Schmudget Blog


"A Shared Vision" Part Two: Thriving Communities

Posted by staceys at Feb 20, 2009 03:00 PM |
Filed under: State Budget, Community

Today we continue our four-part series on the important role of public investments in our state. The series is based on the Progress Index, a framework for analyzing the state budget that was developed by the Budget & Policy Center. The Progress Index utilizes four commonly-held values: education and opportunity, thriving communities, healthy people and environment, and economic security. Last week, I wrote about education and opportunity.

Thriving communities rely on public investments that maintain our state infrastructure and protect our natural resources. Public structures such as transportation, communications, justice, and the arts keep our state economy in motion, our neighborhoods safe, and our cultural life vibrant. To create thriving communities, we need to do more than address short-term needs. We need thoughtful, long-term planning and the sustainable use of resources.

The state can promote economic growth and the wise use of resources while also ensuring that business, education, and the arts serve the interests of all Washingtonians. The Budget & Policy Center has identified four research-based goals that will help us make progress towards creating a state we all want to live in.

  • Promote Economic Growth and Sustainable Development
  • Strengthen Public Transportation and Infrastructure
  • Protect Public Safety and Implement an Equal Justice System
  • Ensure Efficiency and Transparency in State Government

Close to half of the state's investments in thriving communities go towards public safety and the justice system. Another sizable chunk is dedicated to efficiency and transparency in state government. (See graph) Much of the state's transportation investments are made through the capital budget, which is not considered in the Progress Index.

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As the population grows in Washington State, our forests, farms, and recreation areas are at risk of development. One important state investment, the Washington Wildlife and Recreation Program, works to preserve and protect these areas through grants to local governments. Since 1992, the program has funded over 920 projects across the state to create parks, protect wildlife habitat, and preserve working farms.

At the same time, innovative economic development programs create jobs that pay livable wages for workers throughout the state. Investments in education and worker training programs, the renewable energy economy, and research and development all contribute to broad economic development. For example, Washington Manufacturing Services is a state supported nonprofit that provides small manufacturers with low-cost consulting services to help them increase productivity and improve competitiveness.In addition, state contributions to renovations of local landmarks are important for creating communities in which businesses can thrive.

Making smart investments in public safety means more than building new prisons. It requires research-based approaches to improving outcomes for offenders. Washington has made efforts to reduce recidivism among youth offenders by investing in the Family Integrated Transitions (FIT) program, which includes mental health and substance abuse treatment that begins while youth are still incarcerated and continues during the transition period back to their community. FIT is currently available in nine counties. A Washington State Institute of Public Policy study found that while expensive, the costs of the program were easily outweighed by the savings to taxpayers by avoiding future incarcerations.

Finally, meaningful participation by citizens in the decisions of government requires publicly accessible information on government policies and programs. Washington State's budget process has consistently earned high marks in national studies of transparency in government. However, the state's system for reviewing tax exemptions, which amount to $13 billion of lost tax revenue for the state, could be more transparent by including the exemptions in the state's annual budget process.

Does the AWB Want an Income Tax?

Posted by jeffs at Feb 18, 2009 02:40 PM |
Filed under: State Revenue

Don Brunell frequently argues on his blog that state business taxes are too high. (As president of the Association of Washington Business (AWB), it's part of his job.) His recent blog post used a new study from the Council of State Taxation (COST) to emphasize his point about business taxation.

In the study, Washington State is ranked 12th among the 50 states by the share of state and local taxes that are paid by businesses. We noticed a commonality among the top-ranked states: most have little or no income tax.

The table below shows the 17 states that rank in the top third. Thirteen (including Washington State) have no personal income tax or a low personal income tax. If we had a personal income tax, we'd probably be lower on the list. The remaining four states either have no general sales tax or a relatively low reliance on property taxes.

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Here's some more to chew on: Studies that measure the share of taxes paid by businesses versus individuals can be misleading because they don’t fully account for who actually pays the tax in the end.

In Washington State, this is particularly true because of our reliance on the business and occupation tax (the B&O) rather than a corporate income tax. Businesses are more able to pass the cost of the B&O to consumers. And since the tax is levied regardless of the business’s ability to pay, it falls disproportionately on individual small business owners.

Bottom line? Studies like the one cited on the AWB blog are hardly conclusive evidence that Washington State’s business taxes are too high. We need a more comprehensive conversation about how to improve our tax structure in ways that benefit all Washingtonians.

