Tax breaks need scrutiny
For someone who has spent the past 18 years running the Spokane Indians baseball team, there was something very familiar about my first day as a state legislator, which was called “opening day” and began with a beautiful rendition of our national anthem. I had to resist the urge to yell, “Play ball!”
The pomp and ceremony of that first day quickly faded, and we immediately got to work. The seriousness of the situation we face as a state during this economic recession is obvious, and it is clear to me that we cannot rely on business as usual if we expect to preserve our quality of life.
Since 2009 we have cut more than $5 billion from the state budget, we are still not done balancing the books for this fiscal year, and are faced with a $4.6 billion deficit for the next two years. These cuts come at a time when the need for public services like health care, education and worker retraining have skyrocketed.
We are in the midst of an unprecedented funding crisis, one that calls for innovative solutions to protect the essential public services that make Spokane, and our state, such a great place to raise our families and build our businesses.
As we consider solutions, we have a chance to reset how we look at budget issues and reform some of the inefficiencies that have emerged over time.
One idea grows out of my experiences during the past two decades that I have spent running a business in Spokane. When we create the annual budget for our business, the Spokane Indians, we treat any potential discount we plan to offer as an expense. This allows us to compare the value of the discounts side by side with our other expenses. We also consistently track if the discounts and promotions achieved their intended goals. It’s just common sense: This is the information we need to make smart business decisions that ensure our company’s long-term success.
But I’ve noticed that we don’t do the same thing with the state budget. As a state we give out more than 500 “tax breaks” that cost us over $6.5 billion each year, with more added every year. Most of them, like the sales tax exemption on food, make perfect sense. But some have clearly become outdated, costing taxpayers more than they benefit. With others, we simply don’t know whether they are working or not.
The lack of clarity regarding the money we spend on special tax rates and exemptions results because we don’t compare them side-by-side against the other money we spend on our kids and communities. To date, only a fraction of the state’s tax exemptions have ever even been reviewed. We rarely confirm whether tax exemptions actually created jobs or benefited our state, so we have no idea whether we are getting value for our money.
At a time when we are considering kicking thousands of people off the Basic Health Plan, adding more kids into classrooms, and drastically reducing critical services for seniors, we need to scrutinize every dollar we dole out on tax exemptions and compare the benefits to the services we are proposing to cut.
For example, eliminating tax preferences for out-of-state coal and elective cosmetic surgery could generate over $18 million that could be used to help save the voter-approved Basic Health Plan or reduce class size. Or, the proceeds from modifying these and other unproductive tax preferences could be used to lower the tax burden on all individuals and businesses in our state.
As a freshman legislator, I often feel like a rookie relief pitcher, knowing the home team is counting on me to make the right decisions. One of those decisions is my sponsorship of legislation that will create a closer examination of tax exemptions, institute sunset dates so continuing tax preferences are required to be reauthorized at regular intervals and eliminate tax exemptions that can’t be justified. These measures will protect funding for our kids and communities, and bring more accountability and transparency to the tax exemption system.
I hope my colleagues on both sides of the aisle will join me and provide the teamwork necessary to find solutions to our budget crisis that protect Washington families while making our system of taxation fairer and more efficient. With a thoughtful, balanced approach to our budget, we can pick up a win even in a particularly difficult season.