And the WAC. And in the Times defense, this stuff is pretty damn confusing. So I called the House Finance Committee and asked a staffer to step me through it. He did. And he stands by the succinctly worded summary in the final bill report:

Any property taxing district with regular levying authority may seek multi-year lid lifts over a six year period in the same manner as counties, cities, and towns.

That was the clear legislative intent of the bill, and that is how committee staffers expect it to be written into the rules.

Of course, to the Times’ demerit, this stuff is pretty damn confusing, and so I simply cannot believe that they didn’t ask a legislator or staffer to step them through it before running such a hyperbolic and misleading editorial. The Times clearly considers foul-mouthed bloggers like me to be unserious, but at least I took the time to do my homework. Meanwhile Times editorial page editor James Vesely only compounds his paper’s error in a separate column, denouncing “a sneaky tax” he clearly doesn’t understand:

Voters should also pay attention to The Times editorial opinion on the fourth page of this section about an obscure change in state law that turns temporary taxes into permanent ones. Instead of asking for a four- or six-year levy increase on your property taxes, the new law takes the opposite view — that taxes are permanent unless they are specifically noted as temporary. It turns the approval of a levy from something voters see as binding for a few years into a perpetual tax that can be renewed, but at always higher levels.

No, no, no. Multi-year lid lifts are temporary by default, and remain so under the amended statute. Furthermore, Vesely clearly doesn’t understand the relative roles of permanent vs. temporary lid lifts, and now neither do his readers.

Sure, the lid lift statutes are complicated and confusing; hell, I didn’t get it right the first couple times I read through SB 5498. But the Times’ editors didn’t just get it wrong, they implied ill intent. Had the editors been strong supporters of the parks levies (or levies in general,) one wonders if they would have been so quick to jump to conclusions… or so eager to publish them just days before the vote?

Either way, the tone and timing of this editorial was simply irresponsible, and as such it deserves a retraction as prominently placed as the editorial itself. I eagerly await Sunday’s op/ed page.

Yeah sure, I’m no economist, so the other day when I said “fuck inflation” in response to the Federal Reserve’s refusal to cut interest rates in the face of a looming credit crunch that threatened to suck the broader economy down the sub-prime toilet, many readers appeared more offended by my economic heresy than my foul language.

Well… fuck you:

Fed seeks to calm markets with a flood of cash

WASHINGTON — The Federal Reserve, trying to calm turmoil on Wall Street, announced today that it will pump as much money as needed into the U.S. financial system to help overcome the ill effects of a spreading credit crunch.

The Fed, in a short statement, said it will provide “reserves as necessary” to help the markets safely make their way. The central bank did not provide details but said it would do all it can to “facilitate the orderly functioning of financial markets.”

The Fed pushed $35 billion in temporary reserves into the system today morning, on top of a similar move the day before.

Hey… flooding the the financial system with cash… isn’t that supposed to be inflationary? You know, just like cutting interest rates?

I’m not suggesting an interest rate cut necessarily would have preempted or softened the market meltdown we’ve seen over the past couple days, but it certainly does appear that the Fed’s OCD-like focus on inflation blinded it to the severity of what has now become a worldwide credit crunch. And of course, rather than just assuring market liquidity — you know, propping up corporatist interests — cutting interest rates might have helped some threatened homeowners avoid foreclosure by making refinancing more affordable.

I’m just sayin’…

It is editorial endorsement season, and a loud round of cheers was reportedly heard the other day from the pro parks levy folks at Yes For Our Parks, when news broke that they had lost the endorsement from our friend Stefan over at (un)SoundPolitics. (u)SP is kinda the Chicago Cubs of local politics: perennial losers whose endorsement is considered the kiss of death by those who confuse cause with effect. This preeminent local righty blog is more of a looking glass than a window into mainstream political thought — a mirror image of public opinion that tends to reflect the proprietors’ own fantastical take on both policy and the polis.

Take the reliably anti-republican/pro-Republican Stefan, and his curious logic for rejecting the levies:

I like parks too, and am willing to pay a reasonable amount to support them. But the financing mechanism is flawed and the only chance of changing that is rejecting the levy.

