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Friday, January 30, 2009

We’ve offered one approach to state budget decision-making in our Progress Index report - identifying a long-term vision for the state and then using high-quality research to determine how to get there. But of course there are other approaches.

Richard Davis’ thoughtful column from Wednesday’s News-Tribune and The Herald presents two alternatives - "Priorities of Government" and the "Washington Monument Strategy" - and argues for the first.

He extols the "Priorities of Government" approach. This is a process developed by the Locke Administration in order to help them solve the last big budget crisis. A key aspect of this process is that it starts the budget-making process with the limitation that nothing can be changed about revenue. Davis argues for this approach and the Governor agrees. Her budget release states:
"In constructing the budget for 2009–11, Governor Gregoire began with one basic premise: Now is not the time to raise taxes on our residents and businesses."
As a "basic premise," this places a false limitation on our priority-setting process. A more productive budgeting process during these tough times would allow revenue increases and tax exemptions to be considered alongside spending cuts so that we can decide on our priorities from among a full range of options.

Unfortunately, the Legislature is bound from considering the full range of options because of a series of limitations put on them by ballot initiatives. In order for the Legislature to raise revenue, they are, practically speaking, required to put it on the ballot.

I agree with Davis; budgeting on the ballot is not ideal. I share his dislike of what he calls the "Washington Monument Strategy," (referring to the National Park Service using the threat of closing the monument to stave off budget cuts). It’s the budget equivalent of "If you don’t buy this magazine, we’ll kill this dog." It’s not a strategy that moves us toward a long-term vision.

But while Davis makes a well-reasoned argument against the Washington Monument Strategy in terms of spending, he makes a blanket statement about business taxes: "Any increase in the cost of doing business delays the recovery and places jobs and investment at risk." Hmmm. "If you raise this tax, we’ll shoot this recovery?"

The fact is that a budget that cuts billions of dollars from public investment does pose threats to the progress we have been making as a state on education, health, community vitality, and economic security. And while tax increases are not ideal, economic theory and experience shows that they are less harmful than deep cuts in state spending.

It’s time for a reasoned public discussion about the state budget that allows all options to be on the table.

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