In a nation where companies have the same rights as people under the law, it’s easy to fall into the trap of thinking that the state itself has the same needs and rights as individual people.

In the mid 1990s, backers of Initiative 601 argued that Washington State didn’t just need to balance its books every year, it needed to limit its spending with the ultimate goal of setting aside money for emergencies–to create a rainy-day fund, or in other words, a savings account. When it passed, I-601 imposed a cap on the state’s budget linked to inflation, which effectively froze the budget and assumed that no new services should be funded. It also incorrectly assumed that the cost of services wouldn’t rise faster than inflation. Health care costs, to take one example, vastly outpaced inflation throughout the 1990s.

While constrained by the I-601 cap, the state set aside a $1 billion pool of emergency funds, about 40% of which is discretionary (meaning a simple majority vote of the legislature can dip into it), while the rest is in an emergency fund (requiring a two-thirds vote of the legislature to access it). So far, political pressure from conservatives has kept the legislature from spending any of the I-601 funds, under the mistaken belief that the state is a person, a wayward spendthrift who needs to save for retirement or a catastrophic illness or an unforeseeable emergency.

But the state is not a person like you or me. It’s a bureaucracy that needs only to provide basic services for Washington residents. In an emergency it can access federal emergency funds or use its immense borrowing power to cover unexpected costs. But for the most part, the state only needs to balance its budget every year, and that budget has to be adequate, as measured by the needs of the state’s citizens.

Currently our state spends about 60% of its general fund on education. About 30% of the general fund goes for healthcare, human services, and “corrections,” a catch-all term for the state’s jails, prisons, police, and juvenile justice system. The remaining 10% covers transportation, the courts, salmon restoration, environmental funds, and governmental administration costs. So much for where the money goes. Where it comes from is another question altogether.

The state has no single, stable source of income. A mess of property taxes, sales taxes, licensing fees, grants from the federal government, tobacco settlement funds, and a mish-mash of miscellaneous fees make up the bulk of the state’s revenues. This situation has its pluses and minuses, from the state’s point of view. It’s easy for the state to mask its income from the taxpayer–until, of course, someone like Tim Eyman comes along and makes it his business to hack away at one or two of the state’s diverse revenue sources by wielding the tool of a citizen’s initiative.

From the wealthy resident’s viewpoint, Washington State is a paradise. There’s a reason why Californians like it here, and it has little to do with the weather, but everything to do with the lack of a state income tax–which would tax them on their high incomes, not on what they buy here in the state. (It’s so easy to travel to Portland or LA to buy your big ticket items, when you don’t have to work for a living). In the meantime, poor and middle-class residents are soaked with high sales and property taxes that impact them disproportionately. Is it any wonder why I-695, which axed the vehicle excise tax, passed so easily?

Meanwhile, basic services are collapsing. Over the past two decades, the federal government has devolved an ever greater amount of responsibilities onto state governments, including the administration of welfare and Medicaid, and the responsibility of serving low-income, working people who lack health insurance. Current federal Medicare reimbursement rates and state Medicaid rates are so low that the average medical practice in Washington State suffered a $95,000 loss last year, causing a record number of doctors to refuse services to Medicare and Medicaid recipients. For a basic checkup, the state’s Medicaid fund pays only half what a private insurer would pay. Even so, the state’s healthcare costs are expected to rise by over $800 million in the next two years.

The Department of Social and Health Services has been crumbling under years of budget cuts. For example, a recent internal audit of the state’s $200 million program for the developmentally disabled revealed that the program is in a shambles. There’s simply not enough money to hire and adequately train caseworkers; each caseworker in Washington State oversees 141 clients, while the national average is 40. Only 45 percent of the clients receive adequate services, while the rest live in shocking conditions. In addition, child welfare workers also manage impossible caseloads and lack adequate training. It’s easy for us to wax indignant over the death of Zy’Nyia Nobles or Linda David’s abuse, but we have to understand why this young child and this disabled woman were ignored by DSHS: it’s simply a lack of funds.

Education costs are also rising. Voters approved two expensive education initiatives that addressed the two problems legislators have been avoiding for too long: teacher pay raises and a reduction in class sizes. Indeed these two issues, in combination with adequate school buildings, are proven to have the most and best impact on the quality of K-12 education. It’s interesting to note that parents have to resort to citizens’ initiatives to get them, while Gov. Locke and school administrators continue to pour money into a bottomless pit of education frills: computers, high-tech gadgets, administration costs, training courses for school principals and administrators, and the like.

This year the legislature is in a bind. Gov. Jellyfish gave them a budget that funds education at the expense of healthcare and human services, which he wants to cut even more. But to avoid expensive lawsuits, the legislature is going to have to address inadequate funding for DSHS services. And transportation is a mess unto itself. The legislature has to dip into the state’s emergency funds. If it has any guts, it will eliminate this “savings account” altogether.

This, however, will only address the current budget crisis. Down the road, the legislature will need to take a hard look at the state’s revenue structure and consider the politically unthinkable: a state income tax.