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Since 2018, the Washington State Legislature has been run exclusively by the Democrats.

Meanwhile, the opposition party has fallen prey to Trumpism, purging moderates and failing at every turn.

We know how voters responded, but how do we view the state's results?

The Washington Policy Center examines those results, trying to hold lawmakers accountable for a steadily declining measurement of performance in just about all the vital categories of state government.

That's part of the discussion tonight with the Washington Policy Center next on northwest.

Now.

You.

I'm not commenting here.

I'm asking you, what is your observation of the state's results when it comes to, say, homelessness, drug addiction, gridlock, affordability, taxes and education?

As a citizen and viewer of this program, I'm sure it's something you think about.

After the largest tax hike in state history, we're facing another $4 billion deficit over the course of the next two budget cycles.

The governor wants to tap $1 billion worth of the state's rainy day fund.

the state budget has doubled in ten years at three times the rate of inflation and nine times the rate of population growth.

Roads, bridges and the ferry system are all failing Anywhere from 2 to $600 million of money lost to unemployment insurance fraud is still missing, while fees from fishing licenses to license tabs and property taxes are going up, hospitals are in trouble due to federal cuts, and a $728 million reduction in the state funded portion of the social safety net.

Washington has the third highest gas prices in the nation, due in part to the Climate Commitment Act, which we now know is justified on vastly inaccurate overestimates of its impact for business without which there are no taxes and no jobs.

The Bureau of Labor Statistics report that we ranked 45th for business taxes and have the lowest business survival rate in the country, being number one in retail theft is a part of that.

The sales tax now extends to just about all services, increasing cost to customers or forcing businesses with thin margins to close.

The zero tax, which taxes gross receipts, not profits, jumped from 1.75% to 2.1%, increasing costs to customers.

the Well Washington Fund proposal taxes jobs, charging 4300 large employers, 5% for every worker making in excess of $125,000 a year.

on individuals.

The tax on selling your home went from a flat 1.3% and now tops out at 3%.

The capital gains tax hits incomes of more than $250,000, at least for now, The estate tax is up to a whopping 35% on estates exceeding $9 million.

For now.

And the big one, despite being rejected ten times in the past, expect a move for a 9.9% tax on incomes of more than $1 million.

again, that million dollar figure is, for now.

meanwhile, a recent Elway poll shows that more than half the state's likely voters don't feel they're well represented in the state legislature, especially in purple districts where their narrowly elected Democratic representatives vote in lockstep with those from the state's deepest blue districts.

The Washington Policy Center is an independent, nonprofit think tank that promotes free market solutions to our most vexing problems.

The WPC is sometimes described as center right only because center left these days apparently includes various shades of collectivism that history and basic economics tells us don't work.

25 staff members produce research and sponsor events all across Washington, focusing on eight core areas of policy, including state budgets, small business and education.

Joining us now, our director of Budget and tax policy, Ryan Frost.

Education fellow Vicky Murray And Charles Priest drew the call center for transportation director.

Welcome, all of you to northwest.

Now.

Great to have the Washington Policy Center here on northwest.

Now, you guys have been pretty consistent guests on this program over the years.

People from your team.

And we certainly appreciate that.

You know, one of the things that I constantly exhort our viewers to do is to maybe try to put away thoughts and feelings and some of those things some of the time and really take a look at results.

And, I want to open our conversation with that in each of your areas.

Ryan, you focus on budget and taxes.

Let's take a look at the results.

When we look at the big trends, the size of the budget, the tax hikes.

What is your analysis of the state's results?

It's growing at a breakneck pace with, as you mentioned, not great results.

The way I like to explain it to people who maybe don't pay attention to the state budget, is that when I left college, I lived in Washington my entire life.

When I left college in 2012, the state spent about $35 billion a year.

This year, they spent close to 100.

So it's a three times growth in 13 years.

I have not seen three times the improvement in everyday people's lives.

Another way I like to explain it is from statehood until 2019, which was 130 years.

It took that long for our budget to grow to 50 billion a year.

The state to spend.

We have now already doubled it in the past six.

