Sherri votes...
and so should you!
November 2004:
This measure would create a fund designated for preschool through college education by increasing the retail sales tax rate by 1%. The fund would support preschool assistance for low-income children; additional K-12 programs selected by school districts with citizen input; additional higher education enrollments, scholarships and research; and salary increases for certain teachers and other employees of the school districts and community and technical college districts. A citizen oversight board is established and audits performed.
I recommend a NO vote on Initiative 884.
I am a strong believer in using state government to invest in infrastructure, and the most important long term piece of infrastructure the government should invest in is education. I’m usually a support of measures to raise taxes for education. I am anything but an anti-tax zealot.
However, despite all the wonderful things that I-884 proposes to do with the money raised by adding an additional 1% to the state sales tax rate, I have a hard time supporting I-884. I don’t disagree with the need for the money, but I am concerned that I-884 will lead us further down a dangerous path. It increases the reliance of the state government on sales tax revenues, and it handcuffs the legislature by setting all the money aside in a special fund that they can’t touch until they’ve spent certain amounts already on education out of the general tax revenues.
Washington is a blue state with a red state tax structure. Washington is one of only seven states with no form of state income tax, and one of six states that rely mostly on sales tax to fund the government. All of the other states that fall into one of these categories voted for Bush in the 2000 election: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, and Wyoming. Raising the state sales tax to 7.5% would give Washington the highest sales tax rate in the country. The tax structure in Washington seems unusual for a state with a Democrat as governor, two Democrats as Senators, and a majority of Democrats in the Congressional delegation.
Using sales taxes without income taxes to fund the government has two major drawbacks: sales taxes are more regressive and volatile than income taxes. Adding an additional 1% to the state sales tax rate is a 15% increase in tax rate, which is pretty big impact if you’re already just barely getting by. The less your income, the less your discretionary spending, so you can’t soften the impact by buying less. Of course, if you do buy less, then sales tax revenues drop, and the government has less money to invest in infrastructure – that’s the volatility. Sales tax revenues are more sensitive to changing economic conditions, and fluctuate more. When prices go up, or fear of economic insecurity goes up, spending goes down, and sales tax revenues go down. You can choose not to buy some things, but you seldom tell your company not to give you that income. Of course, if you lose your job, you lose the income, and the state would lose income tax revenue, but probably before you lost the job, you had already started spending less, and you will continue spending less while you don’t have a job, and probably for a while after you get a new job.
The argument that I-884 backers make to counter the sales tax argument is that our children can’t wait for the tax structure in Washington to be fixed. I have a child in public schools in Washington, so I’m not unsympathetic to that argument. I even co-chaired a campaign to raise a parcel tax for education when I lived in California, despite California’s notoriously broken school funding process. But it’s in part because of my experience in California that I have major concerns about I-884.
Everyone has at least heard of California’s budget woes, leading to a recall of the sitting governor and the election of another movie-star governor, who’s discovering that it’s much easier to fight cyborgs on the silver screen than budget deficits and a legislature controlled by the opposition.. There are many reasons for the California budget crisis, but one difficulty that not many people are aware of is that something like 85% of the budget is set in stone, with mandatory spending requirements. Some of these come from federal programs, and all states have to deal with them. However, California voters have also passed propositions, such as Proposition 98, that set certain spending requirements in law. In the case of Prop 98, the amount of money the state must spend on education is determined through a complicated formula, not through budget negotiations. When the manufactured energy crisis on top of the dot com collapse left California with an enormous budget deficit, there weren’t many options for dealing with it.
Consider it a cautionary tale. I believe in spending money on education; I believe that you can pay for schools now or you can pay for jails later, and schools are a more efficient investment. I don’t like paying for schools with regressive taxes that prevent the legislature from acting like a legislature. Are Washington schools in such dire shape that we need to pass a bad tax to fix them? If you think so, hold your nose and vote for I-884. If you don’t think it’s an emergency yet, tell the governor and the League of Education Voters to come back with a better proposal.
Some websites of interest for this topic:
http://www.taxadmin.org- has state comparison data on tax rates and revenues.
http://www.jointventure.org/taxpolicyworkbook/JVSVTaxWorkbook.pdf- a framework for evaluating tax proposals, done by Joint Venture Silicon Valley, a network of business, government, education, and community leaders.
http://www.edtrustfund.org - the I-884 web site
http://www.educationvoters.org - the League of Education Voters website.