This morning, the US Supreme Court upheld the Affordable Care Act, putting quality, affordable health care securely on the horizon for hundreds of thousands of Washingtonians. Beginning in 2014, more than 800,000 people without health insurance can gain coverage, reducing the number of uninsured by 74 percent.

While the court upheld the law in its entirety, it ruled that states are not required to expand Medicaid, a key provision of the law. But it would be foolish for policymakers not to move forward with expansion. This provision alone would expand coverage to an estimated 330,000 people in 2014 and would be fully funded by the federal government for the first three years. 

Continued implementation of federal health care reform will ensure access to quality, affordable health care for all Washingtonians- key to creating a healthy workforce, reducing overall costs, and helping children do better in school. 

Read our series on the impact of health reform in Washington state here. 

When legislators gather in Olympia for a special session on Saturday, they’ll deal with the mammoth undertaking of trying to preserve state services in the midst of continued global economic troubles. With revenues having shrunk considerably over the last two years and Washingtonian’s need for help having increased, the special session is also a prelude to the more difficult decisions to come in the regular session that begins in January.

We acknowledge the task is a daunting one. These decisions are troubling and legislators should find the process of making them excruciating. What’s before legislators today and in the months to come involve not simply a budget that needs balancing or a shortfall that needs closing. It’s much more than that.

We hope that legislators will understand the full force of any cuts they make. As painful as the responsibility to manage our state may be, it pales to the pain the cuts would cause.

Some like those being considered in college financial aid – the means for many in a generation to find opportunity – will forever alter the course of lives. It will alter the lives of their children. The decision whether to cut services for seniors will determine whether those of the Greatest Generation will spend their final days with dignity. Others like the proposal to further limit the health insurance for lower wage workers will alter lives, and quite literally end some prematurely.

Legislators should judge their actions based on (at least) the following criteria. They should not:

• Disproportionately impact people of color and low- and moderate income people;
• Damage our values, whether it be educating our children, making sure people have basic health care, or protecting the priceless beauty of the environment we are honor bound to pass along;
• Damage our long-term economic prosperity through cuts in such areas as education.

While it’s true they have avoided for the most part the worst of the proposals – those that would have completely eliminated programs -- these cuts still fundamentally fail the test.

Legislators need to redouble their commitment to a balanced approach – one that considers revenue. At a time when resetting government seems to be the buzzword of the moment, one idea for long-term reform is to examine the billions in tax breaks we hand out to corporate interests with little scrutiny. Shouldn’t we have some scrutiny when we are seriously considering dropping thousands of medical coverage and taking away the opportunity for college?

Take voters seriously in their desire for change and accountability: start by focusing on the never ending tax breaks that are often never examined to see if they accomplish anything.

What will the voters want next fall? This we know. Through all the wild swings of partisan politics, we will still be Washingtonians and we will continue to be Washingtonians, who believe in being caretakers of our environment, who want the best education for all of our children, who think  medical and dental coverage should not be available only to those who can afford it. The manifestations of our values are the systems we’ve built together over the years. Any talk of destroying them should be excruciating indeed – so excruciating that we have no choice to find another way.

Update:

Here's more information about the upcoming public hearings:

Monday, July 19, 2010
7:00 – 9:00 pm
University of Washington-Tacoma
William W. Phillip Hall
1900 Commerce Street
Tacoma, Washington
 
Wednesday, July 21, 2010
7:00 – 9:00 pm
Everett Community College
Parks Building, Multi Purpose Room
2000 Tower Street
Everett, Washington

Tuesday, July 27, 2010
7:00 – 9:00 pm
Administration Building Room 110
Washington State University- Vancouver Campus
14204 NE Salmon Creek Avenue
Vancouver, Washington 

Thursday, July 29, 2010
Time TBA (evening)
Spokane City Hall  City Council Chambers
808 W. Spokane Falls Boulevard
Spokane, Washington

We will follow the same format for all of the two-hour hearings.  It is as follows:

• Convene/welcome

• Presentation on 2011-13 budget by senior OFM budget staff (45 minutes)

• Public comment

(Original Post)

I’m pleased to have been asked by the Governor to help deal with the mammoth problems we face in maintaining public structures from education to health care. I’ll be on a diverse panel of leaders who will be advising the governor in preparation for the creation of next year’s budget proposal. The group will hold four public meetings, beginning July 19th in Tacoma.

It’s a good time to try new approaches, when we’re in the midst of a continuing recession expected to lead to a $3.5 billion shortfall next biennium (that is, if the problem is not made even worse by the passage of I-1107).

But the broad group of folks appointed by the Governor should not focus solely on shrinking our public structures. Not when more people are in need. And not when areas like education will have a bearing on our recovery.

We’ll need a more reasoned approach than just slashing:

• We should use this as an opportunity to think about the long-term structural challenge exacerbated by the recession -- our revenue structure doesn’t support the things people care about in our state budget.

