Published April 2002

State lawmakers can learn from British Columbia’s past mistakes

By Don C. Brunell
Guest Editorial

It’s not often that lawmakers have an opportunity to peer into the future — to see the consequences of their decisions. The Washington State Legislature need only look to British Columbia to see how certain policies can ruin a business climate — and others can restore it.

For the past decade, British Columbia has been ruled by the New Democratic Party. During that time, the party raised taxes, increased spending and expanded government until it virtually destroyed British Columbia’s economy.

As a result of the party’s policies, employers struggled under the weight of high business taxes. Personal taxes were so high, companies couldn’t recruit new workers. A maze of costly government regulations made British Columbia companies noncompetitive, and private investors avoided the province like the plague.

As a result, the growth in B.C.’s gross domestic product over the past 10 years was barely one-fourth that of other Canadian provinces. Then, last May, frustrated voters turned the New Democrats out of office.

To balance its budget and restore its economy, newly elected Premier Gordon Campbell reduced personal and corporate income taxes and cut government red tape, ordering that B.C.’s 400,000 regulations be slashed by one-third within three years.

In addition, Campbell’s three-year plan includes:

• A 30 percent reduction in the government work force.
• 20-35 percent cuts in all ministry budgets, except health care.
• An 8 percent cut in total government spending (a real cut, not a reduction in the rate of increase).
• Wage rollbacks for provincial officials.
• Lifting a freeze on university tuition.
• Means testing for government entitlements.
• Contracting out some government services to the private sector.

Washington lawmakers can learn much from what happened in British Columbia. British Columbia waited far too long to address its economic problems. Consequently, by the time they acted, they were forced to make drastic, painful cuts.

Washington can still avoid British Columbia’s fate, but only if state lawmakers start making the tough decisions necessary to bring state spending under control.

But so far, Olympia’s response hasn’t addressed the underlying problem. The so-called “deep and wide” budget cuts debated recently by state lawmakers are not real cuts at all but simply reductions in the rate of increase.

Legislators must get serious if we are to avoid British Columbia’s fate.

Here are a few suggestions:

• Eliminate half of the 10,000-plus vacant FTEs. According to the state Office of Financial Management, an average of 10,000 state positions are vacant at any one time. While vacant, they still are funded. Eliminating half of those vacant positions would be a 4.9 percent cut, far below job cuts in the private sector.
• Raise state employees’ share of health premiums to the national average. According to the state Office of Financial Management, the share of family health-care premiums paid by Washington state workers is 72 percent less than the national average. Gradually, it should be raised to the national average.
• Freeze state salaries. Even without a general salary increase, almost 40,000 state workers get automatic step increases of anywhere from 2.5 percent to 5 percent a year. (The other 60,000-plus workers don’t get step increases because they’re already at the top of their salary range.) Temporarily freezing state salaries could actually save jobs in the long run.

Washington state continues to face a real budget crisis that requires real solutions. The stakes are too high and the consequences are too serious to ignore.

Don C. Brunell is President of the Association of Washington Business.

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