Recent Stories with tag revenue

Several months ago, writes the Seattle Chamber's Christine Donegan, Seattle employers issued a joint appeal to Mayor McGinn and City Council to avoid raising taxes to balance the 2010 and 2011 budgets. As a follow up, twenty-two business organizations have issued a letter to the mayor and council with specific suggestions for balancing the budget without negatively impacting employers or essential city services.

Mayor Mike McGinn, introducing The Maldives at Bumbershoot

Dear Mayor McGinn,

In April, over two dozen representatives of Seattle employers wrote to urge you to refrain from increasing existing taxes and proposing new taxes to balance the City’s 2010 and 2011 budgets. We believe that burdening employers with additional taxes will slow economic recovery in Seattle. As a follow up to that letter, we write to offer specific suggestions for balancing the City’s 2011 budget that will preserve jobs and critical City services.

As you are well aware, the City of Seattle faces a projected $67 million shortfall between planned expenditures and anticipated revenues in 2011, with $11 million less in revenues than previously predicted. However, the City is projected to collect more General Fund revenue in 2010 than was collected in 2009 and this trend is anticipated to continue through 2012.

Between the year 2001 and 2011, General Fund revenues will have grown by 45 percent, 18 percent when adjusting for inflation. The City’s budget shortfall is not driven by decreasing revenues, but rather as a result of expenses that are increasing at a rate greater than revenues and a rate greater than Seattle’s Consumer Price Index (CPI).... (more)

Here's Jim McDermott, of "the poker-faced 7th," explaining his position on CNBC, who ask him if his pragmatic defense of online gambling (everyone's doing it, so let's legalize it so we can at least regulate and tax it) extends to marijuana legalization. McDermott says he's on record as being in favor of medical marijuana, but that's as far as he goes.

The Seattle Times has the full story: In brief, illegal online gambling is supposed to amount to $5.8 billion annually, a figure that would no doubt increase if it weren't illegal. With no effective prohibitive enforcement on the horizon--and gambling legal in all kinds of other forms--Jim McDermott and Barney Frank are pushing for legalization.

The tax revenue--McDermott estimates $42 billion over ten years--would pay for "improved foster care and early-childhood education. McDermott would earmark a full 25 percent of revenue for foster child care, in fact.

The legalization move is opposed most vocally by Virginia's Bob Goodlatte, whom the Times says believes "legalizing Internet gambling would pave a path to addiction and financial ruin." The Seattle Weekly points out that Goodlatte's strict stance would also lead him to ban church bingo nights. In any event, McDermott's bill allows states to opt out of legalization if they'd like. So Goodlatte would be free to keep Virginia's foster care system safe from gambling profits.

The rusting husk of Gasworks Park, a fitting metaphor for our elected government. Photo by our Flickr pool contributor feekner.

Late last month, I wrote about Oregon's special vote for Measures 66 and 67, two bills passed by the legislature and signed by the governor that were sent to the voters as a referendum, which raised taxes to help close a budget shortfall. One raised the minimum corporate tax for the first time since 1931, while the other was a modest increase in the income tax for high-earners (Oregon has an income tax but no sales tax). Both measures passed with substantial margins, with roughly 54 percent in favor to 46 percent opposed.

The vote was closely watched nationally because Oregon, like Washington, is a state known for its anti-tax fervor. Oregon had its own Tim Eyman, has caps on property tax increases, and has repeatedly rejected new tax increases. But faced with dramatic cuts to crucial services, Oregon voters banded together with their elected representatives and passed two very simple measures that kept the state working.

Our fearless leaders in Olympia, on the other hand, have done virtually nothing. While Gregoire has stated she wants to "buy back" some of the slash-and-burn budget cuts she originally proposed (as a matter of state law, which requires her to present a balanced budget--from the beginning, she made clear she did not support that budget), her alternate budget still relies extensively on cuts, with a large portion of new revenue expected from federal stimulus money. The House has introduced a bill (HB 3176) that would generate $210 million in new tax revenues by mostly closing loopholes, but that's a pittance compared to the overall $2.6 billion shortfall over the biennium.... (more)

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.