Monday, November 23, 2009

What is Christine Gregoire doing?

Washington's current budget was "stimulated" by Obama's 2009 stimulus package. Its huge gap was plugged by a generous $3.3 billion in money from people in other states. So we were in a hole and got a one-time shot. The revenue projections used in that budget are being clobbered by reality. The expected revenue has dropped by $760 million since September. Still in the hole. So have we stopped digging? That is, spending. Christine Gregoire says it is her duty to balance the budget.
“I will produce a budget balanced to this revenue projection because I am required to by law,” Gregoire said. “We all know a budget reflects the values of our state. All options must be on the table to produce a budget that works.”
She is tempted to raise taxes. But raising taxes will slow our economy. Here are 32 economists commenting on the specific situation in our state this year.
“Leaving earnings in the hands of individuals and businesses is the best way to help grow the private sector, create jobs and lead to higher levels of consumption,” the letter states. “Increasing taxes at this time will shift necessary capital from the private sector to the public sector, thereby depriving private enterprise of the source of true economic growth and making Washington state even less competitive for new businesses and jobs.”
And newspapers around the state are calling for no tax increases. The Columbian in Vancouver. State law says she doesn't have to wait for the Legislature to meet in January. She can take action on her own, indeed, she must take action. State law prohibits a cash deficit from occurring by requiring the Governor to take action. Here is what RCW 43.88.110(7) says:
If at any time during the fiscal period the governor projects a cash deficit in a particular fund or account as defined by RCW 43.88.050, the governor shall make across-the-board reductions in allotments for that particular fund or account so as to prevent a cash deficit, unless the legislature has directed the liquidation of the cash deficit over one or more fiscal periods . . .
She can call a special session in December rather than late until January. After all, what do they always do when they meet in January? They wait for the next revenue forecast. But don't think she isn't doing anything. She is very active going to D.C. to beg for more money. Also NPR. Before June 30 the trips were in violation of, first, her own, then the legislature's, travel ban. HT to Jason Mercier at Washington Policy Center.

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