Don Brunell

Robbing Peter to pay Paul is bad managment

My dad lived by the axiom, “You don’t rob Peter to pay Paul!” For our family, that meant mom couldn’t raid our piggy banks to buy something the family budget didn’t cover.

It was hard for my mom, who was very creative when it came to borrowing from dad’s cash stash and putting it back before he noticed it was gone. In fact, she had everyone in our family involved in the ploy until one day dad checked his stash early and found some money missing.

What’s going on in Olympia right now feels a lot like home.

Gov. Gregoire and majority Democrats are attempting to find $2.7 billion to re-balance the 2009-11 state budget and ensure expenses match revenues. Constitutionally, they’re required to do so. But, like my mom, lawmakers have found creative ways to get around taking money from dedicated accounts. This is easier than hiking taxes or cutting spending to live within a budget.

At issue is the use of funds originally earmarked for environmental clean-ups. They are looking to divert taxes headed for the Model Toxics Control Account (MTCA), raiding the extra cash to balance the budget and then refill it sometime in the future when the budget crisis is over.

Today, MTCA is a fractional slice – seven-tenths of a one percent tax – of the wholesale value of substances deemed to be hazardous. The MTCA tax was established when Washington voters passed Initiative 97 in 1988 and applies to over 8,000 substances mainly petroleum products, pesticides and a prescribed list of chemicals.

Back in 1988, the environmental issue of the day was finding money to pay for what were called “superfund” sites. While the federal government, under superfund legislation and special national taxes, paid for large clean-ups such as Love Canal near Niagara Falls in New York and Commencement Bay in Tacoma, there were smaller sites that were just as dangerous to public health where the state needed to step in and remove contaminants.

Over the years, as clean-ups were completed, elected officials started eyeing the millions building up in the MTCA account for other purposes, such as paying for an escort tugboat at Neah Bay for oil tankers heading to Puget Sound refineries.

However, during the 2009-2011 fiscal biennium, the Legislature changed the law so they could transfer money from the excess fund balance of $180 million to the general fund.

Now they are talking about tripling the MTCA tax to beef up the balance and transfer it to cover the budget deficit. Since the preponderance of the tax falls upon oil and chemical companies, it is a way of raising revenues and letting the oil and chemical companies pass the costs off to consumers in the form of higher prices. If passed, the increase on just petroleum is $186 million, which will undoubtedly lead to higher prices at the gas pump.

If they do that, the Legislature may be in a protracted battle over what is called “nexus” – proving that the tax actually supports what it was intended to fund.

That would be more like robbing Peter and Paul to fund the litigation.

My mom never forgot the day dad discovered she was raiding the stash he’d put away for a rainy day. As my mom learned, it is much harder putting the money back than it was “sweeping” it in the first place.

Lawmakers may soon find themselves in a similar predicament.

(Don C. Brunell is president of the Association of Washington Business)