A decade ago, I was the primary author of the annual survey on hunger and homelessness published by the US Conference of Mayors. During the intervening years, there have been significant new efforts to reduce homelessness in America. Cities, counties, and states have adopted 10-year plans to significantly decrease or eliminate homelessness. There was wide agreement that we all need public supports and services that provide avenues to economic security.
Washington State has a statutory goal of reducing homelessness by 50% by 2015. As part of this 10-year plan the state has made significant investments towards that goal including doubling the size of the Housing Trust Fund and towards helping offenders that are being released from jails and prisons transition into the community without ending up homeless.
This plan (and the complementary plans of cities and counties across the state) are apparently not a priority now. That's the message one would infer from the budget that the Governor submitted. Half-way through our ten-year plans have we decided that the goal of ending homelessness is no longer of value?
After much progress, the Governor's budget undermines this goal by proposing cuts in mental health coverage for adults who don't qualify for Medicaid, reducing transitional housing funding for offenders reentering community settings, reducing the investment in the housing trust fund by 50%, and eliminating cash assistance and medical coupons to disabled adults who can't work.
Homelessness is already on the rise in cities across the nation. According to a report by the Center on Budget and Policy Priorities, a fall 2008 survey of 22 cities found 16 showed an increase in homeless families with children. In another national survey, one in five responding school districts reported having more homeless children in the fall of 2008 than over the course of the entire 2007-2008 school year.
Is this the future we want for our cities and hometowns here in Washington? Now more than ever, the state should invest in reducing homelessness through public supports and services that provide economic security and pathways out of poverty.
The legislative session started today. As we’ve discussed, this session carries with it the challenge of overcoming the largest deficit in decades.
But as Brad Shannon pointed out yesterday in The Olympian, lawmakers also face another enormous challenge: how to "leverage spending to increase jobs, avoid layoffs and spur economic growth."
One strategy of the economy-boosting agenda is to coordinate state plans with programs for economic stimulus that will come from the federal government under President-elect Barack Obama. Shannon's article contains detail on the plans of legislative leaders.
The word from D.C. is that aid to the states is likely to come in the form of block grants and possibly through expanding existing programs that funnel money to transportation or wastewater projects, Shannon says. Gregoire’s list to Congress included $132.9 million for transportation projects and $352.7 million in water and sewer projects.
Federal aid may still be a few months away.
The Governor's budget (released last month) proposes deep cuts to the state budget that would limit our ability to pursue public investments in health, economic security, and education.
The stark proposal is in response to a large budget deficit. In part, this deficit is the product of the economic crisis. But, as the attached graph shows, the economy is only part of the story. The ability of the state tax structure to pay for normal growth in government spending has been deteriorating for over a decade.
This graph follows the standard of showing budget amounts as a share of total personal income. This provides insight on the resources we have to fund public investments and also recognizes that the cost of government grows along with economic and demographic trends.
The purple line shows that revenue has been eroding since long before the recent economic downturn. It’s a combination of significant tax cuts, spending limitations, and a tax system that doesn’t grow along with the economy even during good times. So while the current fiscal crisis has obviously been exacerbated by the economic crisis, it’s a longer-term problem.
The green line shows spending trends. Up to now, the state has been able to use reserves and stopgaps to hold spending a little steadier than our revenue stream, but we’re out of reserves now and are facing the largest deficit since the 1980s.
The budget cuts proposed by the Governor (shown here by the dashed green line) would be the largest, relative to the economy, in over a decade.
So what does that mean for Washington? Can a budget of this size truly reflect our values and move our state in the right direction?
As the state economy faces historically large deficits and lawmakers scramble to figure out how to balance the budget, Tim Eyman is proposing a new voter initiative designed to limit to the rate of inflation the amount of revenue state and local governments can take in. Any additional funds coming into the government would go directly to reducing property taxes.
To read the full text of the Lower Property Tax Initiative, go here.
Brad Shannon, political editor at The Olympian, points out on his Politics Blog, that the timing of the initiative is probably not a coincidence. "I'm guessing the measure is timed to lock in the soon-to-be reduced size of state and local governments, which are shedding payrolls and costs due to the ongoing recession," Shannon writes. "In Thurston County, losses of sales tax and other revenues are leading to large layoffs of staff, for instance, and Gov. Chris Gregoire has proposed some $3 billion in reduced program outlays. In 2010 and beyond, revenues are likely to spring back, allowing cut programs to be restored, unless lawmakers cut taxes or Eyman's measure succeeds."
For more information see our report on sound property tax policy for the state.
For many here in Washington State, the grim reality of the national economic crisis hit home on December 18th, when Governor Gregoire released her 2009-11 budget proposal. The budget contains $3.4 billion in spending cuts that will dramatically reduce funding in the areas of health, education, and social services to try to deal with a projected $5.5 billion deficit.
Many states are facing similar budget problems. According to the Center on Budget and Policy Priorities, a national think tank in Washington, DC, 44 states are experiencing budget deficits that could amount to more than $350 billion in 2010 and 2011. And at least 30 states are imposing budget spending cuts that are likely to harm their most vulnerable residents.
This op-ed by Paul Krugman in the NY Times argues against drastic spending cuts by state governments. He cites cuts in programs such as South Carolina’s juvenile justice program, which will force young offenders out of group homes and into prison and the decision by a committee that manages California state spending to halt all construction outlays for six months.
Now, state governors aren’t stupid (not all of them, anyway). They’re cutting back because they have to — because they’re caught in a fiscal trap. But let’s step back for a moment and contemplate just how crazy it is, from a national point of view, to be cutting public services and public investment right now.
Krugman, who is a professor of Economics and International Affairs at Princeton University, notes that the nation is no less able to pay for these and other vital programs than it was before the recession. "Our capacity hasn’t been diminished; our workers haven’t lost their skills; our technological know-how is intact," he writes. "Why can’t we keep doing good things?"
Part of the reason is that revenue is reduced because private spending is down. And almost all states, including Washington, are obligated to balance their budgets. But instead of draconian cuts in spending, perhaps now is the time to consider new ways to increase revenue.
Krugman points out that public investment makes sense during tough economic times:
In fact, the true cost of government programs, especially public investment, is much lower now than in more prosperous times. When the economy is booming, public investment competes with the private sector for scarce resources — for skilled construction workers, for capital. But right now many of the workers employed on infrastructure projects would otherwise be unemployed, and the money borrowed to pay for these projects would otherwise sit idle.
And shredding the social safety net at a moment when many more Americans need help isn’t just cruel, he says. It adds to the sense of insecurity that is one important factor driving the economy down. Aid from the federal government may also help states to afford vital programs and new projects. Certainly, that would help.
One thing is clear, Washington legislators will have their work cut out for them when they return to Olympia on January 12th. Let's hope all ideas and solutions to our budget woes will be considered.
The Seattle Post-Intelligencer has a thoughtful editorial on the Governor's budget proposal in Friday's paper. We met with their editorial board the day before the Governor released her proposal. (You can watch my opening comments and count the amount of times I use a variation of "articulate"). Our primary focus was to brief them about the Progress Index, which encourages an analysis of the budget based on Washington values. This is from the PI editorial:
The solid grounding for a larger discussion about the future involves not just efficiencies but also looking at what we want for our state, whether spending supports our reasonable goals and whether we need more money to keep on track. The Washington State Budget & Policy Center has done excellent work in those areas. Its leaders call the governor's proposal "the starting point for the conversation."