Monday, April 1, 2013

The $2 billion budget myth

Let's say you drive your car about 100 miles a week as part of your job responsibilities. Your boss gives you $50 a week to cover your gas expenses. Then one day your boss says, "Good news, I'm increasing your fuel stipend to $60, but we're also doubling your route to 200 miles."

While the stipend increase would be welcomed, is that really good news? The added miles would more than wipe out the extra $10 a week.

This is the kind of argument you'll hear from some lawmakers and advocacy groups over the coming weeks as budget negotiations heat up. They argue that the state has $2 billion more in revenue this budget cycle compared to the last one – like your gas stipend going from $50 to $60 per week.

Therefore, as the argument goes, we can balance the budget, meet our McCleary obligations, and avoid deep cuts to vital services all without new revenue.

While it is true that our revenues are up about $2 billion, only looking at this side of the equation is fiscally imprudent and misleading.

This argument conveniently leaves out the other half of the equation, like the part about adding more miles to your route. Our expenses have also increased by more than $2 billion since the last biennium.

We have more kids in public schools, more students enrolling in higher education that need financial assistance, and more low-income families and seniors that need medical care.

In other words, it costs more this year to run the state than it did last year. Despite having more money this year, our revenues are not keeping up with expenses.

Based on current expense and revenue projections, the state budget is about $1 billion short of paying for our obligations. When you add our McCleary obligations, we're about $2.3 billion short.

We are not going to find $2.3 billion in cuts alone. We've cut $12 billion from the budget since 2008. House Democrats are pleased to see Governor Inslee's call for closing some tax loopholes to balance the budget and fund education for our kids.

Read this story in Spanish.