The “financing mechanism”…? You mean going before voters for a special levy vote, rather than funding park maintenance and acquisition through the general fund? But isn’t this nickel-and-nickel approach exactly the kind of “direct democracy” for which Stefan and his cohorts routinely argue in their reflexive support for Tim Eyman and his anti-tax/anti-government initiatives?

When Eyman foisted I-747 on voters, with its arbitrary one-percent cap on growth in property tax revenues from existing construction — a rate that doesn’t even account for inflation let alone growth in demand for public services — he argued that local governments could always go directly to voters for special levies and lid lifts. Indeed, he argues that government should always go directly to voters to approve tax and fee increases. And by starving the general fund of adequate revenue growth, he got exactly what he wanted.

Local governments now routinely go to voters with special levies to fund popular and essential public services like parks, libraries and EMS, and while such dedicated levies may make for bad tax policy, elected officials really don’t have any other choice. Over 70-percent of King County’s general fund goes to the criminal justice system, so if Stefan is going to criticize the parks’ “financing mechanism,” he might want to offer up an alternative.

Perhaps he can find one through the looking glass.

Wow. Apparently, I live in a $1.5 million home. So how does a semi-impoverished blogger like me afford a mansion like that? Well it all depends on how you The Seattle Times does the math.

Zillow.com “zestimates™” that the modest, South Seattle home I purchased ten years ago for $187K would now set you back a cool half-million bucks, but according to the math wizards at the Times, that number is completely meaningless. No, rather than using present day dollars to calculate the cost of my house — you know, the actual purchase price — the Times insists on valuing my home in terms of “year of expenditure” dollars, ie the principal borrowed plus every penny of interest over the course of the loan.

At least, that’s how the Times insists on calculating the cost of the light rail portion of the Roads and Transit package headed to the ballot this November. Rather than simply reporting the $10.8 billion price of the rail proposal, they insist on presenting a $30 billion price tag after 40 years of interest and inflation is worked in. Likewise, a half-million dollar mortgage at 7-percent would total about $1.5 million in principal and interest over the course of a 40-year loan. See how that works?

But of course, I don’t live in a $1.5 million house. I live in a half-million dollar house. That’s about what it would fetch on the open market, and that’s about what it would cost me to replace it with a comparable house in the same neighborhood. To claim my house is worth three times that price would be just plain silly. And misleading.

The same holds true of light rail.

The other day I suggested that Washington state dramatically increase the motor fuel excise tax to pay for a massive investment in rail and other mass transit infrastructure. It was admittedly a bit of a thought experiment, as our state Constitution mandates that all motor vehicle fuel excise tax revenues be dedicated towards “highways,” and of course, amending the Constitution remains exceedingly difficult.

But then I got to thinking. Article II, Section 40 specifically refers to “excise taxes.” There’s nothing in the Constitution that says we can’t also levy a sales tax on motor vehicle fuel, and there’s nothing to mandate how such revenues might be spent. Thus all the hooey we’ve been fed about how we can’t spend gas tax dollars on anything but roads and ferries is exactly that… a bunch of hooey. A simple majority in both houses, and the stroke of the governor’s pen is all we need to create a dedicated fund for building mass transit. And of course, the people are free to vote yea or nay via referendum or initiative.

This isn’t just amateur legal analysis on my part. I checked with a constitutional scholar who assured me that my reading was correct, and that similar proposals have indeed been debated from time to time. And it’s not such an original or off the wall idea; nine other states already levy both sales and excise taxes on gasoline.

The point is we can tax gasoline to help pay for transit, and we need to start having this conversation while consumers are still able to absorb rising prices. With few transit alternatives, demand has thus far proven rather inelastic, even as fuel prices have nearly tripled in real dollars over the past decade. If this sort of energy inflation continues — and with increasing global demand and approaching peak oil, there’s no reason to suspect it won’t — there might come a point over the next decade or so when today’s common driving habits become an unaffordable luxury for the vast majority of working and middle class families.