• That means by all means, we should find smarter ways of delivering services, like assessing how the criminal justice drives expenditures. But  I have a deep skepticism about the idea of “zero-based budgeting,” in which all expenditures must be “requalified”  every two years. Many programs  like early learning , require time to show results. Others -- such as the Disability Lifeline for unemployed adults who have a disability that makes it impossible for them to work – are necessary . But they don’t have measurements that lend themselves to a zero-based process. A better approach is something we at the Budget & Policy Center have developed a tool to assess our state’s progress in key areas over time.

• One fundamental reform that should be considered is justifying millions of dollars in tax breaks. These exemptions and preferences now do not receive the same scrutiny in the budget process as other expenditures and are often allowed to stay on the books ad-infinitim.

• In looking for savings, we should not abandon our values nor forget about our long-term well-being. We must also ask hard questions about cuts that may save in the short-term but bring in long-term problems. Cutting back on health care, for instance, would only bring people to emergency rooms with more costly problems. Assessing the performance of programs is key, but they shouldn’t be held to arbitrary measures.

• We need to continue pursuing a balanced approach. The effects of the recession cannot be solely managed through cuts – it requires a balanced approach that includes revenue. Thus far, we’ve relied more heavily on cuts than on increasing revenue, which has made up only 8 percent of the steps we’ve taken this biennium. Many of the increases are temporary.

• We should keep in mind the effects of cuts that have already happened: $3.5 billion in 2009’s nearly all-cuts budget, then another $755 million this year. Major cuts have occurred and they will have a lasting impact (for example, huge increases in college tuition).

Join us for four public meetings  in the coming weeks:

• July 19 – Tacoma, 7-9 PM (UWT-William W. Phillip Hall, Milgard Assembly Room, 1900 Commerce Street)
• July 21 – Everett, 7-9 PM (Everett Community College, Parks Building, Multi Purpose Room
• Spokane (TBA, but likely the week of July 26th)
• Vancouver (TBA, but likely the week of July 26th)

Attention has been focused recently on the political back-and-forth of the revenue deliberations in Olympia, as if the only thing that’s at stake is only the political drama of whether this tax or that tax may go up. But getting scant attention is what the revenue proposals are actually paying for and what’s really at stake.

Behind the numbers are people, and the real drama in Olympia is about the thousands around the state who’ll be affected by what happens.

The deliberations will determine whether young scholars will see their dreams of going to college evaporate if student aid is cut. 

Working parents may lose child care and find themselves having to choose between work or the stability of their families. Children in their formative years would remain in overcrowded classrooms being less able to build a stable  foundation for their future.

A state that prides itself on its quality of life would see environmental cleanups put on hold. A state whose economic strength depends on a skilled workforce that draws and keeps companies here could jeopardize its future.

All remain on the chopping block dependent on the outcome of this special session, as lawmakers try to soften another round of cuts. Make no mistake, there will still be cuts piled on top of the $3.6 billion slashed last year when the recession left the state with inadequate resources to address the growing numbers who need help.

The House and Senate revenue packages, it’s worth remembering, would only represent less than 10 percent of the state’s total response to the budget problems that have come from the recession. Much of the rest has come from cuts. The question is just how much deeper the cuts will be, how many more lives will be impacted.

It’s worth remembering, as the debate rages on, what the revenue is for. It’s not to balance numbers on a ledger. More revenue isn’t needed just to end a political stalemate. It’s not about filling an impersonal budget shortfall. It’s not really even about whether we pay a few more pennies for a beer.

It’s to make sure the elderly are cared for, that children are educated, that the environment is protected, that the state protects its future – all those things we expect our government to do.

It’s easy to focus on the political debate, but let’s not forget why the revenue is needed in the first place, and what is really at stake.

New legislation will finally recognize that tax breaks are really expenditures and should be treated as part of the biennial budget. That legislation is Senate Bill 6853, “The Tax Preferences Act of 2010.” (Note: see the amended bill at the bottom of the linked bill report page)

In describing the legislation last week, Senator Rockefeller explained that the proposal would make “those who receive preferential treatment under our tax code” justify their preference like other parts of budget such as education and health care spending.

So, what are tax expenditures? They are special tax breaks that reduce the funds available for other priorities. In total, we will forego $13 billion of tax revenue in the coming two year budget cycle because of tax exemptions ($1.6 billion from those passed since 1995 alone). The figure below shows tax expenditures enacted since 1995 by category. Some of these tax expenditures make clear improvements to the tax system. Others need to be reviewed to determine whether they are meeting their stated purpose and whether they are a priority when considered alongside other spending items. (See the Center on Budget and Policy Priorities’ paper: “Promoting State Budget Accountability Through Tax Expenditure Reporting” for more information).

