In case you haven’t heard – the state has a budget problem

In this week’s e-newsletter we are talking about the challenges and options for the 2015-2017 state budget. After you read through our thoughts, we would welcome your comments on how to create a balanced budget.

Every two years, the Legislature writes the state budget. The budget pays for day-to-day expenses like teacher salaries, health care for low-income families, and state parks. While Washington is slowly recovering from the recession, revenue is not keeping up with the demand for state services. And while state revenues are up from last year, those dollars will be used just to continue our current operations, without improving anything.

Just continuing what we’ve done before is not good enough. Some of the new expenses that the legislature needs to fund include:

Investing at least $1.3 billion more in K-12 education to meet our legal and moral obligations to give all students the opportunity to succeed. And we’ll need an additional $2 billion to fund the smaller class sizes approved by voters with I-1351. Over 120,000 teachers and state employees have had their paychecks frozen for six years. Good teachers are leaving for other jobs and it’s past time to restore their cost-of-living adjustments. We need significant improvements to our mental health and foster care systems, which will cost at least $38 million. Recovery efforts from the Oso landslide and the wildfires that swept our state last summer will cost about $87 million.

As you can see, we have a pretty big budget gap that we’ll need to fill—either with spending cuts or increased revenue. We’ve already cut $12 billion in state spending since the beginning of the 2008 recession—mostly to social programs and employee salaries. We need to increase revenue or we’ll face more devastating cuts.

Some of the proposals for revenue being considered this year include:

Instituting a capital gains tax on less than 5% of Washingtonians. House Bill 1484 would bring Washington in line with the 41 other states that tax investment earnings. This proposal would apply to very high-income earners and would bring in an estimated $798 million. Closing some of the 650 tax exemptions that are currently on the books such as a tax loophole which allows companies to avoid paying taxes on fuel which they produce and burn at the same facility.  If this exemption was removed we would earn an additional $31.7 million a year. Charging Washington’s 130 largest polluters for their carbon pollution. House Bill 1314 will put a limit on the total amount of carbon emissions we put in to the atmosphere and raise close to $1 billion in much needed revenue.

It’s going to take a lot of work to find agreement on new revenue this session, but the stakes are high.  If we don’t find new sources of revenue, we’ll have to make drastic spending cuts to balance the budget, including:

Cuts to higher education resulting in higher tuition and fewer dollars for student aid. Reducing opportunities for students to go to college will further strain lower and middle income families and exacerbate inequality. Eliminating health care, housing, and food services for families in poverty. Not only is it immoral to force struggling families further into poverty, it is also illogical to pour money into schools that can’t succeed at educating sick, hungry or homeless kids. Making further cuts to state parks, closing many of our cherished natural spaces and losing the economic benefits that come with having a robust outdoor recreation sector.

Obviously we don’t want to cut any of these vital programs. Our economy is improving and now is the time to invest in our future. We must increase revenue to balance the budget without sacrificing the programs hard-working families rely on.

When you take the class size initiative, McCleary related expenses, and all of the other spending items into account, we clearly don’t have enough revenue to pay for it all. In the end, we’re probably looking at some level of spending cuts to go along with some new revenue in order to balance our state budget.

Send us your thoughts! What would you cut from state government? What revenue options should we consider?