News & Updates

I’m still “on call” for jury duty but haven’t been summoned to the courthouse today so I thought I’d post a couple of items you might find interesting.

The state Department of Revenue (DOR) issued a press release yesterday that indicates that Washington residents pay less state and local tax relative to their incomes than residents in 36 other states, according to U.S. Census Bureau figures for Fiscal Year 2005.  Washingtonians rank 37th nationally paying an average of $105.91 in taxes for every $1,000 in personal income compared to the national average of $112.94.

According to DOR this is the lowest ranking for the state since the severe recession of 1981 when the state dropped to 39th.  Washington ranked as high as 11th in the nation in 1998, chiefly because of rapid personal income growth resulting from the “dot com” boom.

And although you’d never believe this judging by the angry letters to the editor I’ve been reading around the state, Washington also fell below national averages in property taxes too.  Property taxes dropped to $30.60 per $1,000 of personal income in Fiscal Year 2005, placing Washington 28th nationally, the same as the prior year.

On the spending side, the Washington Research Council issued a report this past March titled “Trends in State Spending” that looks at the last ten years of state budget expenditure patterns. 

The Council studied “near general fund-state” spending or “NGFS” for short.  This includes the familiar state general fund and eight additional accounts which are similar to the general fund in that the revenue sources are somewhat the same.  These other accounts include the health services account, the student achievement account, the education legacy trust account, the public safety and education account and its equal justice sub-account, the violence reduction and drug enforcement account, the water quality account, and the pension funding stabilization account.

So, what did the Research Council report conclude?  Since 1997-99, the state budget has been dominated primarily by human services spending with most of the growth concentrated in the areas of health care and corrections.  This growth has come primarily at the expense of education (K-12 and higher education) which is the other major category of NGFS spending.

In 1995-97, education represented about 57% of all NGFS spending.  By 2005-07, that percentage share had declined to about 52%, with most of the residistribution going towards the human services spending category.

Within the education category there were some interesting findings as well.  In four of the the six biennia covered in the study, NGFS spending on higher education grew a bit more than overall NGFS spending.  The exceptions were the two biennia affected by the recession — 2001-03 and 2003-05 — in which state spending for higher education actually declined.

The report also conculed that NGFS spending for community and technical colleges grew at a significantly greater rate (or fell at a lower rate) than NGFS spending for four year schools, although the fastest growing segment in all higher education is the Higher Education Coordinating Board due to increased financial aid appropriations.

I will be on jury duty for the next several days and away from the blog during that time.

State Senator Lisa Brown (D-Spokane), Majority Leader of the Senate is leading the state delegation to the 47th Paris Air Show.  The June 18-19 event is held annually and Governor Chris Gregoire tapped the Spokane democrat to lead this year’s Washington contingent, which also includes Snohomish County Executive Aaron Reardon.

Washington State is home to the largest number of aerospace firms in the world and the Paris Air Show is the gala international event for the aerospace industry.  Joining Brown will be representatives from a variety of aerospace companies in Washington as well as leaders from several community and technical colleges which are part of the state’s aviation training Air Consortium.

The Economic and Revenue Forecast Council met today in Olympia to adopt the most recent forecast of state general fund revenue collections.  At the meeting, the Council approved the new forecast which calls for the state to collect an additional $484 million above what was predicted last March.

Dr. Chang Mook Sohn, the state’s chief economist, said that Washington’s economy continues to outperform the U.S. economy, particularly in the areas of construction and real estate.  Software and aerospace are also performing well.  Washington continues to show strong employment growth (2.1%) and the new jobs are predominantly in higher paying job sectors such as aerospace, computer technology, construction and professional and business services.

For the last fiscal year of the current biennium (2005-07), collections are expected to be $195 million higher.  For the coming biennium (2007-09) which begins on July 1, collections are expected to be $289 million higher than anticipated last March, bringing the total forecast adjustment to $484 million.

The new forecast will result in an increase in state reserves.  Unrestricted reserves will increase to $875 million for the 2007-09 biennium.  The Governor and the Legislature have proposed a constitutional amendment for the November general election ballot that would deposit an additional $361 million into a “rainy day fund” for a combined total of $1.236 billion.

Al Ralston, one of the most familiar figures in Olympia and a lobbyist for the Boeing Company for more than 20 years will step down later this summer to become president of the Washington Research Council.  Ralston replaces longtime president Dick Davis who left his post last year to take a position with the Association for Washington Business.  The Washington Research Council was founded in 1954 and is a non-partisan, free-market oriented organization that examines how public policy issues affect business, government and the community.