 
In Washington State, tax expenditures are treated quite differently from other expenditures in the budget process. We regularly review our spending on education, health care, and transportation, but not how to fund tax breaks. In Oregon, the Governor's biennial budget proposal includes a biennial report. Additionally, in 2009 Oregon enacted legislation which places a sunset date on most existing corporate and personal income tax credits.

While we don't do an official biennial review as part of the budget process, in 2006 the Legislature created a process for a long term review. The Joint Legislative Audit and Review Committee (JLARC) conducts extensive reviews of each tax expenditure based on predetermined calendar and makes recommendations about continuing or altering most of them (some were excluded from consideration). A Citizen's Commission for Performance Measurement of Tax Preferences then reviews JLARC's report and makes independent recommendations to the Legislature.

Unfortunately, JLARC's review process hasn’t resulted in many changes. This legislation would be giant step forward towards transparency and accountability.

The Senate Budget proposal released Tuesday makes significant cuts to our health, education and environmental infrastructure. On total, the Senate makes $838 million in cuts. These cuts come on top of the $3.6 billion eliminated last year. Last year's cuts will result in thousands of Washingtonians finding higher education unaffordable, tens of thousands of working families losing their health insurance and larger class sizes for kids in our public schools.

As previously mentioned, new revenues (including last year's modest revenue package and the revenue actions proposed in the Senate's budget) would account for only 10 percent of two years of budget-balancing actions.  Painful cuts in core services would make up the dominant share (37 percent) of actions taken to balance the state budget from FY2009-11.

The Senate Budget would:

• Eliminate grants ($11 million) that allow community health centers to provide health care to uninsured Washingtonians;
• Reduce financial assistance to lower income families struggling to make ends meet;
• Cut food assistance levels to lower income families;
• Reduce dental rates and services for adults and children;
• Cut funding for hospitals that serve a significantly disproportionate number of low-income patients;
• Reduce investments in higher education would be sharply;
• Suspend voter-approved efforts to reduce class sizes in early grades and improve student achievement;
• Sharply curtail temporary financial and medical assistance through GA-U for people who are unable to work due to disability;
• Further reduce mental health care funding for low-income residents;
• Eliminate assistance with activities of daily living such as bathing, eating, and dressing for many Washingtonians with long-term care needs;
• Cut programs that protect our air and water and clean up toxic spills; and
• Do nothing for the 93,000 (and growing) working Washingtonians on the waiting list for Basic Health.

Two and half years ago, the Budget & Policy Center published a policy brief expressing serious concerns regarding proposed ballot-initiative 960.

We said:

Responsible, efficient, and accountable policymaking is hindered when artificial and excessive restraints are placed on the legislature. Such is the case with Initiative 960, an initiative on the November ballot that would undermine the ability of the state to formulate and implement rational and thoughtful responses to public priorities. Contrary to claims of proponents the measure would not advance government transparency or voter awareness.

On Thursday, the Senate Ways and Means Committee heard Senate Bill 6843, which seeks to rectify many of the concerns we identified, while strengthening the integrity of the legislative process.

While many might focus on the temporary suspension of the two-thirds requirement to raise taxes, the legislation also would:

• Modify the cost projections required by the state budget office. I-960 requires the Office of Financial Management (OFM) to develop 10-year cost projections for any bill that might raise revenue. Ten-year economic projections are highly unreliable, however. Additionally, very few bills actually get a hearing, meaning hundreds of analyses of questionable worth are produced that clog up the legislative process. Instead, the bill would require OFM to develop more reliable five-to six- year cost projections, and only for bills that actually receive a hearing.

• Increase transparency by eliminating the advisory vote. I-960 requires that all bills meeting the new definition of a tax increase (and not otherwise required to be approved at the ballot) be sent to the voters in a non-binding advisory vote. But under I-960, the amount of information included in voter's pamphlets about advisory vote measures is very limited.  Unlike other types of ballot initiatives, advisory votes do not have to contain an explanation of the measure written by the attorney general, detailing how they would affect current law.  The initiative does not even allow written arguments -- both for and against advisory vote items -- to be included in the voter's pamphlet. In fact, the only descriptive language allowed for advisory votes under I-960 is a 13-word ballot question, along with a list of every legislator’s contact information, their party affiliation, and how they voted on the issues during the previous legislative session.
• Allow lawmakers to modify or close existing tax expenditures and loopholes. By requiring a two-thirds vote on all revenue-related measures, I-960 made it difficult for legislators to eliminate costly tax expenditures and loopholes. Suspending the initiative, would give lawmakers greater flexibility to reign-in tax expenditures along with other ineffectual spending items during the budget process. For example, the legislature is currently considering measures that would help level the playing field between in-state and out-of-state businesses. Without changing I-960, the legislature would be forced to muster a 2/3 vote even though they would be benefiting Washington businesses.