07/26/2014

It’s Time to Act

By Don C. Brunell, President, Association of Washington Business

Both Washingtons are in a financial bind. In our nation’s capital, President Obama and Congress are running trillion-dollar budget deficits, and our national debt will soon exceed $14 trillion.

How much is that? To pay back $14 trillion, you’d have to spend $1 each second for the next 448,000 years.

Meanwhile our state’s budget deficit is expected to exceed $1 billion for the current two-year budget cycle. It is expected to grow to more than $6 billion by the time Gov. Gregoire and the Legislature write the 2011-13 spending plan. Two years ago, our state used $3 billion in federal stimulus money to balance its 2009-11 budget, but that option is not available this time around.

Unlike the federal government, our state must balance its budget. It also has solid commitments to repay the money it borrows to construct state buildings and highways. So, the choice for the governor and Legislature is either to raise taxes or cut spending.

Voters last November told the president and Congress to rein in spending. They said, “Enough is enough” when they learned that every man, woman and child in the United States owes $45,536 for their share of the federal debt. They are also concerned that we have borrowed more than $3 trillion from foreign governments — one-third of that from China.

In Washington, voters sent a similar message to state lawmakers when they rejected an income tax and reinstated the two-thirds requirement to raise taxes.

As a result, there are painful decisions ahead. Success will be measured by how we lessen the agony and climb out of this financial hole.

Here are five ways.

First, recognize that this is an opportunity to prioritize how our state and nation spends our tax dollars. Legislators should also resist raiding dedicated accounts set up by specific taxes to fund specific programs, such as hazardous waste cleanup. Robbing Peter to pay Paul by moving money around and deferring payments doesn’t solve our long-term problems. Voters want cuts and tax dollars directed for what they are intended.

Second, find innovative ways to provide public services. For example, contract out services to the private sector when it is more efficient and cost-effective to do so, ensuring proper oversight and quality controls. To make that happen, lawmakers will have to change state law to remove contracting out from the collective bargaining statute.

Third, reduce or eliminate existing programs and don’t add any new ones. Federal employment has expanded under President Obama, and in Gov. Gregoire’s first term, the state budget increased 31 percent with higher salaries, richer benefits, 6,100 new state workers, new programs and even a new state agency.  In today’s economy, taxpayers simply cannot afford it.

Fourth, change collective bargaining agreements with public employees. Government workers must sacrifice to the same degree as private-sector employees. So far, that hasn’t happened. Originally, the governor proposed increasing the health insurance copay for premiums from 12 percent to 26 but recently announced it would be 15 percent.

Fifth, shorten permitting time, eliminate duplicative regulations, combine similar agencies with the same mission into one, and reduce costs for the private sector. Eliminating those unnecessary costs will free employers to create jobs, which will restore economic vitality and provide more state tax revenues.

None of this will be easy. It will be a bitter pill to swallow, but it is necessary if we are to get better.

About the Author

Don Brunell is the president of the Association of Washington Business. Formed in 1904, AWB is Washington’s oldest and largest statewide business association, and includes more than 7,100+ members representing 650,000 employees. AWB serves as both the state’s chamber of commerce and the manufacturing and technology association. While its membership includes major employers like Boeing, Microsoft and Weyerhaeuser, 90 percent of AWB members employ fewer than 100 people. More than half of AWB’s members employ fewer than 10. For more about AWB, visit www.awb.org.

It’s Time to Act
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