Article by WashingtonStateWire. Published on Saturday, September 17, 2011 EST.

And Don’t Give the Executive Branch Any More Authority!

The news after the forecast meeting is interesting. A few Saturday observations are in order.

1. How much, when? $1.3-$1.4 whatever. The governor seems to be the only one I can find who actually mentioned the November forecast and what it might mean. And no one is talking about the forecast of March 2012. Since we have been here a few times in the past, we all know that if we wait to fix the leak, more water will drain out and more water will be need to fill the bucket. Or we need to get a new smaller bucket.(why does it keep happening over and over you ask?)

2. Do your job! Reports point to comments from D’s that a balanced approach needs to be the answer. That means cuts and taxes, new taxes, increases on existing taxes. There was a little chatter about putting a tax package on the ballot in the spring. This comment came with a suggestion for some “tax loop hole repeals”. First, do your job. Why put taxes on the ballot? What the heck were legislators elected for anyway?

3. “We have to have a balanced budget.” False. Don’t tell anyone but there is nothing anywhere requiring the state to have a balanced budget. It is wise, and the state’s bonding situation would be altered drastically if we started living on even more bonding. The GO bonds outstanding are about $15-16 B right now depending where you look for info, and that’s just GO, some accounts show the state’s (state and local debt) total debt at or near $70 B. So let’s clear it up: balanced required?…NOT, balanced wise?…you bet.*

4. Special session? To do what? Cut, raise taxes, some of both? When? Just before Thanksgiving, never before the election. Stay tuned for this one.

5. And finally the one that gives me shivers. A disclosure is in order here. As I explained to my friend Jason Mercier over at the Washington Policy Center, his suggestion to somehow, in a limited way, give the executive branch a little more authority is what my grandpa Harry use to say, “Right church, wrong pew.” From an academic and patch-up point of view this superficial solution might fit, right now, just once,…but once is never enough, is it? I cut my teeth in fiscal issues as one of three freshman on the House Ways and Means committee (Appropriations) in 1975. We were just getting the LEAP system off the ground, and finally had OPR staff up and running. The house leadership of the previous two terms had been working on it…thanks! During previous sessions the legislature would take Dan Evan’s budget, try to make sense of it with no independent staff to speak of, stick in a few pet projects and vote yes. So, I’m a little sensitive to the appropriate tension between the executive and the legislative branch. The separation and tension needs to be maintained. The Point? The legislative branch needs to hold tight to it’s budgeting process, and the hard work of Roessellini and my mentor, Warren Bishop and respect the budgeting and accounting act of that era. (RCW 43.88) No, No, No, please don’t let go. Respect yourselves as closely and frequently elected representatives of the people and hang on to your budget position. If it is all about the budget, then you are discussing the beginning of giving it ALL away. This transfer of shaping the redistribution of the state’s wealth will never end. With all due respect, the character and culture of the collective legislature needs to firm up. Courage and duty calls. You best answer. Load this up and read it some night: http://www.sos.wa.gov/legacyproject/pdf/OH1246.pdf

6. Hats off to Hunter and Zarelli. Hunter asked the right question. What kind of state do we want to live in? I can assure you there are different answers depending where you live but I am sure no one wants children to go uneducated, frail seniors to live in warehouses, and those truly in need to go hungry or uncared for. So let the people of the state rightly decide through their elected officials. The answer cannot be flung to the vagaries of a special interest funded ballot measure. And good for Dr. Z, he still is calling for an early, like NOW, bi-partisan strike team work.

Good luck to you all, the state is watching. And they have less money, fewer homes, and a dwindling confidence in government.

* http://seattletimes.nwsource.com/html/politics/2008480910_budget08m.html

State isn’t required to balance budget, but it’s still the goal

Many lawmakers have long believed the state can’t borrow money to plug the kind of budget shortfall the Legislature now faces. But that isn’t true.

