Employers shouldn’t be asked to shoulder the full burden of revenue shortfalls in state and local governments, especially now.
Elected officials need to look inward to determine what cuts can be made to balance budgets. And looking inward includes asking their own employees and the unions that represent them to share in necessary sacrifices.
By and large, the private sector already has contributed much to the fight to curb the spread of coronavirus, a battle that appears to be far from over. Businesses have closed their doors to business for weeks, limited customers upon opening, and taken on the uncomfortable task of enforcing a state mask mandate. They’ve sent employees to work from the safety of their own homes. Those that have remained open have invested in signage and personal protection equipment.
While such measures have been necessary, they’ve come at a price. Some local retail businesses and restaurants have shut down during the pandemic and won’t return. Others are struggling and might not make it out the other side. New or increased taxes would jeopardize the viability of more employers, which stands to increase an already high unemployment rate—15.1% in May, triple what it had been a year earlier.
It would be one thing if this crisis occurred in a business-friendly environment. Instead, it comes at a time when the state is increasing minimum wage, raising the overtime-exemption standards, and hiking taxes employers pay to cover unemployment benefits. Businesses grapple with such cost increases in good times, and these are not good times.
Elected leaders need to remember where tax revenue originates. Healthy businesses and their employees generate more tax revenue when allowed to thrive, and putting more of a burden on them will slow recovery.
The first attempt we’ve seen to generate more revenue comes out of Seattle, with the City Council approving a payroll tax on companies with payrolls of more than $7 million annually. That has been cast as a vehicle for paying for specific services rather than a way to cover funding shortfalls. It’s also a less-than-veiled attempt to get big employers—specifically Amazon.com Inc., one could argue—to contribute more to the tax base.
While that action is more nuanced than an attempt to generate revenue, it’s indicative of an unsettling mindset in which employers are the solution to municipal woes. And talk of a similar, statewide payroll tax exacerbates those concerns.
At the state level, it appears less likely that a special session will occur to address budget shortfalls. While state legislators from both sides of the aisle have called for such a session, Gov. Jay Inslee has suggested the issue can be addressed in January. He has taken some actions on his own, including furloughing some state employees, but putting off more comprehensive action until January—and after the November election—is worrisome.
Some rumblings suggest struggling states could see federal funds meant to address shortfalls. Perhaps Inslee wants to wait to see what Congress comes up with. Let’s just hope he doesn’t wait too long to address what clearly is a distressing budget situation.
There aren’t any easy answers at any levels of government, and sacrifices must be made all around. Solutions that don’t place more of the onus on employers must be prioritized, as those in the private sector have sacrificed much already.
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