Such a mobility crisis would have a devastating impact on the economy of a region as automobile dependent as ours, and it is past time we started building towards the transportation needs of the Twenty-First Century rather than waxing nostalgic on the car culture of the Twentieth. With all the Olympia talk of taking a comprehensive approach to transportation planning that considers transit and roads as part of an integrated system, it seems downright silly to perpetuate our segregated funding system. If roads, buses and rail are really part of an integrated system, why must transit compete for property, MVET and sales tax dollars, while roads enjoy the additional succor of a dedicated gas tax? It just doesn’t make sense.

The Seattle Monorail Project didn’t fail because a West Seattle to Ballard route wasn’t needed, or because the dollar-per-mile cost was too high. It failed because it didn’t have an adequate revenue source to pay off the bonds over a reasonable period of time. But had the Legislature granted Seattle the taxing authority to allow voters to additionally levy a sales tax on gasoline, we could have easily afforded the Monorail or some other transit project.

Perhaps I’m wrong, and mass transit isn’t the solution to our transportation needs. Perhaps Seattle and the surrounding Puget Sound region really is unique. But that policy debate and the transportation planning that comes out of it should not be shaped by a constitutional canard that says that gas tax revenues can only be spent on roads.

We can tax motor vehicle fuel to pay for transit. And we should.

It’s no secret: the working poor don’t have things easy. The Food Stamp Program, which has existed since the 1930’s, was enacted nationwide in the 1974 to supplement the diets of America’s poor. So, who gets food stamps:

The Food Stamp Program is targeted toward those most in need. Of all food stamp households in FY 2003 (the year for which the most recent detailed USDA data are available), 55 percent contain children; households with children receive 79.3 percent of all food stamp benefits. Roughly 18 percent of food stamp households contain an elderly person and 23 percent containa disabled person. Approximately 88 percent of food stamp households have gross incomes below the poverty line ($18,100 for a family of four in 2002). Approximately 38.4 percent of food stamp households have gross incomes at or below half of the poverty line.

The food stamp benefit translates to about 3 bucks a day, or 21 bucks a week. Though the program was meant only to supplement their nutrition needs, these days food stamps recipients are more likely to rely entirely on the program. As inflation eats away at the buying power of the minimum wage, the working poor are earning less. Things have to change.

Some in Congress are trying to bring light to this problem:

Today, four members of Congress conclude the Congressional Food Stamp Challenge, in which lawmakers chose to live “on three dollars of food per day, the same amount an average participant in the Food Stamp Program receives.”

One of the participants, Rep. Tim Ryan (D-OH), “stuck to the challenge” even as he traveled to speak at his alma mater’s commencement exercises, bringing along his “pasta and sauce, as well as the last of my jelly, peanut butter, and bread.”

But when Ryan had to go through airport security, things got dicey:

When I arrived I decided just to carry my bag on so I ran over to the security gate with my carry on. I step up to the metal detector, take my shoes off, place my bag through the scanner and come out the other side to the most dreaded words in travel, “Bag Check!”

As the agent sifted though my bag, I tried to recount what could possibly be in there that was threatening…my mouthwash? Toothpaste? Yeah, it was those two, but it was also my peanut butter and jelly.

He politely put the peanut butter and jelly to the side, closed my bag and gave it back to me. I was too astonished to talk. I took my bag and walked towards the gate thinking about the 4 or maybe 5 meals that she had taken from me. What am I going to do now? It’s not like I can just go to Safeway and grab another jar. I have .33 cents and a bag of cornmeal to last today and tomorrow.

A few congressfolks and the Governor of Oregon took the Food Stamp Challenge. Then again, millions of Americans take that challenge every day. Unlike these pols, it doesn’t end with a flank steak, red skin potatos, and a bottle of pinot noir.

UPDATE:

Many families do things like buy in bulk to keep costs down. This is impossible for most poor folks on a tight budget. Bulk is cheaper per person, but the upfront costs at the cash register make bulk buying impossible. Also, poor folks can get more food if they buy lower quality, hence the fatty ground beef versus the more expensive leaner beef. No wonder obesity is an epidemic for poor kids.

Yet another stupidly conceived, stupidly written Tim Eyman initiative was tossed out by the courts last year, I-747, which capped the revenue growth from regular local levies at 1-percent a year. And now I hear that House Dems are stupidly caucusing today to discuss the stupid idea of reinstating I-747.