So the record spending is, it's frankly a little bit out of control.

I'm not seeing the results that you mentioned that that would, if somebody said, hey, population growth and inflation, are those valid argument?

No, no, it's population growth.

Inflation.

It's only grown by about 51%.

Whereas as I mentioned, the budget's grown three times as much over the last 13 years.

Vicky, taking a look at the big trends in education when we look at results, we test for those results.

The numbers are going the wrong direction while spending is going up.

What's your analysis of the results?

Absolutely.

It obviously matters.

Money matters and education.

But we are clearly not spending on what we should be spending.

It seems like we're spending on everything else but academics and true education, which is what what would families want?

What Washingtonians want.

And something else that I find a little frustrating is that, you know, these pleas for more money.

I moved here just a year ago from Arizona.

So I look at the resources and just how generous Washington taxpayers are in their support of K-12 education.

And it's stunning to me, to see all the spending for Nye.

So hopefully we've got some things that are coming down the pike, some wonderful opportunities that we can start looking at right now.

For example, look at the reforms that are happening in Mississippi, Mississippi now.

How about that?

Isn't that something?

And it's all commonsense reforms we could do right now.

And the second reform we need to be looking at is the federal tax credit scholarship for K-12 educational expenses that could be bringing in $732 million in year one.

Now, public and private school students, now lawmakers have to sign off on signing up for Trump's thing.

Right.

That's that's 1700 bucks.

Oh, no.

We get we're all getting that $1,700 if we if we choose to donate.

The only question for Governor Ferguson is if he wants to opt us in.

That $732 million stays to benefit our students and schools.

And if he does not, that 732 million is going to go to Idaho, Arizona, Mississippi, Virginia, Colorado, other states that are signaling that they're going to opt in.

And I don't want to put a put a spot quiz on you, but we're spending something like 20 grand ahead now, right?

Oh, it's just under on average.

They're still huge variances, but it's around $20,000 on average per pupil.

Okay.

Shifting to transportation and results.

Charles, I think the results on transportation are fairly self-evident for anybody that that drives around.

But when you look at the metrics, you know, Miles a minute spent, money spent versus, number of people being carried, I don't care whether that's cars or transit or anything.

Nothing.

None of the results seem to be, coming out in terms of improvements for people and this problem that we all deal with here, particularly in central Puget Sound.

What's your analysis of that?

What's going wrong?

What's happened?

Straighten me out a little.

It sounds like you've already got it figured out.

And you're not the only one who's frustrated.

Citizens in the state of Washington pay a lot for transportation and gas tax.

License tabs, sales tax for transit, weight fees, you name it, it's a long list.

And now part of the, carbon emissions fee that we pay when we buy gas and diesel fuel.

Also, some of that goes for transportation, but not for highways.

The Climate Commitment Act.

Yes, the climate commitment revenue and and that kind of highlights where the problem is that the spending priorities haven't matched up to the needs very well.

And so we see the condition of the state highway system deteriorating, bridges having to be closed, the ferry system falling far behind in replacing, old ferries and so on.

So that's that's the nature of the problem.

What's the money being spent on that?

It's being spent on a lot of things, but they're not necessarily producing good results.

So, the legislators have been generally trying to frame this as a choice between maintaining the existing system and building new major highways, but they're ignoring where a lot of the money is going, and that is to kind of peripheral programs, transit subsidies, electrification of bike lanes.

Yeah.

Bike lanes, fixing culverts.

I mean, these may be good things, but that's hundreds of millions of dollars a year that isn't available for fixing our highways.

I want to circle back a little later on this program.

We're going to talk about competitiveness.

And, I think transportation, all your areas play such a huge role with that.

Let's dive in and get a little specific now with each of your areas.

And when I'm talking, Brian, budget and taxes, you know, the big one out there, the 800 pound gorilla in the room is an income tax.

I have had, people on this show over the course of the past 14 years who have denied up and down that an income tax was ever on the radar or ever being considered.

I think some of them said that out of a place of veracity, I believe they believed that.

Yeah.

And yet and yet here we are.

We keep hearing it's illegal.

