Just because you have money in your pocket today doesn’t mean you are free to spend it all. Some of it – or even most of it – may be spoken for tomorrow.
That was the thinking behind the 2012 law, approved by a bipartisan Legislature and signed by Gov. Chris Gregoire, requiring a four-year balanced state budget. We were the first state in the nation to institute this check on the state budget process, which is designed to be a defense against irresponsible spending.
Many of the legislators who supported the bill in 2012 and helped it pass with strong bipartisan majorities in the House and Senate, are still serving today. But some don’t want to adhere to it, which is one of the reasons the Legislature has gone into yet another special session.
The law was the result of legislators, after years of grappling with the fallout of excessive two-year spending plans only to come to the next two-year budget facing deficits, realizing something needed to be done. They, like many of us watching the budget process, were tired of the roller-coaster ride every year – surplus to deficit.
In addition to providing a more realistic outlook on the state’s financial condition and giving taxpayers greater certainty, the change was also given high marks by large bond rating companies such as Fitch Ratings, Moody’s Investor Services and Standard & Poor’s.
Moody’s described the state’s “multiyear revenue and expenditure projections” as a strength. And, S&P wrote, “The Legislature has taken a more structural approach to crafting fiscal policy, in our view, thanks to a 2012 statute requiring the state to enact a budget that it projects will remain balanced through four fiscal years.”
This is a common-sense approach to budgeting, and one that that business and families take every day.
Those who would like to undo the law say it doesn’t allow for one-time fund transfers and other gimmicks that allow for more spending now. But that’s exactly why it’s necessary. It’s the same reason responsible citizens don’t spend their whole paycheck on payday when they know bills are coming due.
Exercising financial restraint may not be convenient, but it’s the right thing to do, especially when we can see signs that the economy is beginning to slow.
If lawmakers abandon financial discipline now and go back to their old ways, they are setting themselves up to make the 2017 legislative session even more challenging than we know it will be. We already know, for example, that lawmakers will need to find additional money for schools in 2017 to satisfy the remaining requirements of the McCleary state Supreme Court decision.
Failing to look at the long-term consequences of today’s spending greatly increases the chances that lawmakers will end up looking at additional budget cuts – or raising taxes even higher – in the next budget.
Forcing lawmakers to look at the long-term consequences of their spending has proven to be a positive. Combined with a healthy rainy-day fund, responsible spending now may curb the need for higher taxes later in case the economy slows down.
As the prime sponsor of the 2012 law, former Democratic state Sen. Jim Kastama said about the new way of budgeting in Olympia: “There is a time to campaign for what you want, and a time to govern with what you have.”
We agree. This prudent approach to budgeting is good for lawmakers, taxpayers and the many vital programs on which we all rely. Legislators need to balance the state budget not only looking at today, but at the consequences tomorrow.
Kris Johnson is president of the Association of Washington Business, the state’s oldest and largest business association representing nearly 8,000 small, medium and large employers.