Gov. Chris Gregoire stopped by yesterday to tout her new plan to reset state government (look for our take on the effort in Sunday’s paper; we’ll post the editorial here Saturday evening.)
While she was here, we talked about the failure of the Democrats’ jobs bill in Congress. Gregoire, as well as many other governors, has been counting on the bill to deliver billions in state aid. Washington penciled in $480 million in additional Medicaid money to help balance the state budget that begins July 1.
The package that Republicans defeated yesterday had a fraction of that, but still might have saved the governor from having to make across-the-board cuts. Gregoire now says that she’ll give Congress until its August recess to revive the aid, or she will start hacking state programs.
The federal aid was supposed to kick in after December, but waiting that long to make cuts isn’t an option. “For every layoff I do now, by December, I’d have to do two,” Gregoire said.
Gregoire noted that the failure of the bill also hurts Washington in a couple of other ways: It would have extended benefits to the long-term unemployed (“Those are people who will be coming right back in our door, needing Medicaid assistance, food stamps…”) and saved the sales tax deduction for another year.
The sales tax deduction is a matter of basic tax equity – it gives residents in states like Washington the same tax treatment as provided residents in states with income taxes. But Congress won’t restore it to the federal tax code because 1) it would then have to actually account for it long-term and 2) it makes a handy pawn to win votes for other spending measures.
Interestingly, the House and Senate felt strongly enough about one piece of their jobs bill – reversing a 21 percent federal fee cut on doctors who take Medicare patients – to break it out and pass on its own. But don’t hold your breath for the sales tax deduction to get any such special treatment.