"A Shared Vision" Part One: Education and Opportunity

Posted by staceys at Feb 13, 2009 01:25 PM |
Filed under: State Budget

Broadly available education and opportunity is fundamental to the future of our state. Education opens doors to better job opportunities, higher wages, and greater job security. Success in today’s competitive, knowledge-based economy will require more than a basic education. Our children need schools that provide sophisticated, high-quality learning environments so they can graduate with the skills and knowledge to succeed in the global marketplace.

Education begins early and continues throughout adulthood. The Budget & Policy Center has identified four research-based goals within this value area so we can begin to measure our progress towards creating a just and equitable state.

  • Invest in Early Learning
  • Provide a High-Quality Education to All Students
  • Prepare All Adults for Meaningful Careers
  • Cultivate Opportunities for Higher Education

The state has a constitutional mandate to provide a basic education to all students. Most of the funds in the 2007-09 budget that were allocated to Education and Opportunity went towards the goal of providing a high-quality education to all students. The state’s public universities received the next highest amount, followed by workforce training, and then early childhood education. (see graph)

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Research continues to show the importance of early childhood education to student success in later grades. A study from the Washington Learns committee (which was co-chaired by Governor Gregoire) found less than half of kids entering kindergarten in the state are adequately prepared for school. Parents generally pay for preschool and child care, which can equal up to 30 percent of a median family income. State and federal programs are designed to assist lower income families with these costs, but in 2006 funding was insufficient in Washington and 42 percent of eligible families went without services.

A high quality K-12 education system depends on good teachers, well-run schools, and challenging course work. Washington has close to 2,000 National Board certified teachers, a credential which requires educators to show a mastery of their subject matter, work closely with parents, and stay abreast of professional theory. The state provides incentives for teachers to achieve the certification and even more if they choose to teach in an under-resourced school.

The state is also working to improve instruction in math and science. Last school year, only half of seventh graders passed the math section of the Washington Assessment of Student Learning (WASL) and in 2006, forty-five percent of students who went directly from a state high school to a community or technical college were required to take remedial math classes. In 2008, the State Board of Education approved a plan to increase the math and science requirements for high school graduation to address these concerns.

Completion of one year of post-high school education and a credential can lead to a significant boost in earnings. A recent survey of Washington businesses found that the highest vacancy rates were for jobs that required more than a high school diploma, but less than a baccalaureate degree. One barrier to continuing education for workers is financial limitations. In 2006-07, the state extended “Opportunity Grants” to 843 lower income workers, most of whom were parents. The program was a success – 73 percent of the grantees completed a full year of school and the program was expanded statewide.

Likewise, affordability can be a significant barrier to lower income students who are interested in higher education. In 2007, Washington enacted a new College Bound Scholarship that notifies students in 7th grade from lower income families that the state will pay the full cost of tuition at any public college or university in the state if they pledge to graduate from high school.

Recent state investments in high quality teachers and improving access to worker training programs have resulted in meaningful progress in education and opportunity in our state. We still face challenges in expanding access to early childhood education and ensuring our students are fully prepared to meet the workforce needs of the new economy. These are investments that will have a lasting impact on the future of our state. We cannot allow the fiscal crisis we now face to derail those efforts.

$3 Billion for Washington State Fiscal Relief

Posted by jeffc at Feb 13, 2009 12:10 PM |
Filed under: State Budget

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The federal stimulus package, which may finally be a done deal, includes a number of provisions that will affect Washington State. The two that will have a significant direct effect on the state deficit are an FMAP boost (see my update on that) and the state fiscal stabilization fund. Together, the total is just over $3 billion.

The state fiscal stabilization fund is split into two portions. One is dedicated to education; the other is more flexible. The block grant for education (about $820 million for Washington State) can be used to stabilize state education funding, with any remaining money going to school districts.

The more flexible portion can be used to shore up state funding in other basic services and can also be used for school modernization, renovation, or repair.

 

More detail on the state fiscal stablization fund can be found here.

UPDATE: Federal Stimulus Requires State Investment in Health Care

Posted by jeffc at Feb 13, 2009 11:00 AM |
Filed under: Health Care, State Budget

NEW NUMBERS AND GRAPH BELOW

Public access to affordable health insurance is especially important during a recession. For many people, the loss of a job means the loss of health care. For those whose jobs didn’t provide health insurance, the loss of income makes health care even less affordable. Now is not the time to cut state investments in the health and well-being of people in Washington.

