Bad combination: tax breaks and Eyman initiatives

The standard complaint from those who think Washington state spends too little on public services, (roads, transit, universities, schools, etc.) is to blame it on Tim Eyman and his initiatives imposing tax limits. That's true, but there's another villain: giving away surpluses through tax breaks. Bill Virgin outlines some of them in a valuable column in today's P-I He notes how many of these seem small and desirable at the time, but add up to huge losses of revenue. Virgin makes the valid point that only sometimes are these tax concessions (such as declaring certain kinds of popcorn not subject to sales tax) the result of good old-fashioned "clean graft" where an interest group pours money into a campaign and is rewarded with tax breaks. Often they are required to square local laws with federal taxes, or to avoid double taxation. Sometimes, they are even in the public interest. The total of these exemptions is put at $98.5 billion in forgone state and local taxes for the 2007-09 biennium. The state report tallies 567 different exemptions currently in effect. Why so little outrage? Like federal earmarks, these tax concession take place off stage, smuggled into omnibus bills, and rarely get much public scrutiny. Only when they push hot buttons (like sports stadiums) does the public get drawn into the debate. The state has a long history of tax concessions to major interests, the most prominent being the exemption of Boeing jetliners from sales taxes. They are a reflection of the Evergreen State's habit of growing very large businesses (the "BMW" triad of Boeing, Microsoft, Weyerhaeuser being the notable example), who can then dictate terms. A recent bonanza of tax breaks took place in the 1990s, when the state was rolling in revenues from the dot-com boom. Politicians were happily rewarding powerful constituencies with breaks, tweaking the business-and-occupation taxes, property taxes, sales-tax rebates, and the like. Politicians would blame Eyman for not having money for needed social services while quietly slipping money in the form of tax breaks to powerful interests. This pattern is a major reason that the state (unlike many others) failed to capitalize on the booming 90s, using the good times to catch up with funding for the University of Washington, repairing collapsing bridges, and fully funding schools. The University of Washington particularly went into a financial tailspin, only saved by research grants and generous individuals like the Gates. Only the K-12 forces fought back, passing two initiatives to lower classroom size and pay teachers more -- initiatives that passed but were rolled back during the post-2001 slump. But the hypocritical pattern remains in place. Reward the interests quietly and then blame the shortage of money for public services on the big fat target of Tim Eyman. Makes one wonder two things. What if Eyman the populist were to start complaining about these tax breaks? And what if Eyman were exploded as a political force and the politicians had only themselves to blame?