State lawmakers: dont count your chickens before theyre hatched
August 28, 2008 · Updated 1:53 PM
by Don C. Brunell
President, Association of
When the Pentagon awarded the tanker contract to Northrop Grumman and EDAS/Airbus, Washingtonians went into shock. No one thought a foreign company would be selected to build the airplane, especially when Boeing had a corner on tanker technology and already is building military tankers for Italy and Japan.
For us, it wasnt a matter of if the Air Force would give Boeing the $40 billion contract, only when.
That tanker deal meant 9,000 jobs for Boeing and assured continuation of the 767 production line at Everett for years to come. It also meant the state would take in hundreds of millions in additional tax revenues; a shot in the arm for our fragile economy.
Its a reminder that we shouldnt count our chickens before theyre hatched. State lawmakers should take that lesson to heart.
Even before the contract announcement, legislators were busy adding new costly programs and hinting that they might raise taxes next year to balance the 2009-2011 budget, unusual talk for an election year.
Then Sen. Lisa Brown (D-Spokane), majority leader, filed suit asking Washingtons Supreme Court to toss out I-960 to make it easier to raise taxes.
State officials are worried. They should be.
A slowing economy has reduced estimates of state revenues. When the session started, Washington had $1.4 billion in surplus and Gov. Chris Gregoire (D) vowed to put $1.2 billion into reserve. But then the states chief forecaster sliced nearly $500 million from his revenue estimate. Lawmakers want to stick to their spending plan and cut the reserves. The House and Senate budget plans leave just $750 million in the bank, a paltry sum considering where the economy is headed.
Were not immune from the national business slowdown. Here, the once-hot housing and construction markets have cooled. Thats important, because real estate excise taxes and sales taxes on construction have fueled the states revenue surpluses for the last two years.
On a national level, even billionaire investor Warren Buffett tells CNBC the U.S. is in recession by any common sense definition of the word. Most peoples situation - certainly their net worth - has been heading south for a while now, he says.
The Institute for Supply Management said its February manufacturing index registered at 48.3 - its weakest reading since April 2003 as manufacturers struggle with the high costs of materials, energy and languid demand in the housing market.
In the scramble to raise money, expect some lawmakers to propose eliminating tax incentives. Thats just another tax hike. The incentives currently in place drive manufacturers to invest in research, machinery and equipment. Investors go where they have the best chance to compete and stay in business, whether that be Seattle, Mobile or Singapore. Our tax incentives make this a better place for investment.
Before leaving Olympia, legislators should scrub their spending plans. They need to save at least $1 billion and not commit next years lawmakers to a whole new round of costly programs which may ultimately trigger that dreaded T word, Taxes.
Remember President H.W. Bushs promise in 1992? Read my lips. No new taxes, came back to haunt him in the 1992 election. People have a way of voting with their pocketbooks.
Regardless of all the intrinsic values Washington has to offer and how comfortable we may feel because our economy isnt as bad as the rest of the country, things change quickly.
It is also important to keep in mind it is the private taxpaying sector that will drive the economy to prosperity. Otherwise, there will be no chickens to hatch and we may feel just as empty as we did with the loss of the tanker contract.