Are tax hikes the answer? Washington lawmakers must address budget structural issues | Opinion

Legislators gathering in Olympia are ready to raise taxes. They’ll argue they have no choice, that they must fill a multi-billion dollar gap between what the governor wants to spend and the amount of money the state has.

Since the budget hasn’t yet been written, it is not a deficit, but simply the gap between a wish list, promises and reality.

But this gap is an alarm bell warning that underlying problems loom within the state budget.

If legislators sleep through this alarm and fail to address these problems now when revenues are at historic highs, they will be forced to address them during an economic downturn. Then, corrective action will fall hardest on our most vulnerable neighbors. So, they should act now.

The first step in fixing these problems is acknowledging what’s causing this supposed budget gap. It isn’t too little revenue. According to the Office of Financial Management, revenues increased 113%, from $31 billion to $66 billion, since Gov. Jay Inslee took office.

The fundamental problem is that under Inslee, tax revenue going up 113% wasn’t enough to pay for his projects and commitments. Just during Inslee’s administration, state spending increased 128%, from 31.5 billion to 71.9 billion.

Democratic legislators argue this increased spending isn’t the problem, that the gap is because of inflation, a growing state, and increased caseloads.

Facts undermine their argument.

Revenue has grown much faster than inflation, and spending has far outpaced population growth. Washington’s population grew 17% while Democrats’ spending more than doubled.

And, according to the governor’s Office of Financial Management, many caseloads haven’t increased. Income assistance to needy families has “dropped dramatically despite a growing population of children under 18 years old.” Our prison inmate population is down about 23% from when Inslee took office and the number of juveniles in rehabilitation is 30% lower. K-12 enrollment is up but only by 2% since Inslee took control. The caseload of people in state-supported nursing homes is down 25%.

The problem legislators need to confront is bigger than inflation or population growth or caseload demands. It is structural.

One structural issue that must be grabbed by the horns is the size of the state’s payroll.

Under Inslee, the number of state workers has grown much faster than our population. The governor’s office reported that in 2022-23 alone the number of state government employees grew by more than 5%, while the population grew about 1%. The rate state government’s headcount is rising, combined with new public employee contracts that were considered the “largest compensation package in [the] union’s history”, isn’t sustainable.

As business owners across our state know full well, it’s not just the number of employees that escalates payroll costs, it’s healthcare. The governor’s office reports that, “Health care, including employee health insurance and medical assistance, is over 20% of the general fund budget.” Healthcare costs are rising faster than inflation, and the cost of healthcare for state workers will likely continue surpassing inflation and population growth.

Realigning the state’s payroll with population growth and existing revenue is critical to not only writing a balanced 2025-27 budget, but to our state’s future financial stability.

Rising healthcare costs for state workers is not the only budget driver needing attention. While the state’s nursing home caseload has fallen, demand for in-home nursing assistance has risen. The overall state medical assistance caseload has increased 24% since 2012. With the number of Washingtonians aged 65+ rising, legislators should deep-dive into how we can more efficiently deliver needed health and medical services to state employees and to some of the most vulnerable among us. Developing effective reforms will not be accomplished in a single legislative session, but legislators should get started.

Beyond scrutinizing payroll levels and medical delivery systems, a vital step toward writing a financially sustainable budget is demanding results from dollars spent. Committee chairs and budget writers should take the 2011-2013 budget, compare it to Inslee’s proposed 2025-27 budget, and determine whether every new dollar spent since 2012 has secured the desired results. If programs and spending that ballooned under Inslee aren’t delivering the expected results, they should be restructured or eliminated.

Unfortunately, rather than fixing structural problems, Democrats have decided to raise taxes. That’s not my opinion, it’s their plan.

Last month, a Democratic state senator accidentally sent presentation slides from a Democratic strategy session to some Republicans. Those slides exposed the Democrats’ plans to raise taxes on our state’s largest employers, to increase business payroll taxes, to increase real estate excise taxes on high-value property sales, raise taxes on storage units, ammunition and firearms. And triple the rate people’s property taxes can go up.

The Democrats will argue these tax increases won’t hurt lower and middle-class citizens because they are aimed at large corporations and the wealthy, who the Democrats refer to as ”villains.”

But taxes on business and real estate will trickle down on everyone’s heads and into their checking accounts in the form of increased prices for some goods and services, and increased rents and housing costs. The Democrats will disagree, arguing they intend to offer real estate tax breaks and rent credits, but just admitting those credits will be needed is close to conceding new taxes on business and property will raise prices on rents, housing and the goods and services provided by our state’s largest companies.

None of that is necessary.

The state is collecting money at historically high levels. It doesn’t need more taxes to write a balanced budget. Legislators convening in Olympia should scrutinize the effectiveness of recent spending and fix underlying budget problems before they even consider squeezing another dime from us.