All budget cuts are not equal
Recently I asked the Office of Financial Management to crunch the numbers of how taxes and expenditures flow in our state: At a high level who pays taxes and who receives the benefits. Asking for the data–and prodding for a robust public dialogue about the policy and political implications–unleashed thoughtful but pointed criticism from no less than the Seattle Times as our state’s paper of record. It’s hard not to sense, however, that many of those who consider the data to be provocative doth protest too much.
First, the facts. Six counties contribute a whopping 75% of the state’s taxes and eight are ‘net contributors’ of taxes while 31 are ‘net recipient.’ In a overarching generalization with exceptions, the political disposition of those 31 ‘net recipient’ counties seem to lean Republican while the six ‘net contributor’ counties might be seen to lean Democratic. The 31 are mostly rural while the six are more populated.
This isn’t the real issue or even the reason I am promoting a robust public dialogue. My real goal is simple: As we make substantial reductions in state spending, we must break free of the stale, rigid political cliches and recognize that we cannot cut our way out of this Great Recession.
The only long term way out–the only long term pathway–is private sector economic growth.
And in order to rejuvenate our economy, we must look to aggressively reinvest in the strongest part of the economic engine itself. While it clearly makes the institutional infrastructure of Olympia uncomfortable, the literal truth is that Seattle and King County are the economic fuel of Washington State.
Yes, we are “One Washington.” The friendly and vibrant tension between East and West, Democrat and Republican, rural and urban is as old as our nation itself. It’s part of our fabric and ensures a robust public dialogue about issues and ideas. Our diversity makes us stronger.
Still, during this extraordinary time when ‘everything is on the table,’ we must ask why it is continually acceptable for those who are stridently opposed to government spending to receive radically more than they pay in taxes without consequence or shame? All the while, those who pay more into state coffers than they receive are openly criticized as irresponsible big spenders.
The irony is not lost on anyone but when it’s actually pointed out with cold hard data, the gentle political dialogue of state government shifts uncomfortably in its chair.
Why is it acceptable for some counties, for example, to receive $2 or more for every dollar they send to state government year in and year out and yet vote against every tax imaginable without grasping the implications? I may be accused of proposing to “punish” counties for voting against taxes, but surely those counties should feel the honest, true and legitimate externalities of implications for their policy positions. That is not “punishment,” it is courageous honesty that is outside of the comfort zone of our state’s current political discourse.
By accepting the status quo and reducing spending across the board or close to it–without regard to the actual drivers of economic growth–we are shielding net recipient counties from feeling the true, objective, honest implications of spending reductions that they themselves voted to implement. This allows legislators from those areas to have the hypocritical luxury of voting against all taxes regardless of merit, forcefully criticizing those who disagree as irresponsible big spenders, all the while cashing extremely generous subsidy checks in education, health care, housing supports, transportation and every other category of spending.
And by spending so much money to mask the real effects of these reductions, we are hurting our ability for One Washington to pull ourselves out of this crisis by hurting the economic engine of the innovation economy–the fuel of our economy–more than we should.
If we slash the programs, systems and higher educational infrastructure that disproportionately drives our economic growth we will wallow in the Great Recession. If we bend politically to first protect the disproportionately high subsidy programs and funding for areas that do not generate strong economic activity, we will wallow in the Great Recession. If we don’t invest in our areas of strong economic forces–trade, global health, higher education, biotech, biomedicine, software, aerospace and so much more–we will wallow in the Great Recession.
And so in making reductions in state spending, we must have the courageous honesty to acknowledge that no non-political enterprise, business, non profit, no other large entity would make reductions based solely upon the location or political influence of programs alone. We must make budget reductions wisely and reinvest scarce tax dollars in those areas of strong economic activity that will regenerate economic strength. We must feed our areas of growth to regenerate our collective economic engine or we will fail.
When Ford Motor Company was rebuilding from near-bankruptcy, did they invest in their low-margin brands? Of course not. While counties and people are not cars, and the soul of a just and moral society requires more than cut-throat business decisions, we must also recognize that it is decidedly un-conservative and unwise business practices to redirect investment dollars into those areas that do not produce the most economic activity.
For example, today in Olympia one of the fiercest political battles is whether the make reductions in levy equalization, an education subsidy program for property poor districts that now cover 231 of 296 school districts. It is the ultimate redistribution of wealth and is about equity, not efficiency. And I support it. But I do not support treating levy equalization as a holier than thou, untouchable monument to political correctness. It is a rural subsidy program that attempts to recognize that property poor districts are at a distinct disadvantage in funding public education. No more and no less. But why do we allow the recipients to make the ‘equity’ argument in levy equalization while they simultaneously propose to eliminate Basic Health Care, Disability Lifeline and every other ‘equity’ program the state has created? Equity for me but not for thee.
We continue tax exemptions for zinc mines in Pend Oreille County and coal mines in Lewis County while we devastate the University of Washington’s economic engine that generates hundreds of times the economic return on investment for taxpayers. I’m not surprised at the policy given the nature of our political dynamics, but I also am no longer willing to be be party to the lack of honesty or transparency with the public about it.
Last year on the House floor I counted numerous times when various legislators from net recipient counties pointedly and aggressively criticized the operations, transportation and capital budgets for projects “that can be seen from the Space Needle.” I can think of few instances when a legislator from an urban district took to the same floor to suggest or even imply that, in truth, the dollars flow the other way.
I am, of course, most of all disturbed by what I describe as the moral inconsistency of those who claim we must “reduce the footprint” of state government but who fight relentlessly for programs in their own districts regardless of financial return on investment. It is the natural disposition of a citizen legislature. Yet for me as a representative of a ‘net contributor’ district, city and county, I hope I am entitled to at least express genuine frustration at the lack of objectivity in our spending reductions.
To be crystal clear: I am not arguing that the 36th District, Seattle or King County–or other urban areas– should be shielded from the negative effects of necessary spending reductions because we are net contributors of taxes in every category of state revenues. But I am arguing that we should not experience reductions that are completely divorced from the proven, uncomfortable (for many) reality that Seattle and King County are the economic engines of the State of Washington.
Olympia denies it everyday, but without a healthy economic infrastructure and educated workforce for innovation in King County, Snohomish County, Pierce County and other economic centers, our state’s economy would literally implode.
There are those who may take one sentence from this broad-based post and claim that I’m a big city elitist arguing for money for my own special projects and interests, but that misses the spirit of honesty I’m trying to bring to a very difficult dialogue about how our taxes and spending decisions are made. We need thought leadership that brings our economy forward during these difficult times. We need a willingness to raise tough issues and question the institutional grip of the status quo that gets uncomfortable too easily. We need a willingness to risk being wrong. I can’t do this job as a part-time citizen legislator, and take so much time away from my family, if I’m unwilling to take that risk.
We are so much more than what we’ve become.
Your partner in service,