Washington’s budget sleight of hand continues

The sputtering economy spawned a 2009 legislative session accompanied by more legislative wailing and gnashing of teeth than a cave full of rabid hyenas fighting over a last meal.

Some legislators actually pulled the “people will die” card when it became clear that a general tax increase would not pass.

While certain political realities may have prevented a general tax hike, that did not stop legislators from enacting or raising targeted fees and backdoor taxes.

These forms of revenue boosting are covert and less likely to be noticed or to incite voter outrage.

Over the next two years, taxes and fees—on everything from horse racing licenses to plumbers to hard liquor—will increase by more than $500 million.

Politicians regard fees as more palatable than taxes. However, the line between a fee and a tax is razor thin, with fees lending themselves to all sorts of budget chicanery—perfectly legal, of course.

For example, this year the Legislature voted to double the tax on boxing, wrestling and martial arts events, depositing the money into a dedicated account instead of the general fund.

That act converted the “tax” into a “fee.”

This enabled the budget writers to avoid the two-thirds vote threshold required by Initiative 960 for tax increases.

Fee increases only require a simple majority.

But wait, there’s more.

The Legislature can take the proceeds from the newly-enacted “fee” out of the dedicated account and put it back into the general fund by authorizing a fund transfer in the budget.

Presto, a de facto tax increase is born, sans pesky super majority vote.

Legislators raided $252 million from such dedicated accounts this year to cover their proposed general fund spending.

More notable 2009 budget stunt work included a prominent role for the federal government in the form of the American Recovery and Reinvestment Act, the so-called “stimulus” bill passed by Congress in February.

Washington state’s newly minted budget is thatched together with more than $3 billion in one-time income from Uncle Sam.

In addition, legislators swiped nearly $800 million from the capital budget, $450 million from the state’s rainy day account, and half a billion from pensions — sure to yield compound pain for future taxpayers.

Altogether, the Legislature relied on nearly $5 billion in one-time funds and transfers to balance the 2007-09 and 2009-11 budgets.

Another dysfunctional budgeting technique employed this year — and most years — takes the form of a shell game of sorts, where legislation that might not have a chance of passing on its own is inserted into the budget and advanced quietly among hundreds of other provisos and appropriations.

Perhaps the most obvious example is the raiding of $29 million from the dedicated performance audit account, a 74 percent reduction in available funds.

Last year, the Legislature tried to amend the performance audit law by taking money from the dedicated performance audit account to reimburse audited school districts.

The effort failed.

This year, rather than give performance audit supporters another chance to stop their raid on the account, budget writers simply amended the voter-approved performance audit law within the budget itself, effectively sheltering their decision from opposition efforts.

Such a shell game can only be stopped by a governor’s veto pen—a risk budget writers were clearly willing to take.

Lawmakers wisely decided to forego a general tax increase during an economic recession — a move that will encourage economic recovery and help shelter their political careers from possible voter retribution.

Still, the two-year spending plan they approved contains more red flags than a U.S.S.R. May Day parade.

Upping fees, borrowing from other state funds and using one-time federal stimulus money to fund ongoing programs means systemic budgetary problems remain unsolved.

The Legislature missed a golden opportunity to find a solution to the state’s penchant for overspending and overpromising. Consequently, the budget crisis our state will inevitably face in two years will be much worse than what lawmakers “solved” this year.

Until the Legislature learns to control spending and create a truly balanced budget, taxpayers will continue to see accounting gimmicks, shell games and budget shenanigans.

’Tis the nature of the beast.

Brett Davis is a policy analyst with the Evergreen Freedom Foundation (EFF) in Olympia. Amber Gunn is Director of the EFF’s Economic Policy Center.

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