OLYMPIA, Dec. 13.—While all the attention Monday was on the leadership takeover in the Washington state Senate, another rather important legislative announcement was made in the state House, attracting no attention whatever and surprising exactly no one. Seattle Democrat Reuven Carlyle is joining the ranks of the highest profile committee chairmen at the statehouse, taking over the newly revived House Finance Committee.
The funny thing about it is that everyone around the statehouse seemed to know it for weeks – lobbyists, parking-lot attendants, security guards, marble-polishers. Just before Thanksgiving House Democrats announced they were reconstituting the revenue panel to put a focus on the big tax issues that likely are going to be confronting lawmakers next session. Immediately the word in the hallways was that Carlyle was the one. This put Carlyle in a position perhaps unaccustomed during his four years in the state House — for once he had to keep his silence around reporters. But no matter. It’s out now. “I’m not sure why this was the worst-kept secret,” Carlyle says. “I don’t know who was talking.”
It probably wasn’t a leak – just one of those things everyone knew was going to happen eventually. During his first two sessions, Carlyle, 47, earned a reputation as a big-picture kind of guy, a thoughtful voice positioned somewhere in the mainstream of the House Democratic Caucus, not radical but not conservative either. A former software executive, Carlyle was the first to sound the alarm about the state’s $300-million data-center project, warning that the assumptions were based on old technology in a cloud-computing era. He certainly hit the mark on that one: Today the state finds itself trying to lease out empty space in an overbuilt complex. Where matters of policy are concerned, Carlyle’s blog is widely followed, and he seems to be emerging as one of the most-quoted Democrats since the heyday of Phil Talmadge two decades ago – as any word-search on the Internet might attest.
And now that it’s official, Carlyle can finally start answering those taxing questions. Washington State Wire asked about a few of ‘em – and also about one of the Legislature’s most legendary tales, about one of the greatest pranks of all time. We’ll get to that in a minute.
The Big Picture
When it comes to taxes you have to understand the background. Conventional wisdom among most Democrats these days seems to be the state needs a tax increase next year, though nobody seems to know how much. The biggest factor is how deep a hole lawmakers decide to dig for themselves as they try to satisfy the Legislature’s McCleary decision, the ruling that held they aren’t spending enough on K-12 schools. Until they decide that question, there’s no telling whether they face an actual problem of just a few hundred million dollars or billions and billions. At least one Democrat, Gov.-elect Jay Inslee, says the state can get by with no tax increase at all, though cynics wonder if it was just a campaign promise.
Carlyle isn’t saying whether the state needs a tax increase — that’s really a spending question, and others will have their say in that. “I am not ready to jump in any one direction,” he says. “I will tell you that the three structural issues we face this session are clearly the budget, the McCleary decision and the Affordable Care Act. In some ways all roads lead to those three issues and they are all intertwined. Whether or not any one of them require more or less resources are all pieces of the puzzle, and it is just premature to have any delineation really between them until we have a holistic view of our overall needs.”
And of course, there are other big-picture political questions – like whether there’s any point in attempting to pass a tax increase in the Legislature when the Senate is likely to balk, the governor promises a veto and an initiative requires a two-thirds vote of both chambers. Lawmakers still could take a majority vote and bypass Inslee by sending a tax increase to the ballot. Decisions like those, of course, are beyond Carlyle’s pay grade.
Scrutiny of Tax Breaks
Carlyle makes an argument that he has sounded ever since he joined the Legislature – that the $4 billion or so in business tax breaks granted by the state deserve the same kind of scrutiny that spending programs have gotten during the last few tight-budget years. “It is philosophically inconsistent to be in favor of a rigorous, objective data-driven review of spending but to not be in favor of that same independent examination of our tax policy. And my central goal is to bring that same level of philosophical consistency to both sides of the equation.”
It’s one of the oldest arguments around. Passing tax breaks is easier than repealing them and some of them might linger on the books after they achieve their original purpose. What’s worth noting is that Carlyle touted a rather remarkable concept last year – basically repealing the 251 biggest ones, year by year, and forcing the Legislature to reconsider those it wishes to continue. Which might work in a statehouse where lawmakers evaluate every measure on its merits, decisions are never rushed and party leaders never hold bills hostage for political gain. Alas, Carlyle’s bill did nothing to change the way the world works.