Voters approved though the cap gains tax overwhelmingly.

How do you explain that?

And they seem convinced that it's going to be restricted to the millionaire class.

But we also know that's not where the real money is.

So talk a little bit about an income tax.

Are we getting one?

What's your take on that.

Yeah.

It's to go back to the cap gains tax.

Just for a second, I think that was not sold very well to the voters on the impacts, the cap gains tax.

I think a lot of voters were promised that this was going to reduce CO2 emissions.

And when you look at what the money is being spent on, three quarters of it, they've said this has going to have no impact on CO2 reductions.

So I think that's one of the reasons that tax passed.

Now state income tax, is absolutely coming.

It'll be here.

The draft bill will be here, I would assume this week or next, at the latest.

And you may have had guests on here who've said, you know, we don't we're never going to pass state income tax.

But I think we've we've seen communications dating back to 2017 that that was exactly what their plan was.

While a state income tax may not be, unconstitutional, a graduated income tax.

Absolutely.

As you know, a state income tax itself, we passed two years ago.

We we sent an initiative to the to the legislature, initiative 2111, the band all state and local income taxes had bipartisan support.

They adopted it.

Half a million Washingtonians signed it.

And here we are less than two years later, and they're saying, oh, well, we didn't actually mean it.

You know, we can easily change that law if we want to.

And that's what they're going to do.

And there's a plan for this in terms of litigation, the whole nine yards.

I mean, this isn't just something the Democrats are quote unquote trying, right?

Yeah.

That's right.

I mean, the bill will come out.

They fully assume that it's going to be challenged in court.

As of right now, it would apply to high earners, millionaires only.

There are some tax credits for certain people.

But I think one of the things as you alluded to is that there has not been a state income tax in history where the threshold has not dropped below what they said it was going to start out at.

And so I hope Washingtonians realize that, and start pushing back publicly when that bill does come out to the legislature thinking in education, going back into your area and some of the specific issues embedded within that, parents are fleeing, public schools in this state as a result of the results.

Despite the spending, the state will tell you there's a there's 100 reasons for this enrollment from left over from Covid.

You know, personal situations.

But what is really happening?

What's your analysis of why this enrollment is happening?

What are parents doing and thinking, and how are they behaving?

Well, I think it boils down to one simple thing.

A one size fits all system does not fit all children, and you have more choices when it comes to your coffee or breakfast cereal than you do with your education.

And if you look at compare a state like Washington to a state like Arizona or Florida, which both of those states have tougher demographics overall than Washington.

And the solution is universal public school choice.

You know, Arizona stopped assigning children to zip codes, schools and zip codes over 30 years ago.

We've had universal private school choice for 30, almost 30 years.

And, you know, what we found?

Was there an exodus from the public schools was that they all the parade of horribles that we hear know all schools went got better.

I know this from firsthand experience, attending both really good public schools and really good private schools.

So I've seen it firsthand.

The evidence is clear that when schools have to compete for students, they use every penny better.

They're more innovative.

But you've got to give schools, schools freedom to innovate.

And that's what we're seeing a mountain going to where most of us have been to a college fair.

You know what's happening in Arizona right now and and other states like Arizona with, educational freedom, they're putting on their own fairs.

Look, we have to attract parents to enroll because no parent in Arizona has to ask a district personnel member for permission to enroll.

What's the big impediment in this state to school choice?

I would say the biggest.

And there are two.

One is our schools are great.

It's really it's the poor schools and other parts of the state that are the problem.

I can guarantee you.

And this is something to look into more closely, that if you look at the schools that in row rural, a third or less of children who are from low income backgrounds, children at least one or more grades, a majority of those children will not be proficient in the basics.

So poor results is not a poor, you know, school problem.

It's a lack of competition and the lack of freedom to innovate.

And is there an issue with the unions in the state also opposing that?

Oh yes.

And this is what I like to tell people.

There are unions in every state in the United States of America.

They can and will continue to be a voice at the table.

What's different is not they're not the loudest or near only voice at the table.

Charles, going back to your and transportation to talk about some of the specifics.

