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Everett Herald: Republican Budget Leader Makes Case for Reform Over Revenue

By Josh Feit November 14, 2011

State Sen. Joe Zarelli (R-18, Ridgefield), the senate Republicans' budget leader, wrote a meaty guest column for the Everett Herald outlining his approach to tackling the $2 billion problem in Olympia—that's a $1.4 billion revenue shortfall thanks to the recession (sorry if we're not technically in a recession, but my sense is the technical definitions aren't keeping up with this persistent economic rut) plus the need for a cushion.

Zarelli focuses on reforming government services with an eye on finding efficiencies.
A good place to look for reform opportunities going forward is among the long-term obligations that are huge cost drivers, such as state-worker pensions, health-care services, paying off the state's debt and efforts to bring our K-12 education system into compliance with court rulings.

I agree with the governor that everything has to be on the table for discussion, including reforms that would affect services for non-citizens, state liability, non-Indian gaming, state workplace efficiencies such as competitive contracting and defined-contribution pensions, and how the state subsidizes low-income child care. Some of those were identified as reform opportunities on our side of the aisle earlier this year, but sidelined for lack of support. It's time to look at them again.

He also faults Gov. Chris Gregoire for not presenting enough outright reforms in the her budget cheat sheet late last month (essentially a list of $2 billion in proposed cuts). "I give the governor credit for having provided us this past month with her list of money-saving options," Zarelli writes, "but curiously, only one is described as a reform. That has to do with supervising criminal offenders, which hardly seems the only state program capable of becoming more efficient."

I asked the governor's office about Zarelli's criticism. Gregoire spokeswoman Karina Shagren tells me: "The document she presented earlier this month is not a policy document – it’s merely a list of potential areas to cut. It was meant as a starting point – to get the conversation going. By no means is she saying that her list of options are the only options to be considered. Her full budget will come out later this month – and like past years, she’ll have legislative priorities that she’ll present as we get closer to the regular session."

Last session, the governor did enact a number of money-saving reform,  including reducing five agencies—printing, information services, general administration, personnel, and financial management—down to three;  adding a settlement option to workers' compensation;  and changing eligibility on unemployment insurance.

Zarelli also advocates cutting programs rather than band-aiding them (he calls it an "all-priorities" budget, a snappy rejoinder to the Democrats' derisive cry of an "all-cuts" budget. And he says (begrudgingly) that he's open to looking at tax loopholes and talking about revenue.

I say "begrudgingly" because Zarelli notes wryly ... "While our state doesn't offer a tax preference involving corporate jets, contrary to assertions, I'm also open to looking at reforms of tax incentives that aren't creating jobs as intended."

Zarelli is only openly for user fees on the revenue front, citing last year's bipartisan support for the "Discover Pass" the $30 pass to park a car at state parks; repeats that he prefers reform over revenue (and argues that agreeing to revenue up front will undermine a focus on reform); and trots out the current GOP speaking point on the budget:
It's worth pointing out that the $30.5 billion revenue projection from September, while down from earlier in the year, will still be a record should it pan out. That equates to an anticipated revenue growth rate of around 7 percent for this budget cycle, an increase most Washington employers would be more than satisfied to see.

A note on that: Revenues traditionally grow by about 15 percent per biennium. In the last pre-recession biennium, the ’05-07 biennium, revenues grew 17 percent over the ’03-05 biennium. In fact, Republican GOP candidate Rob McKenna's budget plan hinges, he says, on about 13 percent growth.

And that brings me to another quibble with Zarelli. He leads off his op/ed with a factoid that lacks context. He says government has grown 33 percent since 2004. Republicans have been using this sound bite the 2008 governor's race, when Dino Rossi cited it repeatedly. (The number appears to have remained flat since then, interestingly enough). Here's some context: the number is not adjusted for inflation or population. When you do the econ 101 adjustment, you actually find that state government spending on services has remained consistent over the past 25 years at about $2,200 per capita.
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