Temporary sales tax isn't answer to budget woes

The Legislature needs to get spending under control so it can be sustained with the available tax revenue.


The Legislature is back in Olympia attempting to -- once again -- find a way to balance a budget that's $1.4 billion out of whack because tax collections are falling short of the original revenue forecast.

And while lawmakers are at it, Gov. Chris Gregoire would like them to trim another $600,000 from the $31 billion two-year budget to replenish the state's reserve fund.

Reducing the budget is far from simple because lawmakers have already made several rounds of cuts as the revenue forecast keeps coming up short. A variety of areas are being considered for cuts, such as reducing the number of days students attend school.

Gregoire would like to see a temporary sales tax of half a cent imposed so that about $500,000 in cuts -- those aimed at education and public safety -- could be averted. This tax would only be imposed if it were approved by a vote of the people.

A recent poll shows support for a tax increase to reduce cuts is growing. Pollster Stuart Elway's latest survey of voters found support for a "cuts-only budget" has shrunk from 37 percent to 20 percent. In addition, he said, 54 percent of the people surveyed said they'd be willing to pay a higher sales tax to stave off more cuts.

We, too, find the cuts -- particularly to basic and higher education -- extremely troubling.

However, as we said earlier this week, we believe it would be a mistake to impose a temporary sales tax to deal with this budget problem.

Our concern is twofold. A higher sales tax would slow the economy at a time when it appears to be gaining positive momentum. And, perhaps more importantly, we fear the increased revenue would fuel spending that cannot be sustained.

The current two-year budget was built on a revenue forecast that anticipated an annual increase in tax collections of 7 percent a year. It doesn't take a Ph.D. in economics to know that was an unrealistic forecast.

In reality, tax collections are likely to be flat or modestly higher. This means the state should have about the same number of actual dollars to run state government as it did in the previous two-year budget cycle. The problem is that costs -- including wages and benefits -- continue to go up. Social programs are also increasing as medical costs soar and the need for public assistance is higher as a result of the Great Recession.

Costs are going to keep going up but the temporary sales tax would drop off in 2015 leaving the state short of revenue to cover the costs. That leaves lawmakers with the choice of keeping the tax on or making cuts -- perhaps more dramatic cuts than they now face.

This is the time to get state spending under control so it does not exceed the tax revenue collected now and in the future.

A temporary sales tax will create unnecessary economic stress now while creating budget problems later.


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