This is what the state's Economic and Revenue Forecast Council's reports have looked like for a while.
In this morning’s TNT editorial there is a line that surprised me, putting the blame for the City of Tacoma’s revenue shortfall squarely on the shoulders of their City Council. It’s surprising because it seems to find fault in the Council for trusting their staff’s faulty revenue forecast.
Ultimately, responsibility for this debacle all falls back on the City Council, eight of whose nine members bought into former City Manager Eric Anderson’s bizarrely optimistic expectations about sales tax revenue and union docility.
It’s worth noting that Mr. Anderson is referred to as the “former” City Manager because he was fired by the Council not long ago. No particular reason was given but I wonder if these “bizarrely optimistic expectations” were a part of it. In that case it appears they HAVE taken corrective action.
The point of this post is not to weigh in on Tacoma’s budget, or to absolve their council from any budgetary responsibility. The cuts that need to be made to employee salaries and/or staffing levels are brutal and I’m certainly in no position as an outsider to say what the right decisions are. That said, the health of Tacoma is certainly on my mind. It is the center of Pierce County’s economic world and therefore critical to the region – not to mention my sentimental attachment growing up just across the bridge. As goes Tacoma, so goes the rest of us.
However, I do think it’s an odd position for the TNT’s editorial board to take since they have praised the legislature for putting revenue forecasts in the hands of staff.
Unlike most other states where revenue forecasts are up for debate and negotiation by their respective legislative bodies, Washington has a bipartisan Economic and Revenue Forecast Council. Created in 1984, the ERFC consists of two appointments by the Governor, and one from each caucus in the Legislature, typically their top budget writers. Recommendations are made by their staff of economists which is led by the Chief Economist, Dr. Ahun Raha. As I understand it, the staff’s recommendation is almost always accepted by the ERFC. At the least, they don’t seem far apart. Once agreed upon by the ERFC, the Legislature is bound by law to use this revenue forecast to develop their budget.
Typically this is seen as a more logical way of approaching a budget as revenue estimates can otherwise dissolve into partisan squabbling with more liberal members hoping to spend imaginary revenue, or conservatives urging more austerity than is necessary. On the flip side, the impact of tax cuts/increases can also devolve quickly. Who can forget our Republican Congressional leaders making the absurd claim that the Bush tax cuts paid for themselves?
Given how difficult these last few budgets have been, I cannot even fathom how awful they would have been if revenue estimates were up for debate by legislators. Politicizing revenue forecasts could turn an already paralyzed legislature into a farce.
Now also consider that throughout this recession, Mr. Raha’s forecasts have almost always been overly optimistic. That’s not to say he’s a bad economist – the length and depth of this recession has surprised almost everyone. We’ve also hit some unforeseeable catastrophe’s like the earthquake & Tsunami in Japan, a huge trade partner for Washington.
The point being, the Legislature has frequently written badly out of balance budgets based in large part on these forecasts. So why is the TNT giving them a pass while heaping blame on the Tacoma City Council?
The reality is that elected officials are poorly equipped to second-guess the expert opinions provided by our staffs, whether it’s the state economist or a city finance director. We’re supposed to be in tune with the spending priorities of our constituents, but not necessarily their collective income/spending habits. We can give them direction on policy, but not how to carry it out.
Imagine a world where a politician redesigns an overpass because they think the engineer did it wrong.
Politician A: I say we cut the amount of rebar back by 10%. This is over-engineered.
Politician B: Well I was going to say that 20% would fit this project well under budget so that we can afford my other priority.
Politician C: Would you both settle for 15%?
Scary right?
In Gig Harbor’s case we rely on the estimates of our Finance Director Dave Rodenbach who in turn, relies on the work of the state economist. It’s true that we were a little slow to react to this downturn, but that’s in part due to history. This was my third recession on the Council but the first that Gig Harbor was not immune to. Once action was taken to right-size spending, this Council has accepted zero growth projections that have been right on target.
This year, for the first time really, I put up something of a challenge to that projection. Staring at the abyss of a possible Eurozone meltdown, I thought it better to lower that to a negative growth projection. It turns out we’ve left enough in reserve that it was not necessary, but this points to the informational disadvantage we as councilmembers have compared to professional staff.
But let’s say that wasn’t the case. Should the rest of the Council trust my judgement over a professional? I’m just basing my opinion on a gut feeling and the estimates of other economists on the impact to our economy. I have no special ability to predict what will really happen. So it seems like that my colleagues on the Council would be more likely to trust that our Finance Director took these concerns into account and move on to appropriations.
Ultimately electeds need to depend on the advice of their staffs for information like this. If they turn out to be spectacularly wrong, replace them. It’s easy to say that their council should have done more and flogging electeds is never unpopular, but in practice, it’s kinda terrifying to put this particular jobs into the hands of politicians rather than leaving it to professionals.
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