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December, 9th 2009

Surprise! Chris Gregoire to seek a big, fat tax hike!

– Liz Mair

Here's a shocking piece of news for you, out of the Evergreen State.  Gov. Chris Gregoire, she of the magical 33% approval rating, appears dead set on sending the same plummeting through the floor, to less-popular-than-Dick-Cheney type levels.  How so, you ask?

Well, today, she's basically announced that she's going to be seeking... wait for it... a big, fat tax hike!

See, Washington under Gregoire's leadership has gone from a pretty sound fiscal situation under Gary Locke (you know, a real centrist Democrat on fiscal issues) to having a big $2.6 billion shorfall under Gregoire.  Now, to be fair, this isn't all her fault-- whenever the economy slides, revenues are going to slide, too.  The problem is that Gregoire, previously in her time as Governor, decided to go on a spending spree, throwing caution to the wind and, well, look what happened.  Yup.  She's got a big hole to fill, and it looks like she's going to try to get ahold of more money than taxpayers can't really afford to part ways with in the current economic climate.  And she's going to attempt to drum up support for her tax increase with the budget she released today ("Budget Part I: The Horrifically Scary Budget from Hell") which contains a boatload of painful spending cuts (and I mean that genuinely) and which she has been forced to put forward because as the Seattle Times reminds us, "the governor is required by law to draft a budget that is balanced using existing revenue."

What does today's budget cut?  Per the Times:

Her budget would eliminate the Basic Health Plan, a state-subsidized insurance program for the working poor, saving about $161 million over the next fiscal year. About 65,000 people are current enrolled.

Also zeroed out would be the General Assistance-Unemployable (GAU) program, which provides a temporary safety net for people unable to work because of mental or physical disabilities. That would save $207 million.

It would suspend funding for school levy equalization, which provides money to "property-poor" school districts, saving $110.6 million, and suspend state-subsidized all-day kindergarten, saving another $33.6 million. State-subsidized all-day kindergarten has been offered at a few school districts with the intent of expanding the program.

The budget also would cut $146 million in financial aid for college students and lower the qualifying income threshold from 70 percent of median family income to 50 percent. That means the money would only go to low-income families. The size of the grants would be smaller as well.

Yup: As the Times opines that the governor's office wants, many lawmakers probably are going to have the bejesus scared out of them by these cuts, and yes, that probably does mean that a tax hike, which will be laid out in a second budget, expected to be released next month ("Budget Part II: The Return of the Horrifically Scary Budget from Hell"), will be easier to pass.  Not that it should be: Right now, any kind of tax hike is going to hammer people and hamper the prospects for an economic recovery or frankly just plain fail to deliver revenue needed to close a budget gap (a political risk that frankly, Washington legislators should be terrified of taking, too, even though the legislature is majority Democrat, so they won't be because, you know, taxes are cool and stuff). 

More specifically, if it's a sales tax hike, that's going to hammer everyone, employed or not, but will probably (as sales tax hikes tend to) disproportionately hit the poor.  If a tax hike were, hypothetically, to come in the form of an income tax being introduced, well, that would no doubt please Gregoire terribly, but it would piss off a huge number of Washington voters.  If a tax hike came in the form of an increase in taxes levied on businesses, well, it's easy to see what effect that would likely have on getting employment numbers back up and moving people back into jobs.  If it comes in the form of a consumption tax hike (I wouldn't be at all surprised to see Gregoire pursue more sin tax hikes, for example a tobacco tax hike), that may look appealing to people now, but may not actually present a real fix for the state's budget woes (read these posts from Mike Flynn from earlier this year at the Reason Foundation blog if you want to know how that is so).

Basically, Gregoire is in a bit of a mess here and to a large degree, she's got no one to blame but herself.  But the people who are going to feel the pinch here, one way or another, are ordinary Washingtonians-- and that's a crappy deal. [intro]

 

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