Politics

From the Northwest to New York, there is a growing public sense that this is the year for the decennial political joust over legislative-district makeup called “redistricting” to be taken out of the hands of politicians. At least part of the public desire for change is a conviction that the process is slowly drawing political parties to the ideological edges.

And as unlikely as it seems, there is even a move afoot to have private citizens or groups submit redistricting proposals of their own by using new software available that includes census data. The idea is that a particular proposal might attract sufficient public support in a particular state that legislators would be pressed to accept it.

Of course more than redistricting is at work these days in pulling parties to the political fringes. As former Washington Gov. Mike Lowry, a Democrat, put it: “Sure, redistricting is part of the problem.

“But the turmoil we’re seeing in primary contests in Senate races isn’t a result of redistricting, and the process doesn’t apply to U.S. Senate seats, anyway.” He was referring to things like the removal in Utah of Republican Sen. Bob Bennett from re-election consideration by his party’s state convention and the struggle that Sen. John McCain is facing in his GOP primary in Arizona

The redrawing of legislative and congressional districts across the country is required after each census is completed, which makes 2011 the year the legislative-district remap will occur, with the first impact to be felt in the 2012 elections. That looming deadline is what’s behind the growing public pressure for change.

The number of legislative districts in each state will remain the same in the forthcoming revisions. The boundaries are merely redrawn to provide for population shifts within the states.

But the process is more stress-inducing at the congressional level where reapportionment means some states gain seats in the U.S. House of Representatives while others lose seats. Some states retain the same number of seats.

Perhaps no state has had as tumultuous a redistricting history as Washington State, with federal courts ordering the legislatures after the 1960, 1970 and 1980 censuses to put together acceptable plans under the threat of being prohibited from holding elections until they had done so. During the political battles following the 1970 census, federal judges even took over the process for remapping Washington’s legislative districts.

But in 1983, Washington became only the third state in the nation to turn the task of redistricting over to a commission, a process that will be in place again after this census is completed. The commission is composed of appointees selected by each of the four legislative caucuses, with those four appointees choosing a non-voting chair.

 It’s a process that tends to keep incumbents safely ensconced, but most agree that’s preferable to the wild swings that can occur when one party or the other happens to be in power when redistricting rolls around.

But in places where redistricting has proven more blatantly political, the public concern is gaining traction.

The kind of power play the remap process can engender is perhaps most disturbingly pointed up in New York, where the president of the state senate was overheard telling fellow Democrats that if the party retained control in the next election, “we’re going to draw the lines so that Republicans will be in oblivion in the state for the next 20 years.”

A proposal for an independent redistricting commission has been proposed in the New York Legislature by two Democrats and the plan has become such a public rallying point that the New York Times editorialized that support of the commission should be a litmus test for candidates in the fall elections.

Oregon may soon leap past all the other states in removing from the redistricting process the influence of legislators, whose goal is logically to remain in office and remain in power.

A proposed constitutional amendment on the Oregon general election ballot would create an independent redistricting commission of five retired trial-court judges, one from each congressional district, appointed by the chief justice of the Oregon Supreme Court, totally removing elected officials from the process.

Egil (Bud) Krogh, former Seattle attorney and one-time Watergate figure, says key experts view the redistricting dance engaged in every 10 years as “an unholy but largely implicit compact between the two parties that results in 95 percent of incumbents facing little or no opposition.”

Krogh, now Senior Fellow and Chair of Leadership and Ethics at the Center for the Study of the Presidency and Congress in Washington, D.C.,  says the organization is doing some analysis of what he calls “the urgency of redistricting reform” in the hope of providing some guidance on the issue.

 “Since most legislative candidates are essentially elected in the primaries, because of the way district boundaries are drawn, they find it more and more important to appeal to the extremes. So the two parties are slowly being drawn to the political edges, affecting stability in our political institutions,” Krogh notes.

Whether any substantial change in the redistricting process occurs in many parts of the country next year is likely to be determined by the extent to which the public agrees with that analysis.

As Washington Gov. Christine Gregoire struggles to find ways to plug a $2.6 billion shortfall in the state’s general fund, one who can truly empathize with her is former Gov. Mike Lowry, who found himself in a similar deficit crisis in 1993.