By Andrew Garber

Seattle Times Olympia bureau

The real deal

The state constitution, contrary to popular belief, doesn’t require a balanced budget. Neither does state law. A section in the state Budget and Accounting Act says the governor must propose a balanced budget, but it doesn’t say the Legislature or governor must approve one.

OLYMPIA — It’s long been accepted gospel by many here: The state must balance its budget and can’t borrow money to cover shortfalls like the one lawmakers now face.

“My brochure for my race said that unlike the federal government we have to balance our budget,” said House Majority Leader Lynn Kessler, D-Hoquiam. “I seriously believed that.”

In fact, it’s a myth.

There’s no legal barrier that prevents the state from going into deficit spending, according to legislative staff members and the governor’s budget office.

In other words, the state could borrow money long term to help fill a gaping hole in the 2009-11 state budget that the governor says could reach nearly $6 billion. The current two-year budget totals $33.6 billion.

State Treasurer Mike Murphy, who is retiring, says it’s a bad idea to borrow money to pay for short-term needs. If you need proof, take a look at New York City, which almost went bankrupt in the mid-1970s from excessive borrowing.

But as Murphy noted, the Washington Constitution “does not prohibit you from doing something that’s not too bright.”

The state routinely borrows money to pay for capital projects, including new highways, bridges and schools. It issues bonds to finance the projects and pays them off over time.

But lawmakers have not issued long-term bonds using tax revenue that goes into the state general fund to pay for normal expenses such as the salaries of state workers.

Murphy said that’s like “borrowing money to buy groceries and pay the light bill. That’s not good public policy.”

Gov. Christine Gregoire plans to release a proposed two-year state budget later this month that’s expected to contain deep cuts in spending to make ends meet.

Victor Moore, director of the governor’s budget office, said borrowing money to fund the state’s operations is “not good fiscal policy” and “we don’t have any plans to do that.”

He would not comment when asked if that meant they’d never propose borrowing money.

Borrowing money to fill a gap in the operating budget would require a 60 percent vote in both houses of the Legislature. The Legislature also could send the issue to voters with a simple majority vote.

State lawmakers, grappling with the nation’s economic recession, will start putting together a new budget during the legislative session that begins in January.

The closest thing Washington has to a balanced-budget requirement is a section in the state Budget and Accounting Act that says the governor must propose a balanced budget. It doesn’t say the Legislature or governor must approve one.

Another provision in state law says the state cannot be in the red at the end of the two-year budget cycle. But the same law allows the Legislature to pay off any shortfall over time, Moore said. There’s nothing that requires the state to pay it off immediately.

As for borrowing money, the Washington Constitution does limit how much debt the Legislature can take on. The cap is set at 9 percent of the average amount of tax money the state received during the past three years.

Murphy said the state is pretty close to that limit. But there are ways the Legislature can adjust the calculation used to set the cap, creating more room for borrowing money.

Murphy and other state officials would not estimate how much money the state conceivably could borrow.

The Legislature in 2003 did borrow $450 million using money from a national tobacco settlement to help cover a budget shortfall at that time.

However, Murphy said there were protections built in so that if the tobacco money disappeared for some reason, the state would not legally be on the hook to pay off the debt.

State Sen. Joe Zarelli, R-Ridgefield, the ranking Republican on the Senate Ways and Means Committee, said he’s aware there’s no law against deficit spending but said there’s a restriction of “common sense.”

Borrowing money to pay operating expenses, he said, would hurt the state’s ability to raise money to build schools and other public structures, for example.

Senate Ways and Means Chairwoman Margarita Prentice, D-Renton, said she didn’t know the state has no balanced-budget requirement.

Even so, she said: “If this is how we’ve always operated, by gosh, this is how we’re going to operate. I truly believe that.”

Kessler wasn’t looking forward to word getting out that the balanced-budget requirement is a myth.

“Oh my God, don’t tell my members,” she said.

Andrew Garber: 360-236-8266 or agarber@seattletimes.com

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