Talk a little bit about Sound Transit.

It's supposed to be the panacea and solve all of our problems.

And so is a new bridge across the Columbia River.

That does not seem to be going well because there's a transit piece involved in that.

Talk a little bit about a couple of those specific areas that, impinge upon results and how we view things.

Well, in the case of Sound Transit, they were formed more than 25 years ago.

So, we can see what their track record is.

And, unfortunately, they haven't really delivered the results that I think the voters, hoped for or were led to believe, they could expect, as it stands today, ridership, total transit ridership in the Puget Sound region is lower now than it was ten years ago.

Even though we've spent many billions of dollars building a light rail system.

So even though Sound Transit likes to point to new stations every time they extend, light rail, that's fine, but we're paying a very high price for a system that is only carrying a comparatively small number of, riders in the region.

And in fact, people in the Puget Sound region make a total of about 14 million person trips per day.

That's to school, to work, shopping, everything.

All the trips.

And today, light rail accounts for less than 1% of that.

So that gives you some idea of just how little we've gained, for all the billions that have been spent.

Yeah, the cost per head there is really high.

Yeah.

And when you look at the light rail extensions that they hope to build, which will cost tens of billions of dollars more, they're actually, according to Sound Transit's own forecasts, the worst performing parts of the system.

So if the cost effectiveness isn't very good now, it's going to get worse.

Ryan, want to swing and talk a little bit about small business.

Make sure that small businesses got some representation here.

We've got increased back taxes and actual tax on jobs for large employers for the, well, Washington plan, a sales tax extension.

It almost makes you ask the question, you know, to some degree, why bother?

It feels like the general message is that successful people have done something wrong in some ways, and that their gains are ill gotten.

I'm wondering, do you get that vibe out of lawmakers?

And if the goal is to take the pressure off the middle class, which we keep hearing about, a lot of these proposals, where's the discussion about where the rollbacks are going to be?

I haven't heard that yet.

Yeah.

I mean, there's a lot of talk about regressive taxes and how to fix it, but talk is cheap and there's been no solutions offered yet.

In fact, I think there's been mostly the opposite and that the regressive taxes keep going up.

One of the ways that the majority wants to fund part of the deficit this year, from there, they're, as I mentioned, breakneck spending just to tack on another $100 million in cigaret taxes, which again, very regressive, hits low income people the hardest.

So I think it's just the talk is very cheap about regressive as far as business climate.

Yeah.

Our small small businesses have been getting crushed in Washington in 2014, our state was ranked sixth best in business tax climate.

We are now 45th.

It's been 11 years.

We've dropped from 6 to 40 fifth.

We've had record numbers of businesses closed in Seattle.

The well Washington fund, as you mentioned, that mirrors Seattle's current, jumpstart payroll tax that has caused Amazon to shift their new HQ to Bellevue.

It's caused, quite a number of companies to move across the water to try and escape that.

And now this new well Washington fund will just apply to the entire state.

And so instead of escaping from Seattle, what's going to happen is they're going to escape to another state with a friendlier business climate.

I want to switch over here in our last five minutes.

Talk about your areas framed through the lens of competitiveness.

Because I think that's a huge issue for Washington state, you know, without, not having an income tax and without having good transportation, you're basically signing up to move up into the rain and drive back and forth on 167 in the dark to a dead end job, a cubicle in Seattle.

And I don't see the draw, I really don't.

If you weren't from here and didn't love it, I don't understand why those are talking points.

For somebody to come up here and participate in the economy, and if they're going to tax your job, you know, if you're making more than a buck 25 and they convince your employer that maybe we don't need that position.

You know, I just don't see much good news out there.

So from a competitive competitiveness perspective, Ryan, talk a little bit about you mentioned we're 45th now in terms of business climate.

Where does it put us overall just in terms of climate climate?

I mean, it just it just means new businesses aren't being started in Washington.

We've seen that, all the other taxes layer on top is making it incredibly hard, not just for businesses to live here, but for people to live here.

Our home prices are now in the top five in the country.

Our sales taxes are in the top five in the country.