There are obvious differences between the situation Lowry faced, looking ahead to a $1.6 billion shortfall in a biennium whose start was then six-months away, and Gregoire’s gaping revenue hole in a biennium already six-months under way. But in each of their cases the quest to close tax loopholes was, and is, part of the perceived solution.

And like Gregoire, who thinks one way to make up some of the shortfall is by bringing more equity to the state’s business-and-occupation tax, Lowry sought to generate more dollars by creating more tax equity through extending the sales tax to services like law and accounting.

Gregoire wants to extend the b&o tax, which is imposed at different rates for different types of businesses, to out-of-state companies on the portion of their business revenue derived in Washington State.

In focusing on the b&o tax, based on a business’s gross receipts rather than profits, Gregoire may be about to open a longer-term process of looking at the array of rates at which that tax is imposed. The rates range from .0013 percent (13 cents on $100 of gross revenue) to 1.5 percent for services ($1.50 for every $100 of revenue).

“Looking for additional revenue through tax equity was the reason we sought to extend the sales tax to services,” Lowry recalled in a telephone conversation. “And tax equity is what Gregoire is seeking to achieve with her proposal to extend the b&o tax to out-of-state companies.”

Lowry’s  proposal by then made it through the Democrat-controlled House but bogged down in the Senate as attorneys,  in particular, successfully made the case that coming under the sales tax represented too many costly administrative challenges. Lowry recalls that the professions were more open to a b&o tax hike than to being brought under the sales tax.

In the end that 1993 Legislature closed its budget imbalance by increasing the b&o tax paid by those service businesses from 1.5 percent to 2.5 percent, with a provision that the increase would sunset after four years.

Lowry says he frankly doesn’t like the b&o tax “because a tax on gross receives has a lot of problems, like the impact on start-up businesses. And the disparity in rates among industries creates some real irritations about government and taxes.”

Lowry pointed up the challenge of the b&o tax, instituted in 1933 and the nation’s oldest gross-receipts tax, by noting “it’s an income tax, basically, because its rate is based on the assumed profit margins of various industries.”

“It seems to me that a corporate income tax would obviously be preferable, and more equitable to all businesses,” Lowry added.

But failure has met every effort to bring about an income tax, which would require voter approval because the conventional wisdom (not longer agreed to by all) holds that it would require a change in the constitution.

The service industry represents the perfect example of what Lowry is referring to. Firms in that industry pay 1.5 percent of their gross revenue because that industry basically has the highest profit margins, on average. Although it’s anyone’s guess as to why gambling (for those whose annual winnings total $50,000 or less) is specifically singled out for the same rate as the leal, accounting and consulting businesses.

Anyone looking for absurdity in the b&o tax need look no further than its placing escort services in the retailing category, which means the tax is about half of the rate on services. A wag might suggest that the state should not be promoting escort services as retail activity, in which sales occur

Referring to the disparity of b&o-tax rates, Don Brunell, president of the Association of Washington Business, points out that many of the variations in the rates relate to incentives provided to various industries at one time or another.

Thus production of biodiesel fuel was put in the lowest-rate category of .0013, which had been created for “wholesale meat processors.”

And the most high-visibility example was, perhaps, the 2005 change that made “manufacture and sale of commercial aircraft” beneficiary of a reduction from .0042 to .0029, a clear part of the incentive package for Boeing.

Brunell, whose statewide business association is also the state chamber of commerce, suggests that just looking to remove a tax incentive, as Gregoire is basically suggesting, isn’t necessarily the answer. Why change an incentive that is doing what the legislature intended it to do?

“The duty of any industry that gets an incentive such as b&o-tax reduction, is to produce jobs to offset the tax revenue the state is losing from the tax incentive,” said Brunell. “The legislature should be constantly looking at the whole array of incentives and if the incentive isn’t paying off for the state, the legislature should look to change it.”

Incidentally, the additional 1 percent b&o tax hike service industries were hit with in 1993 was eliminated three years later as what was becoming the state’s dot-com surge brought a budget surplus of more than $600 million.

Gregoire and the legislators considering the painful combination of cuts and tax hikes necessary to balance the budget, as well as businesses and individuals who will feel the pain, can only hope that a similar comeback for the economy is in the not-too-distant future.

Flynn's Harp Dec. 30, 2008