The logical answer to a state budget surplus has not, historically, been to spend it all, even on one-time projects: It creates an unsustainable level. (A little one-time stuff may work.) Nor have the tax cut proposals worked out well: Cuts in taxes one year tend to lead to ugliness, and often tax increases, later on.
Rainy-day funds, at least up to a point, seldom go too far wrong. If stability in government finance is a good thing, then such funds are easy to defend. And usually not wildly hard to sell - if you practice the right kind of diplomacy.
That's the challenge ahead for Washington Governor Christine Gregoire as she proposed putting the largest chunk of the state's anticipated revenue surplus into a rainy-day account. Her proposal of it - a massive $900 million - is not a hard sell in the context of a state of the state speech, and the virtue of it is easy to intellectualize. But when it comes down to passing out the dollars, hands will be out. And the issue isn't entirely clear-cut, because Gregoire has weighted her budget plans with a handful of spending proposals of her own. (more…)