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Budget pain looms for legislators

By Kathie Durbin
Published: December 12, 2009, 12:00am

At Vancouver breakfast, local lawmakers discuss state’s $2.6 billion deficit

Southwest Washington lawmakers offered a somber assessment Friday of the challenges they will face next month as they begin debate over how to close a $2.6 billion state budget deficit.

The annual legislative breakfast at the Hilton Vancouver Washington, sponsored by the Greater Vancouver Chamber of Commerce, Identity Clark County and the Columbia River Economic Development Council, had a less partisan tone than usual, as members of both political parties conceded that nothing will be easy about the task that lies ahead.

“After five years in the state Senate I have lost the dream of being king,” quipped Sen. Craig Pridemore, D-Vancouver, who has often disagreed with Sen. Joe Zarelli, R-Ridgefield, on state spending priorities in the past. Both men sit on the budget-writing Senate Ways and Means Committee.

“We start realizing partisanship doesn’t get you very far,” Pridemore said. “We’re going to have to do painful cuts, painful tax increases.”

The business community reflected the stark reality of the state’s budget crisis too, offering a short list of legislative priorities including tax breaks for solar manufacturing, support for the Columbia River Crossing and no further reductions to higher education funding.

“Southwest Washington’s leading business organizations believe it would be irresponsible to make broad demands for new economic development, transportation and education in the face of drastic cuts in state basic services,” the sponsoring organizations said in a joint statement.

Moderator Bart Phillips, president of the Columbia River Economic Development Council, asked each of the nine legislators on the panel to address the all-cuts budget that Gov. Chris Gregoire presented Wednesday and to say how they would balance the budget and what the state could do to create jobs.

Phillips also asked each lawmaker whether he or she would favor going after a bigger federal contribution to the Columbia River Crossing if President Obama and Congress approve a second stimulus.

The answer to that was a resounding yes.

Case for new bridge

The federal government “ought to actually invest in something that makes sense,” Zarelli said. The Columbia River Crossing is among the most important projects in the country, he added. “Our (congressional) delegates need to make that case. … We need to expect more out of that delegation.”

Zarelli repeated his call for immediate cuts in state spending to lessen the impact during the second year of the budget cycle. He also called for far-reaching reform, including a return to the core functions of government and a search for new, more effective ways of delivering services. Both will be needed to address a continuing deficit in 2011 and beyond, he said.

“We cannot cut our way out of this and we cannot tax our way out of this.” he said. “We cannot continue to spend as if we’re going to get another windfall.”

The state boxed itself in by accepting federal stimulus funds that require it to maintain a certain level of funding for programs through the end of 2010, he said.

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Rep. Deb Wallace, D-Vancouver, said it’s important not to oversimplify the debate. State spending can create jobs at the local level, she said. For example, state dollars invested in economic development have created hundreds of jobs in Clark County.

Cuts to education would hurt the state’s ability to recover from the recession, said state Rep. Tim Probst, D-Vancouver. He promised to work for passage of a solar manufacturing tax incentive bill that died in the final hours of the 2009 session, but he admitted it will be a hard sell because “it’s a tax incentive in a very tough budget year.”

Rep. Ed Orcutt, R-Kalama, had some of the panel’s toughest words for the governor. He said Gregoire hasn’t done enough to improve the business climate, especially for forest products companies. Gregoire released a plan last week to streamline natural resources permitting and appeals.

“We need to get down to single-agency permitting” for timber sales and leave the departments of Ecology and Fish and Wildlife out of the process, Orcutt said.

What to tax

Orcutt also warned the business community to watch out for “things going in the wrong direction” when it comes to finding new sources of revenue.

Eliminating tax loopholes, as the governor has said she’ll consider, could result in the loss of valuable tax incentives for businesses that were debated and approved by previous legislatures and signed by previous governors, Orcutt said.

“You will have to be on the defensive,” he added.

Rep. Bruce Chandler, R-Granger, whose 15th District includes a small portion of east Clark County, said he’s looking forward to the budget debate. One challenge, he said, will be to not lose sight of the long-term future in the rush to balance the 2010-11 budget.

Imposing a sales tax on professional services, an option the governor will consider, would affect people like his daughter, a hair stylist in Yakima, Chandler said. He predicted that her clients will respond by coming in to get their hair done less frequently.

“People respond to tax policy. Every cost we impose changes consumer behavior and changes business behavior,” Chandler said.

Because the economy and access to credit have changed so dramatically, the state will have to make a fundamental change in how it funds and delivers state services, he added.

“We are never going back to 2007. We are going to come out of this recession a much different economy. We are going to have to allow our businesses to be flexible to adjust to the expectations of their customers.”

Rep. Jim Moeller, D-Vancouver, went a step further, saying the state must eventually reform its entire tax structure.

“This state happens to be the most regressive tax state in the nation,” Moeller said. “The poor pay a disproportionate share of their income. We need to change that. We cannot continue to squeeze more out of the poor to pay for services.”

How to balance

Phillips asked each lawmaker to say how he or she would balance the budget “if you were king.”

The question drew few specific answers.

“It’s a simple answer but not easy,” said state Rep. Jaime Herrera, R-Ridgefield. The state needs to focus on its core priorities, including public safety, transportation and education, she said.

“We haven’t chosen to fundamentally change the way we do business,” Herrera said. “We spent $70 million on new park land last year” when the state can’t afford to maintain and operate the parks it has now, she said.

Orcutt said he favors “a haircut budget, just a little off the top.”

“There are some things the governor did well,” he said. For example, she didn’t propose eliminating the State Children’s Health Insurance Program; instead, she tightened eligibility for the program.

“Don’t just slash entire programs,” Orcutt said. “When you eliminate something entirely, you inflict more pain on people who can least afford to pay.”

Rep. Jim Jacks, D-Vancouver, had the last word. He used it to make a pitch for public involvement in the hard decisions ahead.

“I’m the king. Great for me, maybe not so great for you,” he said. “We don’t like dictators. That’s not how this country works. We’re a democracy. It’s your job to have an opinion and to share it with us. We are all in this together.”

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