Monday, April 12, 2010

Debt and tax increases for what? Updated

Update 4/14: The legislature reduced the size of the "green schools" funding. What is so essential that our Legislature in desperation was forced, forced to raise many taxes and go farther into debt? - Tax increases that will increase the cost of business and cost jobs. First, the debt. This isn't just spending more than we are taking in, but choosing to go further into debt. You thought our Legislature had to balance the budget every year. I thought so too. But they didn't. HB 2561 will create $850 $500 million in new debt to pay for energy retrofits at schools in Washington. Given the past record of "green" projects like this for $850 $500 million in debt we can expect energy savings of maybe $200 million, maybe zero. Remember the track record of Seattle's new City Hall? Seattle P-I
Seattle's new City Hall was designed with the environment in mind, using the most energy-efficient technologies. ... It also uses 15 percent to 50 percent more electricity some months than the older, larger building it replaced, according to Seattle City Light utility bills. [Some months use about the same amount.]
So there goes $850 $500 million with the net benefit of bragging rights at conferences. And it's a debt burden on our future. What else? State employees pay about 11% of the cost of their health care. After this belt tightening they will be paying ... less than 12%. Many state employees get pay increases despite - or causing - the deficit that "required" raising taxes. The unions say those aren't pay increases, but step increases. They raise the employees pay. Isn't that an increase? [I haven't been able to verify if this is in the not-yet-final budget, though it was in every precedent.] Sound Politics 3/19/10 Priorities? Richard Davis asks why our Washington leaders are on auto pilot when so much has changed. They should be picking apart state programs to root out those that once made sense, but no longer do. So they can spend our limited funds on our current priorities. In Tacoma News Tribune:
... I’m thinking about lawmakers’ capacity to fool themselves about the state’s fiscal future. The inability to confront the new economic realities, of course, took the Legislature into extra innings, with most of the players picking flowers in the outfield. ... My impatience stems from this: The longest and deepest recession since World War II has yet to produce a fundamental reappraisal of the services state and local governments can realistically afford in the coming decade. Instead, the majority continues to treat the budget crisis as a spasm, a temporary contraction that will soon pass. Rather than reset, lawmakers have again bet on the come. Sen. Joe Zarelli, R-Ridgefield, recently released a report identifying $8 billion in future costs stemming from budget decisions made by the 2009 and 2010 legislatures. While suspending the Initiative 728 “class size” initiative, lawmakers promise to restore it with interest next year. Ditto the I-732 cost-of-living pay hikes for teachers. And their failure to adequately fund pension obligations increases costs in coming years. As they duck current obligations, they commit themselves to new spending in the future. Among them: more taxpayer support for state employee health care, expanded early learning programs, and increased state aid to schools with low property tax bases.
Davis concludes:
State government is doing too much and paying too much to do it. It can’t go on forever. So when will it stop?


Anonymous said...

Ron, good stuff. FYI, the legislature reduced the borrowing to $500 million from $850 million. Interestingly, despite reducing the funding by 40% they only cut the "jobs created" projection by 20 percent.

Also, the Seattle City Hall is the least of the problems with "green" buildings and energy retrofits. Our research of "green" schools found that in all but two school districts, the "green" schools use more energy than their non-green counterparts. You can read more here:

- Todd Myers, Washington Policy Center

Ron said...

Todd, Thanks. I remember the "green schools" situation as being pretty bad. I was going to search for the Washington experience. You provided it and it was yours.