Washington Policy Center Blog

Public records performance audit released

The State Auditor today officially released a performance audit on government compliance with the Public Records Act. So what does public records compliance have to do with government spending and efficiency? Consider some of the recent taxpayer payouts for government violations of the law:

"In recent years, court cases in which state agencies and local governments have been assessed fines and penalties have been specifically related to the entities’ improperly withholding public records and/or delaying release of the records. We did not identify litigation that was based on entities’ practices other than improper denials or excessive delays. In addition to penalties, attorneys’ fees, and costs awarded by the court, the entity also bears it own legal costs of the litigation. Accordingly, minor court awards can be expensive if the legal costs associated with the litigation are considered as well. Examples of recent lawsuits include:

• The Department of Corrections settled a lawsuit for $65,000 in late 2007. A Tacoma man made public records requests at 10 government agencies for information about employee health insurance coverage. The Department said it could not electronically redact the requested records and offered to provide paper copies at a cost of $8,900. A Thurston County judge ruled in this case that the Public Records Act does not require agencies to provide records in an electronic format. However, the agency ultimately provided the records electronically to the requestor.

• The Department of Corrections settled another public records lawsuit earlier in 2007 for $541,000. Prison Legal News, a watchdog newspaper, requested records in 2000 and disagreed with DOC regarding the documents withheld and the time it took to provide the records requested. The Thurston County Superior Court order supported the position of the Department and, on appeal, that decision was supported by the Washington Court of Appeals. After a favorable decision from the two lower courts, the Supreme Court reversed their decisions and ordered the documents to be released. DOC was ordered to pay statutory penalties, attorney fees and costs incurred over the 7 years it took for the case to pass through the appellate process. The case involved issues over exemptions in the Public Records Act.

• In 2006, the City of Spokane settled a case for $299,000 involving its refusal to release public records regarding financing of a parking garage. At the time, it was thought to be the largest public records-related settlement in the history of the 1972 Public Records Act.

• A state Court of Appeals judge in 2007 fined the King County Executive $123,000 for failing to comply with the state’s Public Disclosure Act. A Seattle businessman took a case to court in 2000 after the Executive’s office failed to respond to a 1997 public records request for documents regarding the public financing of Qwest Field. A King County Superior Court judge originally fined the Executive $5 per day for each day it failed to produce the requested records. The Act allows up to $100 per day. The case was still being resolved at the time of the audit.

In addition to the financial expense of being involved in a legal dispute involving public records, failing to respond properly to public records requests can erode the public’s overall trust and regard for the entity and government in general."

To view the full audit and recommendations for improvements, click here.

Free-Market Land Use Policy, by way of Houston, TX

I'm attending the American Dream Conference in Houston, Texas this weekend and I've learned some interesting things.

Houston is the fourth largest city in the United States. Though, its median sales price of existing homes in 2007 was only $152 thousand. Compare this to the top six largest cities:

City                     Population                  2007 median sales price, existing homes

       New York, New York (pop 8,213,839)  $380-$540 thousand

2)    Los Angeles, California (pop 3,847,059)   $589 thousand

3)    Chicago, Illinois (pop 2,842,753)   $276 thousand

4)    Houston, Texas (pop 2,117,937)  $152 thousand

5)    Phoenix, Arizona (pop 1,469,794)  $257 thousand

6)    Philadelphia, Pennsylvania (pop 1,456,350)  $234 thousand

 

One reason is that Houston is the largest city in the country that does not regulate land-use through zoning. This means the free-market dictates where commercial and residential activities occur.

There are areas of the city where a large high rise shares a city block with a single family home. While this may sound unthinkable, consider that it does not happen in all places and where it does, prices adjust to the situation. So a home near a commercial property would cost less than a similar home in a traditional neighborhood.

Houston is not without regulation, however. Typically, the use of a property is defined through deed restrictions. So each property contains individual restrictions that limit what the owner can do with the property. These restrictions are similar to HOA agreements and they can range from landscaping to building height requirements. The deed restrictions can expire (usually within about 50 years) and can be renewed (or left to expire).

Some property owners will allow their deed restrictions to expire in order to sell the property for commercial purposes with no land use limitations. This is how large multi-use activities become intermixed. They are usually highly controversial and opposed by the local residents.

Deed restrictions can also influence the value of a property. Most residents enjoy predictability with land use so tight restrictions that last a long time are more desirable. Likewise, unrestricted properties are an invitation for commercial enterprises.

While mixing residential and commercial development might be undesirable to some people, the majority of Houston residents seem to prefer it. There have been several attempts to move Houston toward zoning but the public has consistently rejected the idea. Thus, preserving the free-market system.

