November 1, 2001
Lawmakers, UWRA consider revenue boost
If it were up to members of the UW Retirement Association, the state of Washington might well adopt an income tax.
But, as several legislators pointed out at a forum this week hosted by the association, the chances of such a major reform happening are slim.
“I believe that a state income tax should be coupled with the elimination of the business and occupation tax, as well as reductions to the property tax and sales tax,” said Democratic Sen. Jeanne Kohl-Welles. But when I talk to people from outside the Puget Sound area about an income tax, their eyes glaze over. There’s a feeling that things in the state have to be truly horrible for an income tax to have a chance. Either that, or it may have to come from the voters in the form of an initiative.”
Questions about state revenue and tax reform dominated the forum, moderated by Betty Jane Narver of the Evans School
“The truth is, we need more revenue,” said Democratic Rep. Helen Sommers. “Taxes that we have reduced or eliminated would’ve provided an additional $2.1 billion in revenue.”
“Our tax structure hurts those least able to afford it,” said Sen. Pat Thibadeau, a Democrat. But I don’t believe a majority of my colleagues (and we need a two-thirds vote to pass a constitutional amendment) would support an income tax.”
Legislators predicted a challenging session in January, when they must come to grips with revenue shortfalls that are likely to range from $600 million to $1 billion.
“The convergence of Boeing layoffs, stock market drops, economic slowdown and the effects of Sept. 11 make the situation like ‘the perfect storm,'” said Thibadeau. The state shortfall, which she pegged at $600 million, is likely to be addressed largely from social and health services, “because that’s where the money is.” She estimated that $340 million alone will come from medical assistance, through the reduction and elimination of programs for the poor. She predicted that concern over the cost of drugs, which is responsible for
46 percent of the increase in medical costs, will drive some reforms, including more education about over-utilization (especially by senior citizens) and state ventures in volume purchasing.
Republican Sen. Jim Horn, said the “shape of the negotiating table” was a major determinant in a session that ended up passing a budget he termed “unsustainable” and no transportation plan. With the House split evenly and Democrats holding a tenuous, one-vote majority in the Senate, negotiations were difficult. He predicted that the outcome of two elections for seats in the House would change the course of the upcoming session. “We have increasing needs for education, combined with decreasing revenues. We also have the second worst traffic congestion in the country, and $42 billion in transportation needs.”
Democratic Rep. Phyllis Gutierrez Kenney expressed concern that some of the progress made in the 2001 session will be threatened, despite Gov. Locke’s pledge to protect higher education from budget cuts. “We must provide a healthy education system with affordable, predictable costs providing a seamless education for a diverse population,” she said.
Kohl-Welles said that in tough times, there is a greater demand for higher education, but services are likely to be squeezed because higher education funding is discretionary. She expressed skepticism that higher education will be immune from budget cuts. I think we’ll be faced with cuts or at least no growth, which means we won’t meet demands for increased access and affordability. It’s critical to keep making investments in higher education. But, at the same time, cuts in human services and health care don’t make sense.”
Sommers urged the audience to think beyond the current legislative session. “We need to take a new look at higher education and expand our definition of basic education, taking it beyond 12th grade. Our thinking needs to shift from higher education as a defined period to lifelong learning.”
