Will the legislature raise new revenue?

By Jeff Johnson

As 2011 draws to a close, the effects of what is a really a second “Great Depression” continue to ravage the Washington State economy, our public budgets, our critical social services, and our safety net. Unfortunately the legislature was able to do little in December to help.

On December 14, after sending the Governor an administrative savings bill that reduces the $2 billion budget deficit by 24 percent, the legislature adjourned. While many expected more from the Special Session because of pressure from advocacy groups and the occupy movement both in Olympia and in legislative districts, no new revenues were raised and no jobs bills were passed. The real showdown over jobs, revenue and services will confront us in January.

It came as no surprise that the legislature was unable to solve a $2 billion revenue problem in an end-of-the-year Special Session. In November, Governor Gregoire put out a set of austerity options to cut $2 billion from the budget. Then just before the start of the Special Session she announced a willingness to support a temporary one-half cent sales tax increase. But no path to resolution was worked out between the Governor’s office and the House and Senate. And apparently there was no magic wand either.

The legislature can now do three things to increase revenue and create jobs. The question remains: What are they willing to take on, and how hard are they willing to fight?

First, a joint Senate and House proposal for an infrastructure bonding proposal could be passed with a 60% vote in the legislature. The House and the Senate differ in magnitude of the proposed bond offering and types of projects it would fund. But the common goal is to dedicate a portion of a capital revenue stream from which to bond in order to build or repair needed projects now to help lift us out of this depressed economy.

With $2 billion in infrastructure bonding we could create 15,000 construction jobs in storm water clean-up projects, energy retrofits, repair of bridges and state park infrastructures, etc.; create another 15,000 induced jobs in other sectors; and generate $30 million in sales taxes for our operating budget.

Thirty thousand jobs would lower our overall unemployment by more than 10 percent and our unemployment rate by 1%. Now this is something to write home about. At this writing the House is considering about $ 1.8 billion and the Senate somewhere between $850 million and $1 billion in infrastructure bonds. We encourage both houses to consider $2 billion.

Second, the legislature can securitize a small portion of operating funds through a simple majority vote (though there is still a legal question over whether it requires a 50% or 60% vote) allowing the legislature to borrow money from the future to pay for healthcare services and jobs now. This would be bridge financing until the federal Affordable Care Act and associated funding takes effect in 2014.

Finally, the legislature needs to raise new revenue. During the past three years $15 billion in budget deficits have been closed through $10 billion in service cuts and jobs cuts and approximately $5 billion in federal stimulus money. Now it’s time to raise revenue. Although the legislature could raise revenue by creating new taxes, raising existing tax rates, or by closing tax loopholes, it is unlikely that they will be able to meet the supermajority requirement imposed by I-1053. With supermajorities, politics and ideology trump good policies.

So the question is: Will the legislature put a comprehensive revenue package out to the public for a spring vote? A comprehensive package could close tax loopholes benefiting banks and corporations that have not paid their fair share over the years, create a wealth tax on our state’s highest income residents, create a state capital gains tax, and fund a working families tax rebate, returning a large portion of sales tax payments to workers in low-income employment. Any of these ways of raising or adjusting revenue would address both the grievances and the needs of the 99%.

The Governor and many senators are talking about raising the sales tax by ½ cent over the next three years. This is the simplest and quickest way to raise revenue. But since it is primarily the working class that will have to foot the bill, will the people vote for it?

Finally we need to watch out for any trades the Governor and legislative leadership are willing to make to send a revenue package of any sort to the people for a vote. Demonizing state employees, privatizing government functions, and attacking collective bargaining rights are all shortsighted and unacceptable.

The 2012 legislative session and political season will test the mettle of the 99%.
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Jeff Johnson is president of the Washington State Labor Council, AFL-CIO, and a member of PSARA.