Oy.

I’ll come back later with a more substantive post on the issues involved, but I just want to take a moment here to discuss the politics. I have been told by more than one legislator that there is a real concern that failing to reinstate I-747 would create the opportunity for Eyman to come back with an even more damaging initiative, thus reinvigorating his flagging career, and I just have to respectfully say that this is the most heads-up-your-ass, mind-numbingly backwards analysis that I have ever heard in my life.

If you are desperate to breathe new life into Eyman, go ahead and prove to the world that you fear him, by reinstating I-747. He’ll claim credit for your boneheaded, reactionary blunder, and the Capitol press corps will give it to him, because… well… he’ll deserve it. Hell… why not just abdicate your responsibilities entirely, boot Frank, and elect Tim as Speaker?

Or, of course, you could calmly explore the policy alternatives, impose a more reasonable cap of say, inflation-plus-population with a 4-percent max, and then address the growing regressivity burden by creatively passing a property tax homestead exemption or an income-sensitive circuit breaker.

And you know how Tim will respond? He’ll send out a couple of angry emails to a list whose most avid readers include a handful of email-weary journalists and some anti-Tim activists like me. Maybe Dave Ammons will quote him in an AP story. And that’s about it.

You see, in case you weren’t paying much attention, Eyman really hasn’t done much these past five years, his last tax-cutting initiative having passed way back in November of 2002. He has no organization to speak of, no grassroots, and apart from the deep pockets of Michael Dunmire, an anemic and ever-shrinking fund raising base that barely brings in enough cash to pay for mailing his many fund raising appeals.

The legislature has nothing to fear from Tim Eyman. He’s toothless. He’s a paper tiger.

No… I take that back. To call Tim Eyman a paper tiger would be to grossly overestimate his chance of delivering a political paper-cut. With his dwindling support and our shifting political climate, Tim is at most a toilet paper tiger… the soft, 3-ply, fluffy kind my grandmother buys, not that coarse, off-brand variety you find in the Capitol restrooms. Provoke Tim, and at most he might leave behind a political dingleberry or two. But come back with a killer initiative? Not likely.

So my advice to the House caucus is please… take your time and carefully evaluate all the implications of reinstating I-747 — the stupid political implications as well as the stupid policy ones. And please remember that Tim Eyman is a toilet paper tiger, so the last thing you want to do is feed him. No, you just want to wad him up, wipe your ass with him, and flush him down the toilet.

The state House Finance Committee is considering two bills this week, and committee members need to hear from you immediately.

The first is HB 1827, a bill requiring a “tax expenditure report” to be part of the biennial budget process. What does this mean? Very simply it requires an accounting of all tax exemptions, credits, loopholes etc., so that legislators (and voters) can quantify what they are costing the state in lost revenues. Hard to argue with that… unless of course, you simply don’t want the public to know how much corporate tax breaks are costing us.

The second bill — and this one really gets my goat — is HB 2117, which would codify the one percent annual limit on increases in property tax revenues, that was recently tossed out along with Tim Eyman’s I-747. Let’s be clear… re-imposing this 1 percent cap would not only be incredibly harmful to local communities — particularly those in slow-growing, rural regions of the state — it would be downright cowardly and idiotic.

There may be a cap rate that makes sense, but one-percent is nonsensical and vindictive — it can’t even keep up with inflation, let alone growth in population or growth in demand for public services. All across the state local taxing districts are on the verge of insolvency, and face a potential collapse in essential public services (police, fire, EMS) unless something changes, and quick. I-747’s court defeat is an opportunity to reexamine the issue and create a reasonable cap, while targeting some real property tax relief to those who need it most. (Hmm… a Property Tax Homestead Exemption comes to mind.) But to simply regurgitate Tim’s bullshit would be a total abdication of legislative responsibility.

So let your representatives know that you want them to vote YES on HB 1827 and an emphatic NO on HB 2117. The Washington Tax Fairness Coalition has made it easier for you; just scroll to the bottom of this page and submit the form.

And do it now.

