How did we get here? Budget brinkmanship ignores real problem

Last Friday, three Democrats joined forces with Republicans in the Washington Senate to force through a version of the state budget that cuts education and services for the state’s most vulnerable residents. Much has already been said about passage of a major bill without one word of public testimony. It may now take a special session to get a budget the Senate, House, and Governor can agree to.

But let’s take a step back to look at the larger picture. Because while the roughly $300 million difference between the House and Senate budget is nothing to sneeze at, it pales in comparison to the $10.5 billion already cut from the state budget since the start of the Great Recession.

How did we get here? Why is Washington is failing to meet its paramount duty to fund basic education, watching tuition for public colleges and universities skyrocket, while legislators are debating whether to ax a program that assists disabled people living in poverty (a proven money-saver)?

The root of our problem is neither some legislative spending spree nor solely the result of the recession. Washington is actually spending less now, per person, than we have in decades:

Certainly lower tax revenues can be in part blamed on the recession but there is plenty of money out there. The bigger culprit is the state’s structural deficit – the fact that over time, revenue has grown more slowly than the state’s economy as a whole. Washington has a structural deficit because it relies so heavily on sales tax to fund schools, protect kids and public health, and pay police and firefighters. As our economy changes, retail sales revenues are contracting even as personal income – exempt from taxation – continues to grow.

Over the past three years, personal income in Washington state has risen by 5% – even with the recession – while sales tax collection is down by 14%. It’s not laid off construction workers or grocery clerks who have lost hours of work whose incomes are rising. It is by and large the wealthiest among us, the same people who are getting away with paying among the lowest tax rates in the country.

The state’s over-reliance on sales taxes means the poorer residents of Washington state pay a higher percentage of their income in state and local taxes than do the more well-off. Here’s a breakdown of state and local taxes paid, by income level, for people living in Seattle:

Seattle, State and Local Taxes by Income Level

Income Taxes paid Percent
$25,000 $2,825 11.3%
$50,000 $4,021 8.0%
$75,000 $5,173 6.9%
$100,000 $5,651 5.7%
$150,000 $6,502 4.3%

Biennial budgets and political brinksmanship are the headlines of the day, but Washington state will not be able to make the investments we need to give everyone in our state real opportunity until we reform our tax structure.

Until we address changes in our economy, and update our tax code for the 21st century, Washington state will continue to have higher class sizes, more potholes and more expensive college tuition, with less hope and opportunity for all of us.

Originally published at Washington Policy Watch

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