Washington needs more revenue: Add a penny to the state sales tax

JUST last spring, state lawmakers facing the fallout from the worst recession since the Depression slashed the state's budget to the tune of $3.6 billon.

People lost medical coverage. Nursing homes suffered. Educational opportunities were lost. It's a sad reality that with a recession comes the greater need for services, but less money to pay for them.

We thought we'd been through the worst. But the economy continued to worsen. So lawmakers will return to Olympia this week needing to find another $2.6 billion.

On the heels of cuts already made, we cannot afford a one-sided approach of slashing away at investments for working people, such as the Basic Health program, which provides medical coverage at a time when fewer people are insured through work.

A more-balanced approach would mean doing what at least 30 other states are doing — cutting spending, certainly, but also raising revenue. And we need sufficient revenue to protect our present and our future.

Lawmakers face some realities. Much of the state's budget cannot be cut because of legal requirements and federal mandates. Only $7.7 billion of the state budget is available for cuts. Trying to cut $2.6 billion from that pot would mean slashing deeply into critical areas like education, the environment and health care.

Gov. Chris Gregoire, in her initial budget in December, gave a glimpse at what a cuts-only budget would look like and, to her credit, couldn't stomach what she saw. Not only would these cuts harm struggling families now, but many of them would cost us money in the future:

• Eliminating state-funded early learning programs for 1,500 lower-income 3-year-olds only means they'd be less prepared to succeed;

• Significant reductions for state water-quality programs erode our quality of life and have consequences later on;

• Cutting health coverage for more than 65,000 people by eliminating the Basic Health program will just send people to emergency rooms;

• Sharply limiting the availability of child-care assistance to working families would only make it harder to find and keep jobs.

• Eliminating funding to reduce premature births and infant mortality through providing support for lower-income women with at-risk pregnancies would lead to health problems for babies.

In fact, we crunched the numbers. Combined with the cuts made last year, the governor's budget would mean slashing some critical areas, like higher education and job training, or such programs as those that help needy families with children and those physically unable to work by a fourth.

The governor has signaled that she'll come out with a more-balanced approach in January that will include $700 million in additional revenue.

But in the context of the state's $11.6 billion budget challenge over these two years, that's a drop in the bucket. It would still mean more major cuts. We can do better with a balanced approach and there's much that we can do.

In the future, the state needs to address its fundamental revenue problems that are weighted for the rich and against the poor, and do not provide sustainable amounts just to maintain our current services.

For now, raising the sales tax by just a single penny for every dollar we spend — while also giving lower-income working families a rebate — would help by raising about $1 billion.

We think the penny increase could be temporary, if we take other steps like closing a loophole on the sales tax for services. Why, for example, shouldn't a person getting a Botox treatment or a spa massage not contribute to the cost of protecting our water quality, as do people who pay sales tax on the purchase of a handheld back massager or a tube of lipstick?

Whatever they do, state lawmakers should take a more-balanced approach than last time. This will be a short legislative session, but the decisions made over the next couple of months will have long-standing implications.

Remy Trupin is executive director of the Washington State Budget & Policy Center, an independent, nonprofit think tank specializing in analyzing and offering solutions on state fiscal policy (www.budgetandpolicy.org).