The federal economic recovery package that is being debated in Congress will likely include an increase in the Federal Medicaid Assistance Percentage (FMAP). This provision will ease some of the pressure on the state budget and allow us to protect other key health programs. But if we’re not careful, budgeting decisions could result in deep cuts in essential services and the forfeiture of some federal funding.

FMAP is the share of Medicaid spending that is covered by the federal government. (Medicaid is the primary source of public health insurance for lower income families across the country. It is funded jointly by states and the federal government.) Washington State’s FMAP is about 50%. So out of the roughly $4 billion spent annually on Medicaid in Washington, the state covers about $2 billion and the federal government covers about $2 billion.

If the recovery bill passes in its current form, federal dollars for Medicaid would rise. We will be able to reduce our state spending on Medicaid without reducing total spending. This would happen through an immediate increase in the state’s FMAP to 60% or perhaps higher. That would mean that the federal government would pay for 60% (instead of 50%) of our $4 billion Medicaid program. The state would only be required to pay 40% (see graph below).

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In that scenario, we could reduce our state Medicaid spending from roughly $2 billion to roughly $1.6 billion without cutting people off the program or reducing benefits. This will free up money we would otherwise spend on Medicaid to protect other important health care programs. (Medicaid is only one piece of the health care system in danger due to the deficit.)

A word of caution, however: If we cut Medicaid spending any more than the FMAP increase will cover, we’ll kill the golden goose. Suppose we cut our Medicaid spending by an additional $100 million per year over the amount covered by the recovery package. Because the federal government will only fund 60% of the total funding, the federal share would also fall—by $150 million. We would lose $1.50 in federal funding for every additional $1.00 we cut. It would be a bad move for people suffering from the recession and it would be a bad move for the state economy.

UPDATE

Based on the latest estimates from the Government Accountability Office (GAO), the federal recovery package will increase federal Medicaid spending by $2.06 billion between now and the first quarter of 2011. The state will be able to reduce Medicaid spending by $2.06 billion over the three fiscal years while keeping total spending on the program constant. The money will be divided among fiscal years as shown in the graph below, according to the GAO.

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A Shared Vision for Washington State: Four-Part Series

Posted by staceys at Feb 13, 2009 06:25 AM |
Filed under: State Budget, BPC News

Later today schmudget will post the first in a four-part, Friday series that outlines a shared vision for Washington State. The Budget & Policy Center recently published a report called the Progress Index which sets up a new framework for evaluating the state budget based on shared values and goals. The framework reminds all of us that we have a shared responsibility to create the state we want to live in. Together we must ensure that our air is clean, our drinking water is safe, and our public schools provide an excellent education to all students. This is work we must do together because no one person can do it alone.

The Progress Index highlights four essential values: Education and Opportunity, Thriving Communities, Healthy People and Environment, and Economic Security. The report divides the 2007-09 state budget into these four value areas (see graph) and identifies research-based goals within each area.

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In these times of economic crisis, it is possible to lose sight of the important role of state investments in all our lives. We are all feeling the pinch of the recession, at home, at work, and in our state government. We must be thoughtful in our investments and make smart choices to protect the progress we’ve made and secure a better future for tomorrow.

You are welcome to read the report and share your thoughts with us. With this project, we hope to initiate a new conversation in Washington State about where we are, where we want to be, and how we can get there.

General Assistance: New Strategies for a Vital Program

Posted by staceys at Feb 11, 2009 10:00 AM |
Filed under: Economic Security

gauss.pngToday the Budget and Policy Center released a new policy brief on Washington State's General Assistance - Unemployable (GA-U) program. The paper, entitled, "General Assistance: New Strategies for a Vital Program," outlines the value of GA-U, which offers economic security and health care to over 20,000 working-age adults with disabilities in our state. The Governor has proposed eliminating the program, a proposal that would have a very detrimental effect.

In addition, the paper discusses how GA-U could better serve clients through implementing strategies that will improve outcomes and reduce costs. Included in these proposals are:

  • Provide a medical home for every GA-U client
  • Expand coverage for mental health and substance abuse treatment
  • Improve state facilitation of eligible GA-U clients to federal programs
To read the full text, go here.
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