We want to pass a new income tax, which would give Seattle the largest marginal rate, top rate income tax in the entire country by a very large amount.

And so what's going to happen is people are just going to start moving here, stop creating businesses, high earners are going to move out, which is already happening.

We have high earners have begun moving out at a rapid pace the last few years.

We have the highest death tax now in the entire country at 35%.

So people are definitely not going to die here that have any money.

They're going to leave well before that time comes.

Yeah.

And so we're just compounding taxes on top of taxes, but somehow we're still in the deficit.

So they keep raising taxes and we're in a really bad cycle right now.

That is called that's the classic death cycle where tax revenues go down.

So taxes have to be raised, more people move out and you end up in this death spiral.

I've seen it in both new Jersey and California reporting there.

Vicky talked a little bit about competitiveness when it comes to education.

People will move here for good schools.

They will not move here for bad schools.

Let's talk a little bit about that.

No.

Exactly.

And I think the tax climate, the education climate go hand in hand because their largest expenditure in really any state budget is going to be K-12 education.

It's going to crowd.

It's certainly crowding out higher education and everything else.

I mean, we're already between 42 and 40, 3% of our budget.

In fact, Washington ranks fifth nationally for state funding, state for pupil funding of schools.

Yet look at the results.

Washington used to be a top performer years and years and years ago, certainly over the past 10 or 15 years, we've nosedived.

And the reason is other states have up their game because let's face it, K-12 will bankrupt your state.

And in a certain point, you can't afford to spend more money on more of the same.

You have to innovate just like we innovate in every other aspect of our lives.

And that requires competition.

And so I think Washington, we're seeing, that we need to innovate and it it's innovate to do common sense things like Mississippi, which is so strange to think that, no, it's poverty.

I mean, you don't blame you don't have to blame poor kids.

These are folks who did common sense things and many of the same phonics.

Phonics.

Try getting that out of the house.

Education Committee.

Yeah, second year in a row.

We will not be hearing this.

This is something that Mississippi turned things around for about $15 million a year.

We could cover that through the education Federal Tax Credit Scholarship program.

If just 1% of federal taxpayers in Washington donated to this program.

Charles, competitiveness on transportation, it's a quality of life issue again, is do I want to move there and really go through that freight mobility?

I mean, it touches on everything when it comes to competitiveness.

Talk a little bit about that.

You know, unfortunately, the way the public agencies in Washington state legislature, transit agencies, cities and counties, have thought about transportation doesn't line up with the way the private sector looks at it.

And in the private sector, they do a return on investment calculation.

But in the public sector, decisions are driven by all kinds of other considerations.

And so we end up with these expensive vanity projects that don't really improve transportation system performance.

The system is actually getting less cost effective, more congestion and that makes the region and the whole state less competitive.

Time now for a little naked self-promotion, Ryan.

How do people get involved if they want to learn more about the Washington Policy Center and how to get involved in some of these issues?

Lay it out for them.

Yeah.

Please go to Washington policy.org right now at the top of our banner, we have a no new taxes campaign that people can sign up to.

They can go tell your legislator specifically that you want no new taxes this session after raising taxes by $9 billion last year.

And so that's the best way to reach us.

Okay.

Great conversation.

I appreciate all of you coming to northwest.

Now, I told you that, 21 minutes would go quickly.

There's so much to talk about and a lot going on in the legislature.

And I know you guys are down there doing the research and, trying to get your voices heard.

Thanks so much for coming to northwest now.

Thank you.

Thank you.

I want to leave you with this thought.

We cannot tax our way to prosperity.

The bottom line understanding where money comes from and how to shape incentives correctly to create the value needed to encourage its exchange, is the only way to perpetuate the prosperity we currently enjoy.

Please share that with the young people you happen to know.

My thanks to David Bose and the Washington Policy Center for their participation on northwest now over these many years.

I hope this program got you thinking and talking.

You can find this program on the web at kbtc.org, stream it through the PBS app or listen on Spotify and Apple Podcasts.

That's going to do it for this edition of Northwest Now until next time, I'm Tom Layson.

Thanks for watching.

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