When Gov. Chris Gregoire unveiled her proposed two-year state budget a couple weeks back, the Seattle Times editorial board echoed the criticism of state Republicans, calling it “too high” and “unsustainable.” Oh, don’t get them wrong — the Times liked most of the spending priorities in Gov. Gregoire’s new budget — they just don’t want to pay for them:

Much of this has our support. But a 12.2-percent increase in spending compared with a 7.7 percent expected growth in revenues is too much. It is unsustainable on its face.

My immediate response was to point out that the projected budget shortfall was not due to out out-of-control spending but rather an antiquated tax system that is not only the most regressive in the nation, but is structurally incapable of producing revenue growth adequate to meet the demands of our state’s growing economy. I argued that Washington is not a high tax state, and that measured as a percentage of personal income, state and local taxes have steadily decreased since I moved here in 1992.

Well, now I have some current statistics to back me up, and it turns out that far from a dramatic expansion, state government under Gov. Gregoire’s proposed budget is actually shrinking as percentage of the state economy.

A summary analysis by the Washington State Budget & Policy Center describes Gov. Gregoire’s budget as “a modest step towards the kind of state Washingtonians want to live in,” and clearly shows that general fund spending under Gregoire is merely following the same trend established during the 1990s.

The Times would have you believe that it is Gov. Gregoire’s proposed 12.2-percent spending increase that is the anomaly, but in fact it was actually the slower spending growth during the national recession and tepid recovery that fell below historical growth levels. Gov. Gregoire’s budget merely returns the state to the established trend.

Indeed, as a share of the total state economy, Gov. Gregoire’s budget actually represents a reduced investment — a smaller share of state resources than any of the six budgets that directly precede it.

Anti-government/anti-tax critics can spout all the want about rising spending and per-capita tax increases, but those numbers are entirely meaningless when taken out of context… as they usually are. Read the academic literature and you will find that the most common metric used in comparative studies of government spending, and for analyzing the relative growth of both expenditures and revenues, is spending/taxation as a percentage of personal income.

The reason is twofold. First, the economic metric that most closely tracks long term growth in demand for government services is growth in total personal income. That is because many of the services provided by the government are commodities, and as personal income increases, so does consumption. As our state grows wealthier, demand for government services increases faster than population plus inflation.

The other reason to focus on personal income is that it is the only metric that tracks individual taxpayers’ ability to pay. The state invests in things like transportation and education and law enforcement — investments that provide the infrastructure necessary for our economy to grow and for all our citizens to prosper. A spending increase, even when accompanied by an increase in marginal tax rates, does not increase the burden on individual taxpayers if it results in a corresponding increase in personal income.

There is a legitimate debate to be had over the proper size and scope of government, and the priority in which we make public investments. But it is fundamentally dishonest to enter this debate by reinforcing the common misconception that our state government is growing, when by the most meaningful measure — the government’s total share of our state’s economic resources — even Gov. Gregoire’s proposed 12.2 percent increase represents a decline from historic trends.

So let’s have an honest debate.

Washington state’s minimum wage went up to $7.93 yesterday — an automatic cost-of-living adjustment — $2.78 higher than the federally mandated minimum wage of $5.15/hour paid just across the Idaho border. And according to an AP story in today’s Seattle Times, that’s great for minimum wage workers like James Randall, a University of Idaho student who lives in Moscow but delivers pizza 30 hours a week in Pullman.

“It’s kinda hard to make ends meet,” Randall said. “I’m just glad the state of Washington has tied the minimum [wage] to inflation. That way it’s advantageous to everyone.”

But of course, this article was written by a professional journalist, and thus there must be two sides (and usually only two sides) to every story. If our state’s higher minimum wage is good for workers on both sides of the border, then it must be bad for businesses here in Washington, right?

Yeah, well, so one Pullman business owner “thinks” while another supposes that it will “catch up to me eventually,” and that’s enough for the AP to spin the other side of the story. Of course there are tons of academic and government reports studying the economic impact of minimum wage hikes here and elsewhere, but why bother with hard facts and numbers when one can report anecdotal suppositions to back up your thesis?

