Get Real; Raise Revenues

Today's Salish Sea News and Weather contained a couple of clips about the looming budget shortfall in the state's budget:

Washington state economist Arun Raha projects that state revenues will drop by $122 million over the next two years. State faces nearly $1.4B deficit    Robert Graef in a Marysville Globe editorial closely reads Governor Gregoire’s proposed list of program budget cuts down into the bone of our state’s social fabric. Blood on the budget axe


Our Man of the South wrote: "Carnegie Group (3 years ago) suggested a way to raise revenue (up to $2 billion / year) without raising taxes.  It was ignored of course."


Here's the letter sent on December 9, 2008 to Governor Christine Gregoire:


"Dear Governor Gregoire:
SUBJECT: BUDGET SHORTFALLS AND IMPACT FEES

The State of Washington and most local jurisdictions are feeling the effects of a severe downturn in the economic health of the nation. Proposed budget cuts will hurt many people and many initiatives vital to the public including children, troubled families, and the protection and preservation of our environment, to name a few. Yet there is an untapped source of revenue that ranges into the hundreds of millions, perhaps billions of dollars annually that does not require new taxes.

We are referring to the massive subsidies currently given to the development industry by the state and virtually every local jurisdiction. In a hurried study done by Eben Fodor in 2000, the cost of unfunded infrastructure demands generated by growth exceeded $50,000 for every new dwelling unit constructed. Cost of growth studies by Mazza a few years later, substantiate the subsidies. Similarly, cost of growth studies in other states corroborate the enormous amounts given away for growth. There are no recent cost-of-growth studies available, so numbers may not be current. But it is quite possible that the cost in tax revenue in Washington State to subsidize growth could exceed $2 billion annually.

It is nearly impossible to spend a dollar in this state without providing a subsidy for growth. The cost burdens of subsidies fall on everyone including the very poor. The beneficiaries are the wealthy developers, land speculators, and the relatively wealthy newcomers who can afford the high price of a new home. The state’s citizens have long suffered under this iniquitous system. Our leaders to date have been unwilling to confront the development industry lobby on this issue. But if ever there was a time in history when our leaders have justification to bring equity to taxpayers and simultaneously provide much needed revenue to state and local jurisdictions, now is that time. If there was ever a time when the administration owed so little to the development industry, it is now. If there was ever a time in the last 40 years when the revenue needs were so great, it is now. If there was ever a time when growth threatens to overwhelm us with environmental degradation, it is now. Let us seize the moment.

We recommend that the state immediately put in place capital facilities charges on new dwelling units for the state facility needs generated by growth including but not limited to:
• State Parks
• Schools and colleges capital facilities
• State transportation needs
• Penal system facilities
• Justice systems
• State police capital facilities
• Social and health services capital facilities

We also suggest that the state make the following amendments to state law to allow local jurisdictions to collect and use capital facilities charges for its unfunded infrastructure demands related to growth:
• Expand the list of capital charges for which local jurisdictions may charge to include penal systems, justice systems, power generating and transmission facilities, libraries, city and county administrative facilities, and so on.
• Remove the time limit in which capital facility charges must be spent.
• Allow capital facility charge revenue to be spent anywhere within jurisdiction boundaries.

Finally, we recommend that the state make all grants to local jurisdictions for capital and infrastructure needs contingent on their imposing the maximum allowable capital facility charges in all the categories in which it is legal to impose such charges.

In the near future, the state can apply the general funds no longer needed for subsidies toward the shortfalls in the provision of vital services that it is currently experiencing. In the longer term, lower taxes might be a much needed bonus for state residents.

We have drafted and submitted numerous bills over the last ten years to implement these and other policies designed to cure the inequities of growth funding. We will avail ourselves at your convenience to meet with appropriate members of your staff to brief them on these proposals.

Sincerely,
The Carnegie Group of Olympia
BOARD OF DIRECTORS
Peggy Bruton, Citizen Activist
Thomas W. Holz, Civil Engineer
Robert Jacobs, Former Mayor, City of Olympia
Walter Jorgensen, Former Councilmember, City of Tumwater
Suzanne Nott, Former Candidate, Port of Olympia Commissioner
Jerome Parker, Citizen Activist