Moody’s Investors Service is a credit rating agency that performs international financial research and analysis on commercial and government entities. In December of 2009 Moody’s downgraded Washington’s bond rating outlook to negative. On Jan. 13 of this year, Moody’s said Washington’s net tax supported debt of $2,226 per capita is more than twice the national median of $936.
Let that sink in for just a moment.
Last February the National Governor’s Association estimated that all of the state’s combined were facing budget deficits of $134 billion and several governors say the worst is yet to come. But as the above statistic indicates Washington State is in more trouble than most, including California.
How did we get into this mess? Quite simply, elected officials kept kicking the can down the road. Governor Gregoire and her Democrat controlled legislature used accounting tricks and one time Federal Funds to “balance the budget.” They ignored declining revenue forecasts and continued to spend.
According to Bob Williams of the Freedom Foundation, Gregoire says she has cut $12 billion out of a $32 billion state budget over the last two years however state spending is still up by over $4.6 billion. The problem is the “cuts” came from proposed spending not already committed projects.
In addition to shortfalls in the current operating budget the state employee pension fund is currently under funded by $7.5 to $10 billion. Primarily because the governor and legislature have failed to make required contributions to those programs in order to balance the budget.
The day of reckoning has arrived.
Taxpayers are becoming increasingly resistant to requests for more money. They recognize intuitively the simple reality that government spending is out of control and as their frustration level increases the arguments become more contentious. Conservatives versus liberals, public sector versus private sector, or rich versus poor but all those debates are an endless road to nowhere.
Regular readers of this column are already aware of my position regarding the hard choices that our elected representatives need to make to begin to get this problem under control. There is only one real way to address the structural problem with state finance – cut expenses.
The cuts must be real cuts, not reductions in proposed new spending. In fact any bill that requires new spending must be immediately discarded until our elected representatives can get our state back on a solid financial footing.
The governor and legislature must eliminate all non-essential government programs like the state printing office. This is a service that can be provided in a more cost efficient manner by the private sector.
The governor must open all union contracts to renegotiation with the goal of reducing current state pay rates by 5 percent. Many of my readers have challenged me on the disparity between public sector wages and benefits and private sector ones. Well, here is a website where you can view the Bureau of Labor Statistics data:
www.effwa.org/main/article.php?article_id=3127&number=51 That chart clearly shows Chelan County public sector employees earn 66 percent more than private sector employees, Douglas county is 67 percent more and Okanogan county is 87 percent more. Statewide it is 24 percent more.
Public employees deserve to have living wage jobs but the disparity between their pay and benefits and their private sector counterparts has grown too large. The unions and employees will argue that instead of cutting the pay rates the state should layoff staff or give “furlough” days to reduce the cost to the government. The problem with that approach is it leaves the remaining employees with an increased workload.
The hard work in Olympia has begun. But unless they hear from the electorate not much will change. The unions and state employees will be whispering in the ears of legislators and the public sector will continue to drain more economic vitality out of the private sector.
Call or write your legislator today. Bury them with notes to cut real spending, otherwise we will all continue to support out of control government spending.