State continues sleight of hand on budget

Good coverage of the set of tricks our legislature and governor used this year to "find money."

They avoided tax increases by hiding the tax increases they passed as fees. But see what they did next. They transfered fee money to the general fund to turn it into tax money must be illegal. Transferring funds between accounts might be their using their own tool, but misusing it.

They will be shocked! shocked! when state pensions are short on funding.

And the lowest trick yet: they placed controversial actions into the budget so they would not be debated; that cannot be defended with a straight face. It's a bald-faced violation of the legislative process of holding hearings before making changes.

Brett Davis and Amber Gunn in the Bellingham Herald:

The sputtering economy spawned a 2009 legislative session accompanied by more legislative wailing and gnashing of teeth than a cave full of rabid hyenas fighting over a last meal. Some legislators actually pulled the "people will die" card when it became clear that a general tax increase would not pass.

While certain political realities may have prevented a general tax hike, that did not stop legislators from enacting or raising targeted fees and backdoor taxes. These forms of revenue boosting are covert and less likely to be noticed or to incite voter outrage. Over the next two years, taxes and fees-on everything from horse racing licenses to plumbers to hard liquor - will increase by more than $500 million.

Politicians regard fees as more palatable than taxes. However, the line between a fee and a tax is razor thin, with fees lending themselves to all sorts of budget chicanery - perfectly legal, of course. For example, this year the Legislature voted to double the tax on boxing, wrestling and martial arts events, depositing the money into a dedicated account instead of the general fund. That act converted the "tax" into a "fee." This enabled the budget writers to avoid the two-thirds vote threshold required by Initiative 960 for tax increases. Fee increases only require a simple majority.

But wait, there's more! The Legislature can take the proceeds from the newly enacted "fee" out of the dedicated account and put it back into the general fund by authorizing a fund transfer in the budget. Presto! A de facto tax increase is born, sans pesky super majority vote. Legislators raided $252 million from such dedicated accounts this year to cover their proposed general fund spending.

More notable 2009 budget stunt work included a prominent role for the federal government in the form of the American Recovery and Reinvestment Act, the so-called "stimulus" bill passed by Congress in February. Washington state's newly minted budget is thatched together with more than $3 billion in one-time income from Uncle Sam. In addition, legislators swiped nearly $800 million from the capital budget, $450 million from the state's rainy day account, and half a billion from pensions - sure to yield compound pain for future taxpayers. Altogether, the Legislature relied on nearly $5 billion in one-time funds and transfers to balance the 2007-09 and 2009-11 budgets.

Another dysfunctional budgeting technique employed this year - and most years - takes the form of a shell game of sorts, where legislation that might not have a chance of passing on its own is inserted into the budget and advanced quietly among hundreds of other provisos and appropriations. Perhaps the most obvious example is the raiding of $29 million from the dedicated performance audit account, a 74 percent reduction in available funds.

Last year, the Legislature tried to amend the performance audit law by taking money from the dedicated performance audit account to reimburse audited school districts. The effort failed. This year, rather than give performance audit supporters another chance to stop their raid on the account, budget writers simply amended the voter-approved performance audit law within the budget itself, effectively sheltering their decision from opposition efforts. Such a shell game can only be stopped by a governor's veto pen-a risk budget writers were clearly willing to take. [More...]

Via Evergreen Freedom Foundation.