Fight Climate Change...Fly A Plane In Circles

Tomorrow, presidential candidate Sen. John McCain will be in Seattle to discuss his cap-and-trade proposal to reduce greenhouse gases and fight climate change. Some, however, aren't happy and will be protesting.

The State Democratic Party will be attacking McCain's effort to "boost his faux 'maverick bona fides,'." (By the way, the letters from "faux maverick bona fides" can be rearranged to spell "Scuba Rove Affixed A Mink" which can only be some secret code.) How they will be doing it, however, is interesting.

According to the Tacoma News Tribune, "The plan is to hire an airplane that will carry a special message to Republican John McCain, and everybody else who is paying attention." Maybe the banner will say "McCain: Faux Maverick Bona Fides."

So the way they are going to attack John McCain for his climate change plan is to hire an airplane to fly around in circles burning fuel. If that doesn't demonstrate a contrast, I don't know what does.

Didn't we cancel that project?

Adam Wilson of The Olympian wrote an interesting article this weekend about a state computer project that some legislators thought they eliminated this year. According to the article:

"The state Health Care Authority plans to spend an additional $9 million on a computer project that the Legislature tried to cancel this year.

State officials say the move will preserve work done so far and buy another chance at continuing the project. But a key lawmaker said it contradicts what the Legislature intended.

After $5 million had been spent on early development of the computer project, lawmakers approved spending $25 million more on the BAIAS system in 2007. The computer would replace the 30-year-old system that handles public employee health insurance.

The state spent $2 million last year on the project, but Democratic lawmakers, looking to save money, pulled $14 million from the project in March.

The cut effectively ended the effort to develop the system after $7 million in taxpayer money had been spent because there wasn't enough money left to finish it. But $9 million from the original budget was still available. The agency plans to spend that money on the system in the next year . . . A lawmaker on the board, Rep. Ross Hunter, D-Bellevue, warned against the proposal. He said he opposed canceling the project, but had no doubt that is what the Legislature wanted to do.

State spending is expected to outstrip revenue by $2.4 billion in the next two-year budget. Hunter said it's unlikely more funding will be given to the project next year, making spending more now questionable . . . As for concerns about reversing the decision of the Legislature, run by the Democratic majority, Swecker said it was fair play.

'My theory is if they were trying to terminate the project, they should have cut all the money,' he said."

So is the Health Care Authority an agency run amok blatantly disregarding the law and the intent of lawmakers?

Well, not exactly. Perhaps in their haste to rush through the $306 million 2008 supplemental budget increase, lawmakers left the original language in the budget concerning the project even though they reduced the funds:

"Sec. 214(7) $784,000 of the health services account--state appropriation for fiscal year 2008, $1,676,000 of the health service account—state appropriation for fiscal year 2009, $540,000 of the general fund--federal appropriation, and (($22,480,000)) $8,200,000 of the state health care authority administrative account--state appropriation are provided for the development of a new benefits administration and insurance accounting system"

We're all for reducing unnecessary spending and saving money, but lawmakers need to be more diligent in how they write the budget so they can clearly convey their intent. Perhaps if they had adopted a 72-hour budget review reform, this oversight would have been caught.

The City: Now Your Broadband Internet Provider?

A good insider article from Peter Lewis over at Crosscut recaps the city of Seattle's desire to play internet service provider. Even though the city wants to partner with a private sector business to help run the service, let's just say that my confidence in such an endeavor is weak at best. We've seen this scenario play out in many municipalities around the nation and the results are less than staggering. I will say that at least the city is not interested, at this particular junction, in providing free (meaning ad-supported) WiFi service -- a catchy fad that is thankfully fading into obscurity. Turns out people are willing to pay for good service rather than suffer through poor, yet free, Wi-Fi service.

The city is relying on a couple of feasibility studies and surveys that shows, guess what?, people care about the price of the service they purchase. But my concern isn't so much that the city is able to provide less expensive broadband service. It's this: what happens when the city realizes it is running over budget and the system is under performing? When Verizon rolled out its FiOS (fiber optic to the home) plan a couple of years back and said they would spend billions nationwide in infrastructure development, I thought it was fantastic that this private company would risk a rather large amount of capital to serve its customers. If Verizon goes over budget they can't clean up their shortfall by taking tax dollars from those who do not use the service. But what happens when, and if, the city needs more capital to invest in the very expensive investment of upgrading fiber optic lines? That makes me nervous.

