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Saturday, April 9, 2011

State Government Overspending Report

Going into debt is bad news. Giving greedy Democrats the state's credit card is a very bad idea.

State revenue is expected to be $778 million less for the combined 2009-11 and 2011-13 budgets: Download the official projection here.

$79.8 million less for the 2009-11 budget, creating a $229 million shortfall.

$698.4 million less for the 2011-13 budget, creating a $5.1 billion shortfall. (Spending is going way, way up.)

This means the 2011 Legislature must address a projected total shortfall of $5.1 billion. I say projected because that assumes a budget of $37 billion, or roughly a 15 percent increase. In the current economy we cannot expect to increase spending by 15 percent. The revenue forecast itself is 13.5 percent more than the previous biennium. At $32.5 billion, it is our highest revenue number ever.

That said, this will require major adjustments since many, many programs were added or expanded, and even more promises were made before the downturn. Like the rest of the economy, we are now having a hangover from our years of exuberance. I will give you a view of the budgets when they are presented in the next few weeks.

Closing Tax "Loopholes"
The majority party and a number of their supporters continue to push for additional revenues despite the projection they will exceed the expenditures in our current budget cycle. They are calling on the Legislature “close tax loopholes to balance the state budget.” What these special interest groups are actually talking about are “tax preferences.”

One of the largest tax preference "loopholes" is food. I don’t think many of us would want to close that so-called tax loophole. It is important we are clear about what we are talking about on this issue.

Each tax preference should be reviewed for effectiveness, because there are many that are beneficial. You may recall the tax incentives we passed in 2010 for aluminum companies. It allowed Alcoa to restart additional pot-lines at the Wenatchee Works plant. You may not recall this either. Its a sort of wonkish thing to know.


In November, the People voted down I 1082. Now we face the consequences of trusting government to do the right thing.

The Department of Labor and Industries (L&I) pays $1.84 in benefits for every $1.00 in premiums it collects, the highest “combined ratio” of any public or private workers’ comp insurer in the country.

According to L&I, these costs are not sustainable without annual double-digit premium increases on employers that pay into the state fund.

The 2008 Washington Pension System Review (Upjohn Institute) confirmed one reason for the highest number of long-term disability cases and pensions in the nation is the absence of a voluntary settlement option that exists in 44 other states.

Total benefits paid in Washington grew from $1.3 billion in 1998 to $2.2 billion in 2008. That’s an increase of 70.4 percent, compared to 34.2 percent growth for all states.


Merrily into debt we go. But Washington State is prohibited from accumulating debt*. So we are going to have a round of increased fees or taxation. But We the People forbid that without a 2/3rds majority in the Legislature. So the majority Party (along with some help from RINO Mike Armstrong) delegated "rate increases" to the various agencies which actually charge the rates.

The Puget Sound area will probably face ferry rate increases, other than the regular Summer increase. A toll will likely be imposed on routes in addition to the 520 bridge. Tolls will be added to use certain HOV lanes on some highways. (My cousin, who is an urban planner, refers to these as HIV lanes.)

The increases are probably illegal. I-1053 requires super-majority in the Legislature for revenue increase. But you can rely on the "Democratic" Party to suck around for your money to buy itself "friends." As long as politicians can act irresponsibly and get away with it, they will.


*Current debt may not exceed 9% of current spending. This was supposed to prevent uncontrolled spending of exactly the type we are seeing.

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