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Home / Washington Business - January/February 2005 / Dick Davis Column: POG – Priorities of the Governor? |
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Dick Davis Column: POG – Priorities of the Governor? |
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Written On: January/February 2005 |
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Written By: By Richard S. Davis - President, Washington Research Council |
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To understand Gary Locke's desire for a half-a-billion-dollar tax hike, think of the Priorities of Government as the Priorities of the Governor.
Policy wonks nationwide celebrated Washington’s innovative approach to balancing the state budget two years ago. Gov. Gary Locke handled a $2.4 billion shortfall without raising taxes. Senator Dino Rossi, then chairman of the Senate Ways and Means Committee, engineered legislative approval. The consultant responsible for POG, Peter Hutchinson, capitalized on its success here to extend his practice.
Everybody won. And the tool — the POG model — got the credit.
It refocused the process of writing the state budget. Public spending critics often decry “iceberg budgeting,” which builds on existing appropriations, concealing most of the budget below the surface. POG shatters the iceberg, directs budget writers’ attention toward outcomes, breaks down departmental divisions, and pools resources to get the best deal.
And it does that within a limit. Two years ago, the governor directed his staff to stick with current revenues — no tax increase. They did, he did, and the Legislature did. While the POG proved to be an effective tool, one that organized information to support decisions, it did not make decisions. Ultimately, the effect of the POG varies with the intent of the executive.
This year, Locke’s priorities no longer include managing within current revenues. December 16, 2004 — weeks before leaving office and with his successor still unknown — Locke presented his budget proposal for the next two years. He declared that anticipated state revenues fell short, and that taxes and fees should be increased.
Soda Pop’s a Sin
The governor’s last budget is a throwaway. He won’t be around to fight for it. And, by targeting beer, liquor and soda pop for the bulk of the tax increase, he’s taking an expansive view of sin: soda drinkers bear more of the load than do alcoholic beverage consumers. He gains $504 million from the sin taxes. An additional $94 million comes from a new tax on physicians that would allow the state to draw more federal money and increase Medicaid reimbursements to doctors.
Perhaps Locke doesn’t seriously intend to raise a half billion from the state’s most regressive mix of taxes and simply had to show revenues to offset his higher spending. With the tax hike, he would provide more money for public schools, increase enrollments in colleges and universities, maintain basic health services, and continue some welfare programs.
This budget reflects the priorities of the governor, arguably the real meaning of POG. Locke has always wanted to put more money into education. When the state ran a budget surplus, he supported the unfunded initiatives to reduce class sizes and raise teacher pay. Even as he promoted the austere budget in 2003, he looked for a way to raise revenues for schools. He championed boosting the state sales tax for the schools, which voters vetoed by a 3-2 margin.
He used his last budget proposal to again signal his priorities. The budget process he initiated two years ago fueled his efforts. Locke neither turned his back on the POG nor did the POG fail him. But he has his priorities wrong.
Misreading the Economy
He misreads the economy. A tax hike now would threaten the state’s embryonic economic recovery. Using POG as a guide, the Legislature and new governor should budget within current revenues. Job creation remains the priority. In POG they have the tool. Do they have the will?
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