Hmm. Well if this whole debate amounts to little more than a thought experiment, how about this angle: if a higher minimum wage is bad for Pullman businesses because it squeezes profits and forces prices higher, what kind of impact does it have on Idaho businesses who can’t attract and retain qualified employees like Randall while paying them only two-thirds the wage available just across the border? Workers are just as mobile as customers after all, so you think maybe WA’s minimum wage law is forcing wages up in Idaho towns all along the border? So wouldn’t that relieve some of the economic pressure on businesses in WA border towns?

Of course, I could do a little research to find some studies that back up my thesis, but I’m striving for journalistic professionalism here, so I wouldn’t want to stray from pure conjecture and supposition.

In fact, there is pressure on Idaho to raise its minimum wage and tie future increases to inflation, and just such a bill made some progress in the Idaho legislature last session.

Idaho’s minimum wage has been at the federal level of $5.15 an hour for about 10 years. A state bill to increase the wage to $6.15 an hour — and mandate yearly increases tied to inflation, like in Washington — died in an Idaho House committee this spring because some lawmakers feared it would lead to higher prices, increase unemployment rates and reduce incentives for low-paid workers to improve themselves.

That’s right, because we all know that, um… it’s not the employers who choose to pay a sub-subsistence wage that are at the root of the problem, but rather the lazy workers who choose to take these low-paid jobs. I mean, if we pay people like Randall a living wage, he’ll never have the incentive to improve himself. He’ll just drop out of college and deliver pizza for the rest of his life.

Yeah. Right.

I’m filling in this week for Dave Ross and Ron Reagan on Newsradio 710-KIRO from 9AM to 1PM. Here’s a peek at today’s line-up:

Hour 1: The Sonics want a new arena and NASCAR wants a new track… and both want hundreds of millions of dollars in taxpayer subsidy. Are public funded arenas a good economic investment, and can elected officials really justify financing an arena the voters have rejected?

“Pro sports stadiums don’t bolster local economies”

Hour 2: As per-student state education funding continues to lag behind inflation, schools are increasingly relying on PTA’s to make up the difference… leaving schools in poor neighborhoods at a loss for cash. Is this really a reasonable way to fund public schools?

Hour 3: A proposed compact with the Spokane tribe could spark a massive expansion of gambling in WA state, but does nothing to address our growing epidemic of problem gambling. Jennifer McCausland of the Teen Gambling Prevention Project joins me.

Hour 4: TBA

Tune in (or listen to the live stream) and give me a call: 1-877-710-KIRO (5476).

The Seattle Times thinks that Gov. Chris Gregoire’s budget is too high because it leaves the state with projected budget deficits out into the future.

Well, yeah… but even a budget that merely keeps pace with growth in demand for public services (which roughly tracks growth in personal income) would result in projected budget deficits out into the future. In fact, even if we ratchet government down and only try to have spending keep pace with population growth plus inflation, we’ll still end up with budget deficits projected indefinitely out into the future.

That is because we have an inadequate and unfair tax structure that simply cannot keep pace with our economy, resulting in a structural budget deficit as far as the eye can see.

For too long the state has dealt with this structural deficit by delaying investment in critical infrastructure. The result is a multi-billion dollar backlog in transportation maintenance and construction, and a higher education system that’s fails to accommodate all our state’s college bound students… and at an ever increasing tuition cost. Spending per K-12 student is amongst the lowest in the nation, and Spokane and Seattle area teacher salaries adjusted for local cost of living are near the bottom of the 100 largest metropolitan areas nationwide.

There is a popular fiction — which the Times editorial board fails to refute — that Washington is a high tax state. It is not. In fact, it’s rather middling. And average state and local taxes as a percentage of personal income have dropped steadily since I moved here in 1992. I pay no state income tax, and while my property taxes have more than doubled since I purchased my home in 1997, they are less than half that of a similar house in the Philadelphia suburb in which I was raised.

A tax structure that heavily relies on taxing the sale of goods simply cannot sustain adequate revenue growth in our 21st Century service economy. It has also created the most regressive state and local tax structure in the nation.

If you earn less than $20,000 a year you live in the highest taxed state in the union. If you earn over $200,000 a year you live in one of the lowest. Unless and until we reform our tax structure so as to tax all families more fairly, we will never adequately address our state’s long term structural budget deficit. And we’ll never have a fair and adequate tax structure until we implement an income tax.