Yesterday the Washington Research Council released a report examining the so-called Connector, the Massachusetts health care strategy that has sparked national interest, including here in Washington.
Here's their conclusion:
With any luck federal tax code barriers to health care coverage for individuals and the unemployed can be fixed first, so that states may avoid constructing cumbersome, complicated, and costly ‘work-arounds.’ Not only are the long-term consequences of their real-life applications highly questionable, but they have not yet been demonstrated to actually work anywhere.
Governor Gregoire recommends a ‘go-slow’ approach. We agree. There are still too many questions and not enough answers about connectors. With luck, some of the answers will be supplied by the Massachusetts experiment.
The Council also released a report looking at the role construction plays in our economy and the impact it has on state revenues.
Construction activity has a powerful impact on state revenues. And changes in state policy that reduce the level of construction activity will, therefore, have an impact on the general fund. Legislators should keep this fact in mind as they consider bills such as SB 5046, which, by increasing the liability exposure of contractors, could reduce the level of residential construction activity in the state.
The state’s deep fiscal crisis of the early 1980s stemmed from the unwinding of a historic construction boom.
Here's the important caution:
The last downswing in construction earnings’ share lasted for nearly 6 years (from the second quarter of 1990 to the first quarter of 1996) and the next downswing could last well into the 2009–11 biennium. The result would be a long period over which state revenues grew at less than their long-term trend.
Legislators should exercise caution as they write a budget for the 2007–09 biennium. Unlike the experience of recent years, above trend growth is unlikely to erase any structural budget deficit.
Both reports are well worth your time. Good stuff.