Secondly, before the city decides to jump on the technology provider bandwagon, it should take a look at the emerging technologies that private enterprises are rolling out. Free Wi-Fi failed for a number of reasons, among them the fact that Wi-Fi signals only reach about 150-300 feet and covering a city with thousands of nodes (stations that broadcast the signal) is cost-prohibitive. On the other hand, news came down yesterday of a deal between Kirkland's Clearwire, Sprint, Google, Intel, Comcast, Time Warner Cable, and Trilogy Partners to invest over $3 billion in developing a Wi-Max system. Wi-Max covers a far larger area (up to 20 square km) with one antenna. Thankfully, unlike Philly, San Francisco, Spokane and other cities, Seattle resisted the urge to spend millions on what is already a fairly outdated technology. The risk of developing these networks belongs with the private companies with private funding -- not when our tax dollars are at risk.

The point is that the City of Seattle is seeing itself as some altruistic provider of an essential service; a service so essential apparently, that a government-run entity is the best, and therefore, most logical choice in the marketplace. But from the numerous examples of failed or budget-busting projects around the nation, I'm not holding my breath.

Stop the discriminatory tax exemption madness!

Peter Callaghan of the Tacoma News Tribune has a great column today on the increasing strategy of businesses trying to carve out exemptions from the crushing burden of taxes they face. While I find no fault with these employers for trying to make doing business in Washington more palatable, the answer is not discriminatory tax relief, but instead universal tax relief for all employers and individuals in Washington.

From Peter's column:

"If cities like Tacoma and states like Washington are willing to offer tax breaks and other public funding to keep big employers, DaVita would be silly – even financially irresponsible – not to grab them.

DaVita didn’t create the atmosphere that allows companies to set up bidding wars. That was begun years ago, ironically by a business that has been deemed by federal courts to be a nonbusiness, exempt from antitrust laws. That would be Major League Baseball, which wrote the textbook on getting ladles of tax dollars.

All sports franchises had to do was threaten to move a beloved team elsewhere (and persuade the people who run those elsewheres to play along). In nearly every case, it worked.

But while pro sports leagues created the technique, The Boeing Co. brought it into the private sector and perfected it, at least around here.

First, the aerospace company won $60 million in tax breaks from Chicago and the State of Illinois to move a few hundred corporate office folks.

It then launched a second round of civic bidding with its competition to site the assembly plant for the 787. Washington won – or perhaps bought – that race. The Legislature gave up $3.2 billion in future tax collections to keep the plant in the state. The state also paid for road improvements, a $30 million dock that turned out to be unnecessary, and a training center.

That worked out so well for Boeing that it has begun to set the stage for a third contest – this one to host the plant for the jetliner that will eventually replace the mid-sized 737.

Russell Investments must have learned from the Boeing example. Not just that there is money to be had but that seeking it can lead to bad feelings among taxpayers. Boeing looked greedy by asking, so Russell escaped that by not really asking. It continues to act as though it doesn’t even realize that cities and developers are drooling for a chance to host the company.

Altogether, Tacoma, the state and the feds have developed a package worth $140 million. But Russell has declined to comment throughout the competition, so no one knows if it will be enough.

Now comes DaVita. Russell employs 1,100 people downtown with promises of hundreds more if it stays. DaVita employs 850 and also predicts expansion. Russell jobs pay more, while DaVita is a solid employer of workers in its billing, accounting, information technology and government reporting sections.

DaVita has the city’s interest. But who’s next?"

It’s past time for elected officials to address the business climate (tax relief) on a universal basis and stop using the tax code to reward those employers deemed worthy of relief by the government. No more exemptions and subsidies, instead one flat universally low tax rate. Same goes for individual taxes. No more sin taxes or special exemptions (except for maybe food and medicine). If government wants to raise taxes, they raise taxes on everyone and if the tax rate is too high (which it is) they lower taxes for everyone. No more tax code winners and losers determined by the power and force of government influenced by he with the strongest lobbyist.

Pick the Headline

Here's your environmental quiz for the day. Which headline appeared today?

"Al Gore Ties Myanmar Cyclone to Global Warming"

"Scientists Tie Myanmar Cyclone to Global Warming"

See the answer here.

Learning from the Past and Creating our Future

On April 15, 2008, former Comptroller General of the U.S., David M. Walker, provided the keynote address at our Government Reform Conference. The title of his presentation was "Learning from the Past and Creating our Future." Here are excerpts from Walker's speech:

". . . I am here to tell you, our Republic is at risk. Washington is out of touch and out of control. I’ve had the good fortune of going to 26 states and 40 cities as part of the 'Fiscal Wake-Up Tour' during the last two years. I’ve been to a number of other states, and many more cities in my capacity of the role as Comptroller General of the Unites States, and now in my capacity as President and Chief Executive Officer of the Peter G. Peterson Foundation . . .

