State has a spending problem, not a revenue problem

Tuesday, March 12, 2002

Commentary - Seattle Post-Intelligencer

"I still believe there is not a man in this country that can't make a living for himself and his family. But he can't make a living for them and his government, too. Not the way this government is living. What the government has got to do is live as cheaply as the people do."

--Will Rogers

This Will Rogers quote is especially relevant during our recession in Washington as the Legislature tries to pass a supplemental operating budget to correct a $1.6 billion difference between available revenue and spending costs.

Many legislators and Olympia's bureaucracy need to be reminded that government has no money that it doesn't first take away from individuals and businesses.

Rep. Jim McIntire, who wrote Thursday in the P-I about tax exemptions, would have us believe that the state has a revenue shortfall problem, not a spending problem.

Let's make sure we all know what we are talking about when we discuss repealing these exemptions or closing "loopholes." Is it really an exemption to not collect property tax on the land our streets and highways are built on? Is it really an exemption to not collect the property tax on non-profit schools or colleges, military bases, cemeteries, city and county parks or even city hall?

These are some of the exemptions McIntire references. Other "loopholes" include the senior citizen exemption on property taxes and the sales tax exemption on food, prescription drugs and medical services. These tax exemptions make such items affordable for many people.

Other "tax breaks" promote economic development that translates into jobs -- badly needed jobs for workers in Washington state.

People who focus on the revenue shortfall are missing the bigger picture in this budget debate. Contrary to what they say, our state government doesn't have a revenue problem. It has a spending problem.

The state is experiencing one of the highest unemployment rates in the nation. More than 20,000 high-tech workers have been laid off, and 30,000 Boeing employees will be laid off soon. The Legislature's top priority should be jobs and the economy. Yet, state bureaucrats and some legislators talk about ways to create more revenue. No wonder citizens talk about government waste and misguided priorities.

Citizens don't want to hear about "solutions" to address a lack of money for government. They want government to spend their money more wisely and efficiently. They want government to effectively address our major problems and concerns. They want to see government doing not only the right things, but doing things right.

This session, Senate Republicans and state employee groups have presented $1.5 billion in money-saving options for the budget. These common-sense ideas would reduce spending without harming essential services. They include a broader hiring freeze for middle and upper management and non-critical positions.

We've also proposed reductions in state spending on travel, goods and services, training conferences, non-essential furnishings and equipment and even consulting contracts.

While our Democratic colleagues in the Senate and House have incorporated some of these cost-cutting measures, they haven't gone far enough. We all know the children's tale about the goose that laid the golden egg. The golden egg in our case is twofold -- the jobs that support our economy and employ our citizens, and the taxes that support schools, essential government services, and the elderly and children.

The state's goose is business. Whether it's a huge company such as Microsoft or a small restaurant in Coupeville, businesses produce the money that fuels state government.

Combined, the state sales tax (generated by retail sales) and the business and occupation tax (which takes in a certain percentage of a business's gross receipts) produce three-quarters of all revenue for state government.

As our economy goes, so goes state government.

So at a time when the state's economy is suffering, it would be counterproductive to cook our goose. The net loss in jobs and the reduction of state revenue for important state-funded programs and services would be unacceptable.

McIntire claimed the tax exemption on manufacturing machinery and equipment (M&E) hasn't created many jobs. But according to an independent study by a consulting firm from New Jersey, the M&E exemption created 58,100 new jobs between 1995 and 1999 and stimulated billions of dollars in new investment.

In fact, the Department of Revenue agrees that the exemption's benefits far outweigh its costs. Eliminating tax exemptions and focusing on the revenue shortfall won't resolve our short-term or long-term budget crisis. Getting our house in fiscal order will.


State Senate Republican Leader James West serves Spokane's 6th District. He is a former chairman of the Senate Ways and Means Committee.

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