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Thursday, April 7, 2011

Another Letter from Jaime

Jaime Pedersen responds to my advocacy of a fairer tax and budget system.

Dear Mr. Drake --

Thanks for your message and for your advocacy for ending tax breaks. If we could do so, it would certainly help balance our budget and protect critical services in our state, including for our most vulnerable people. Last year, I was proud to vote to suspend Initiative 960 (which required a 2/3 vote in the legislature to increase taxes or repeal tax loopholes) and to vote for a bill that repealed a variety of tax exemptions and increased several taxes to avoid an all-cuts budget. That bill was not as broad as I would have liked (for example, it did not repeal the longstanding B&O tax exemption for banks on their interest income from first mortgages, increase taxes on private airplanes, or repeal the tax exemption on cosmetic surgery), but it did raise nearly $800 million for the 2009-11 biennium and nearly $2 billion for the 2011-13 biennium. But for that bill, our shortfall would be much worse.

Then came the 2010 elections. The voters soundly rejected I-1098 (the income tax initiative, which I endorsed and voted for), approved I-1107 (which repealed taxes on candy, soda, and bottled water I mentioned above), and approved I-1053 (which requires a 2/3 majority to increase taxes). The Democrats also returned with smaller majorities in the House and Senate. The net effect is that we have no ability to increase revenue unless we can convince the voters to agree. 

We returned to Olympia in January to face a massive budget shortfall for the 2011-13 biennium. The cost to maintain existing services is roughly $37 billion and our projected revenues are $32 billion. Of the $32 billion, roughly $26 billion covers the cost of programs that are either constitutionally mandated (such as basic K-12 education, interest on bonds from school construction and other capital projects, the court system, and elections) or federally required (such as the core elements of the Medicaid program). So we have $6 billion in revenue to cover the other $11 billion of expenses -- assuming that we leave no reserves. The House Ways & Means Committee has passed -- and I expect to vote on Saturday in favor of -- a budget that has been balanced almost entirely with cuts that I would prefer to avoid.

I am very open to sending tax breaks to the voters. I am a co-sponsor of HB 1847, which would eliminate a variety of exemptions to help fund the Basic Health Plan. And I just signed a bill that would repeal the nonresident sales tax exemption and the first mortgage deduction to restore class-size reduction funding.

But the other reality that we must face for our current task is that even if we could send a package to the voters and get it approved, it would not come soon enough to help with this budget -- which we are required by law to balance before we leave Olympia. I am deeply saddened by the effect that an all-cuts budget will have on people in our state. But I don't see an alternative. And at some level, candidly, I think that the voters need to see this pain before they really understand the consequences of supporting Tim Eyman.

Best wishes, Jamie

Representative Jamie Pedersen
43rd Legislative District

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