Senator Ranker Speaks on Taxes and Health Care

State Senator Kevin Ranker recently released a newletter in which he addressed the State economy, tax structure, health care reform and other matters. His comments are excerpted below. For the full report, go to wa.gov/ranker/e-newsletter-november-19th/

In just two short months, on January 10th, I’ll be heading back to Olympia to start the 2010 legislative session, and we’ll have our work cut out for us. Just a year after tackling a $9 billion budget deficit – the largest in our state’s history – we’re faced with another $2 billion shortfall. This means we’ll be forced to look at even more program cuts and savings enhancements to keep Washington fiscally sound as well as keep our well established social safety-net in place for our most vulnerable.

I also believe we, as Washingtonians, need to have an honest and frank conversation about our expectations vs. our revenues. We have high expectations for our schools, our mental health, senior and healthcare programs, public safety, our environmental programs and other issues that define the health, culture and happiness of our communities. On the other hand, we have revenues that are lower than necessary to meet these expectations. In the 2009 session, Democrats cut an unprecedented $9 billion or ¼ from our state budget – without raising taxes. These cuts hurt, bad. Many critical programs in our local communities were impacted.

As we begin the next session, I believe we have to answer an important question: Do we want to lower our expectations – further cutting programs, or discuss tax reform and raising additional revenues. We need not to be afraid of discussing program cuts, tax reform or a combination. However, when discussing tax reform and revenues I think it is necessary to not only discuss new revenue streams, but also evaluate existing taxes, such as the Business and Occupation Tax.

I have been speaking to many of you for a year now about my thoughts that on this matter and I have heard many diverse opinions. Significant majorities of you have told me that further cuts to our most critical programs are not acceptable. However, on the revenue side, while some feel that there may be more cuts that can be made, others of you feel that we need to discuss new revenues. I appreciate this ongoing dialogue as it is thought provoking, informative and helps me define my positions. I look forward to hearing from more of you.

Just where does our state rank on taxation?
A few weeks ago the Tax Foundation released a report that named our state the third worst in the country for combined state and average local sales tax rates. The way they added up the numbers, our 8.78 percent rate was topped by only Tennessee’s 9.41 percent and California’s 9.06 percent. Sounds pretty bad, right?

Well, actually no — not when you look at the full picture. The problem with the Tax Foundation’s claims is that they don’t account for state income tax. And since Washington is one of the few states in the country without a state income tax, it’s unavoidable that our other taxes would be high.

So where do we really stand on taxation?

Pretty well, it turns out. We rank a distant 32nd nationally in property taxes, and 26th in state and local taxes as a percentage of personal income, according to an analysis by the state Department of Revenue. We paid $109.25 in state and local taxes per $1,000 of personal income, compared to a national average of $113.32. That puts us in the bottom half of the country when you compare income to taxation.

The analysis is based on 2007 data published by the Census Bureau and Bureau of Economic Analysis and does not reflect the current downturn in the economy, which largely won’t show up until the Fiscal Year 2009 information is available for all states.

Health care reform
Skyrocketing health care costs continue to take a huge toll on state budgets. The passage of health reform legislation in the U.S .House of Representatives raised hopes here in Washington that comprehensive reform will be enacted soon to lower costs and provide everyone with quality, affordable coverage. It’s something states like Washington, which spend tens of billions a year on health care, have needed for decades.

Our state has taken steps over the years to address the problem by, among other things, creating the Basic Health Plan, but absent a strong federal partner, the future of BHP and other health programs will remain in jeopardy. To give you a scope of the health care picture here in Washington:

• Currently an estimated 876,000 Washingtonians are uninsured.
• In 2007, total Medicaid spending totaled $5.7 billion. Of that amount, the state paid $2.7 billion.
• In 2004 alone, total health care spending in Washington State totaled $31.6 billion.
• In 2008 nearly 56 percent of Washingtonians were covered by their employers; nearly 6 percent had individual plans; 13 percent relied on Medicaid and 11 percent on Medicare.
• Absent major reforms, by 2016 it will cost over $26,000 each year to provide health insurance to the average Washington household ─ nearly 42 percent of median household income. The average deductible in Washington could climb to more than $3,400 by 2016. Individual and family spending on health care could shoot up 68 percent by 2019.

I want to hear your thoughts on health care. I encourage you to attend our Health Care Town Hall on Nov. 23rd in Bellingham.

Health Care Town Hall

• Monday, Nov. 23, 2009
• 7:00-9:00 p.m.
• Whatcom County Council Chambers 311 Grand Ave. Suite 105 Bellingham, WA 98225

I want to encourage you to come out to our Health Care Town Hall, Nov. 23rd in Bellingham. I’ll be joined by Sen. Karen Keiser, D-Kent, Chair of the Senate Health and Long-term Care Committee,

Rep. Eileen Cody, D-Seattle, Chair of the House Health Care & Wellness Committee and other healthcare experts. They will discuss the state-level changes for health care and the impacts and opportunities presented by the changes at the federal level.

As always, feel free to get in touch with me or my legislative assistant Ann Larsen at our Anacortes office at 360-899-5638, or e-mail me at ranker.kevin@leg.wa.gov . For our 60-day session, between January and March we’ll be in the Olympia office, 360-786-7678.