Frankly, I’m not just concerned about the sustainability challenges we face. I’m concerned about how far this nation has strayed from the solid foundations that our Founding Fathers provided for us in 1789. And let me mention just a few examples.

First, the size of government. The Founding Fathers believed in limited government. In 1789 the federal government was 2% of the economy. Today it’s 20% and is scheduled to get a lot bigger.

Second, the composition of government. At the beginning of our republic, the federal government focused on things that realistically only the federal government could do. Responsibilities like national defense, foreign policy, treasury, postal service, Congress and the Executive Office of the President of the United States. Today, the 38% of the budget that is deemed to be 'discretionary spending' contains every major express and enumerated responsibility envisioned by the Founding Fathers for the federal government. Every single one. What happened to the provision written by the founders: that any role or function not expressly reserved for the Federal government belongs to the states and ultimately to the people? We have lost our way . . .

Let me touch briefly on a few sustainability challenges then wrap up and go to Q&A. Firstly, our federal fiscal challenge. It’s not our current deficits, and it’s not our current debt levels that are the problem. Yes, the deficits are larger than they should be. Yes, our debt levels can hardly be justified given the principles our founders established, and frankly, America’s history, up until the 1970s. When we incurred significant debt because of wars, whether it was the Revolutionary War, whether it was the Civil War, whether it was World War I, or World War II, our nation had a tradition of paying down that debt as quickly as possible so we did not encumber future generations with burdens that they should not be expected to bear. But since the 1970s, that tradition has gone by the wayside, and it’s time that we think about bringing it back over time.

We have large deficits and debt levels, but the real problems are off-balance-sheet obligations. As per the latest federal financial statements, we have over $44 trillion (there are 12 zeros to the right of that 44) in off-balance-sheet obligations, primarily in the form of unfunded Medicare and Social Security obligations. Adding this number to our nation’s current net liabilities means that our total federal fiscal hole was about $53 trillion as of September 30, 2007. That unfunded hole is getting bigger by $2-3 trillion a year by doing nothing. If you balance the budget tomorrow, which we’re a long way from doing, that hole would still grow by $2 trillion-plus a year. $2 trillion-plus a year!

Now, what is $53 trillion? It’s $455,000 per American household. What’s median household income in America? Less than $50,000 a year! Therefore, based on our present policies and programs, the typical American household has an implicit mortgage of over nine times their current annual income, but no house to back that mortgage. That’s the big sub-prime crisis . . ."

To read the speech in its entirety, click here.

Couldn't have said it better myself...

Great letter ("What hurts? Not a square inch hasn't been squeezed") in The Seattle Times today by Teresa Holland, a small business owner, on the frustrating levels of taxation generated by state and Seattle city policymakers. She correctly hits the nail on the head about short-sighted taxation policy that is depressing (or at least frustrating) small business development in Seattle.

A recent study by the Washington Research Council highlights Seattle's dubious taxation policies and an older study by WPC addresses the over-regulation of some of the city's industries. Teresa's letter should be considered by policymakers as a real-world testimonial by a small business owner on the impacts of taxation policy run amok.

Note to Seattle....Britain's reversal on congestion pricing and pollution fees

A centerpiece in Boris Johnson's campaign to unseat the incumbent mayor of London, Ken Livingstone, was the mayor's proposal to expand the city's congestion pricing scheme.

Livingstone implemented a £25 charge on high polluting vehicles, entering the city. The CO2 fee is on top of the £8 congestion pricing fee. Using an exchange rate calculator shows the charge for someone driving an SUV into London is about $65. For someone who worked downtown everyday, the charge amounts to about $17,000 per year!

Boris Johnson ran on the platform of reforming the congestion and CO2 charges. This from the BBC:

Once installed at City Hall, Mr Johnson will be able to start his plans to reform the congestion charge, another high profile part of his election campaign.

Last month, the state of New York took a page from Johnson's strategy, killing Mayor Bloomberg's congestion pricing proposal, which was modeled from London's scheme.

Locally, the Seattle Times recently ran a story highlighting a new study that claimed widespread congestion pricing could reduce congestion. And other notable policymakers are on record supporting such a scheme here. 

But with 42% of the vote, Johnson defeated the incumbent (36%) Livingstone. This stunning reversal demonstrates that congestion pricing and CO2 fees are not popular with voters, who only have so much tolerance for higher tax burdens.