He isn’t saying whether he will try something like that again, but he does say there is a big problem. Take the state’s tax credit for high-tech research and development. Carlyle notes that a citizen’s commission on tax preferences, the Joint Legislative Audit and Review Committee and an independent research firm all concluded that the $14 million annual tax break goes in large part to companies that don’t need it – biggies like Amazon, Yahoo and Real Networks – and it creates a piddling 490 jobs. Carlyle had another big-picture bill on that one last year, ending the break but diverting proceeds to higher education.
“The issue isn’t whether we should support R&D, the issue is whether we have the courageous honesty to put on the table that there is enormous value in rigorously examining the programs that we set up. Or once we create one, do we put it in for perpetuity and never look at it again, even though we have overwhelming data that there is hardly any return on investment? I think again there isn’t a businessperson on the planet that would look at that and say, yeah, let’s keep going.”
The Really Really Big Picture
Carlyle says he’s a big thumbs-up on efforts to develop a one-stop state Internet portal for business to make tax payments and obtain forms and licenses – a big priority for business the last couple of years. But given Carlyle’s penchant for the big picture, this might not sound surprising: Eventually, not right now, but sometime – he says he’d like to take on the biggest tax issue of all, the state’s tax structure. Which is the sort of thing that often makes business nervous. Usually tax reform is a code word for an income tax.
“I believe we are in an innovative, entrepreneurial, progressive and creative state, and in many ways a lot of our public policies and much of our tax structure does not represent those core traits. As the home of some of the greatest companies in the world – Amazon, Microsoft, Boeing and some of the others — I think some of that spirit needs to be translated into our public policy. I think our tax policies should be in my view less political. They should be less of a factor in our political debates. If our overall rates were lower and broader-based with less carve-outs, I think we would have a more economically efficient approach that truly breathes with our economy.
“So my hope is that we have the kind of courageous honesty that Gov. Dan Evans and others at various times have employed, to just elevate the dialogue about what is possible in a more economically efficient model. Some people are driven by the issue of equity in our system. My driving passion is more oriented around the question of economic efficiency and that is more a reflection of my business background. I think it is the fact that we have reached a point where there is just a certain legitimate amount of backlog of tax issues that need to be reviewed and analyzed and discussed and debated openly, due to the lack of focus on that in the last 10 to 12 years.”
And Now the Funny Part
Carlyle grew up in Bellingham and actually spent a couple years in the Legislature long before he returned as a member. On one of his first jobs out of college he was a staffer for the House Ds. And then he vanished from the statehouse for a time, taking a job in the Ohio governor’s office, earning a graduate degree at the Kennedy School of Government at Harvard, and finally returning to the state in various management roles in the wireless and software industries. He came back to the Legislature as a member in 2009, after defeating liberal think-tanker John Burbank in the race to succeed Helen Sommers. At which point there were still a few who remembered him from the days before his hair turned white.
Which brings up a story about Carlyle that is worth telling here – about what certainly is one of the wickedest, nastiest and most delicious pranks ever played at the statehouse. Carlyle was a well-known and well-liked figure around the Capitol campus during his staffer days, and when he departed for Ohio in 1989, Bob Partlow, former legislative correspondent for the Olympian, got an idea. You have to remember that Partlow was known for his aggressive pursuit of stories about government scandal, and in particular those involving a certain Democratic Bellingham legislator whose name will become important in a moment.
Partlow called a friend at the Columbus Dispatch. And on Carlyle’s first day at the Ohio statehouse, the reporter called on Carlyle in his office, carrying a stack of documents. He told Carlyle to shut the door. He started grilling Carlyle with questions about the big scandal that was just about to break – the criminal Washington-Ohio political conspiracy involving drugs, gun-running, money-laundering – naming names and offering detail about Washington politics that no ordinary Ohio citizen could be expected to know. Carlyle says, “It was a huge story, the governor was involved, all kinds of nefarious schemes, and he said, ‘I have come to you to get your quotes and I want to know what you are going to do.’”
And finally, as Carlyle started to sweat and began to wonder what on earth he had stepped into, the reporter said, “And I want you to know that my source on all of this is the chief of the Washington State Patrol – Pete Kremen.”
You can just imagine Carlyle sitting there, staring at him dumbfounded. Wait a second. Pete Kremen? “Partlow!” he screamed. The story swept Olympia within hours. File it among the legends of the statehouse: “Oh, he got me good,” Carlyle laughs today. “My first day, for God’s sake.”