Several weeks ago we noted that Rep. John Lovick (D-Mill Creek) was planning a run for Snohomish County Sheriff this November.  Lovick is a retired Washington State Patrol officer and a familiar face to TVW watchers as he serves as President Pro Tempore of the House of Representatives and is therefore, often the chamber’s presiding officer.

As Everett Herald columnist Jerry Cornfield writes in Sunday’s edition, the jockeying for Lovick’s seat has already begun.  Three Democratic activists are working hard to gather support for an appointment should Lovick win the county sheriff’s race this fall.  The three are former Snohomish Mayor Liz Loomis, Snohomish County Democratic Party Chairman Mark Hintz and 2006 state senate candidate Lillian Kaufer who lost in the primary last September to Steve Hobbs who went on defeat incumbant Sen. Dave Schmidt in November.

Under state law, if Lovick wins, the Snohomish County Council will choose a successor from among three names given to them by the district’s Democrats.  The person would then need to stand for election in November 2008.

Now that the future fiscal fortunes of the UW have been statutorily linked to the 60th percentile of per student funding in the Global Challenge States, it probably makes some sense to periodically peak in on how things are going for our higher education university brethren in California, Virginia, Maryland, Massachusetts, New Jersey, Colorado, and Connecticut.

To that end, I have posted a new report under the Spotlight section of the State Relations website titled “Global Challenge State Update.”  The goal of this report, which I intend to update quarterly, is to provide UW officials and others with a quick and “easy to digest” sense of how our competitor institutions are faring in obtaining funding from their respective Governors and state legislatures.

I hope you will find this report interesting and valuable.

Yesterday I attended the annual Technology Alliance luncheon at the Washington Convention and Trade Center.  The luncheon is the Alliance’s major function each year and more than 1,000 folks from business, government and education were in attendance.

The keynote address was given by Microsoft’s Steve Ballmer in a conversational discussion format lead by the UW’s Ed Lazowska.  While most of us were settling into our chairs and trying to decide how much of our dessert we were going to actually eat, Ballmer got everybody’s attention with his pointed response to Ed’s question about what state government should be doing to help grow the technology industry in Washington State.

“Education, education, education, education” boomed Ballmer as he physically turned to address the assembled throng.  Ballmer went on to bemoan the state’s lack of sufficient four-year degree capacity and while he did note Microsoft’s frustration about transportation issues in Puget Sound, he made it crystal clear that at the end of the day, the most important issue to the company was education.

The message from Ballmer was so clear and passionate, that today’s Seattle Times story about the lunch is titled “If Steve Ballmer were governor…..”  More than a few folks who attended the lunch remarked to me on the way back to the garage, “How much did you guys have to pay him to say those things about higher education?”

Nothing of course, but it’s always nice to be appreciated.

State and local transportation leaders held a press conference in Seattle yesterday to announce a comprehensive funding strategy to pay for the SR 520 bridge replacement project without the need to raise new “state” taxes.  The strategy was prepared as part of the Regional Transportation Improvement District (RTID) planning committee efforts to prepare a transportation package to be submitted to the voters in the November 2007 general election.

The funding strategy which estimates bridge replacement costs between $3.3 and $4.4 billion consists of $1.5 to $1.9 billion in so-called “committed funds” from existing federal and state sources and $1.8 to $2.6 billion in “policy choices” which could come from a combination of RTID investments contained in the November ballot initiative; a $6 round trip toll on the re-built bridge and other options.

According to RTID the funding strategy raises sufficient funding to pay for a six-lane bridge replacement (four general purpose lanes and two HOV lanes), the Pacific Interchange design option and improvements from the lake shore to I-405 and I-5.  It is unclear how the funding strategy would accomodate community mitigation that is likely to result from the 18-month mediation process established in legislation enacted this past session, and which should be underway by the end of the month.

Like many of you, I was shocked to read the news of Norm Maleng’s passing in the morning papers.  For those of us in public service in Washington State, Norm was the epitome of professionalism and intergrity in a business that often fails to adequately reward either trait.  I just thought Norm would go on forever and serve as King County’s prosecuting attorney for many more years.

I got a chance to work closely with him in 1990 when I was on the staff of the Senate Ways and Means Committee in Olympia.  Norm was named chair of a task force formed in the wake of a horrendous crime committed by a recently released sex offender and emotions in the state capitol were running high.  In his deliberate and thorough manner, he wisely steered a large group of elected officials, community leaders and citizens through some very rough waters and emerged with a consensus package of legislation that sailed through a divided legislature unanimously.

I learned a lot from him about the importance of staying calm in the heat of the moment and not allowing passionate emotions to cloud your judgement about the fairness of one option over another.  He was truly one of the “good guys” in Washington State politics and he will be sorely missed.