Recent Stories with tag deficit

A joyful "Gum Wall" courtesy of SunBreak Flickr pool member lwestcoat

Governor Gregoire has come up with a few ways to raise an easy $605 million: sin taxes. The Olympian says she'd put "new levies on toxic materials that include refined oil, and on bottled-water, carbonated beverages, cigarettes, candy, and gum."

I suppose the tax on toxics like oil qualifies as a sin tax. (We're getting very moral about the environment these days.) In any event, it brings in the most money, about $215 million, mostly from Washington refineries. Putting a sales tax on candy and gum, the Seattle Times says, brings in just $28 million.

You'd think $600 million added up to real money, but the state has a $2.8 billion deficit forecast for 2010 and 2011. Gov. Gregoire is hoping to talk the federal government out of over $400 million, but that still leaves quite a shortfall.

"Here's the way I see it," said our legal correspondent over lunch, "the City Council sends a representative to the state legislature and asks that municipalities be given the choice to opt out of state enforcement." We were talking about legalizing marijuana, but not from any personal interest. (I prefer a smoky Scotch.) We were looking for "new revenue" responses to the state's fiscal crisis.

Raising property taxes is a nonstarter. Upping sales taxes is not only infeasible politically, but leaves the state dangerously dependent on consumer confidence. No one but budget policy wonks is still pushing an income tax. But there is a huge hole in the state budget that is cutting into essential services, and the future only looks to bring reassessed, post-bubble property values.

In Olympia, the political will for decriminalization is almost there--in Seattle, it's already been elected. Mayor-elect Mike McGinn told KUOW recently that "We recognize that, like alcohol, it's something that should be regulated not treated as a criminal activity and I think that's where the citizens of Seattle want us to go." ("Legalize marijuana and tax it" is the number two entry on the Ideas for Seattle website.)

On December 14, the Seattle City Council unanimously passed a resolution in support of SB 5615 and HB 1177, bills decriminalizing possession of small amounts of marijuana, which were introduced by Sen. Jeanne Kohl-Welles and Rep. Dave Upthegrove.

"We support reclassifying possession of small amounts of marijuana from a misdemeanor to a civil infraction," is the Council's word on the matter (video), putting possession in the realm of jaywalking in terms of public safety priorities. Under Kohl-Welles bill, possession would draw a fine of $100, but no jail time.

Wrote the senator in an op-ed: "Our state Office of Financial Management reported annual savings of $16 million and $1 million in new revenue if SB 5615 passes. Of that $1 million, $590,000 would be earmarked for the Washington State Criminal Justice Treatment Account to increase support of our underfunded drug treatment and prevention services."

State Rep. Mary Lou Dickerson takes it even further, reports Publicola:

Dickerson wants Washington farmers to grow pot and sell it in our state’s liquor stores. The revenue, she says, will go to pay for drug and alcohol treatment programs (and to cover the WSLCB’s costs for adding the new product to its shelves.) She estimates the revenues from pot sales would be similar to booze sale revenues, which are currently at $330 million.

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As the AP reported yesterday, the state is predicting "weak revenue" for the next year and a half (weak to the tune of $760 million), and so the deficit for that time period has grown to $2.6 billion. That said, Publicola is using $11.6 billion--the cumulative deficit amount for the state's budget from 2009 through 2011 so far--as a way of reminding everyone of how far we are from where budget forecasts started. (It's the same story as at the county and city budget level, writ large.)

With the series of cuts necessary to retire last year's $9-billion deficit, the state sliced past fat and into the meat of its social services. Much of the budget is mandatory, "protected" funding, so the legislature can only cut about one-third of the $33-billion biennial budget total. To make up the new $2.6 billion, Washington Budget & Policy Center says, the state would need to cut that one-third by about one-third.

With unemployment across the state at 9.3 percent (it's actually higher in Seattle), and projected to rise, not many people will greet the idea of higher taxes with delight. "The economic downturn has forced more than 60 percent of Puget Sound area residents to delay their retirement plans," says the PSBJ. If slumping consumer spending is driving most of the state's deficit, look for that to continue.

But taxes are what Democratic leadership is suggesting, though since they are looking for options that include their reelection, one likely suspect is sin taxes. Actually, higher liquor taxes prices just went into effect last August, when the Liquor Control Board raised its markup to just over 50 percent.

What we have here is both a failure of leadership and imagination. State and local government spending is hugely important to the economy--one study says that one lost government dollar equates to $1.41 in lost economic activity. Simply put, slashing government spending makes a recession worse, at precisely the time when people need government programs most.

Yet closing "tax loopholes" and soaking the remnants of our middle class isn't going to get the job done, either. I am a long way from knowing what the solution to this particular dilemma might be, but one thing is clear: The current plan--implementing destabilizing cuts in the hopes that the economy is "just taking a break" and will be back soon--is the option of people who have government jobs. And if things worsen, plenty of people now in Olympia may not have them.