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Eye On Olympia

This can’t be good news…

The Washington, D.C.-based Center for Budget and Policy Priorities today reported that…

Wait. The title says it all:

“STATE REVENUES PLUMMET, July-September Revenue Numbers Are Worst in Years.”

Of the 15 states for which current data was available, the liberal-learning group reports, nowhere was the drop steeper than in, yup, Washington state. According to a chart prepared by the group, Washington’s sales tax collections dropped by about 4 percent over the last few months.

Why? Because scared consumers haven’t been spending as freely as they used to. No longer are real estate sales shoveling unexpected millions into state coffers. And in states with an income tax (hello, Idaho), worker layoffs and cutbacks in hours have sliced into those revenues as well.

Compared to the same quarter last year, it’s even bleaker. Washington’s July-Sept tax collections compared to the same period last year are down a startling 11.3 percent. This after quarter upon quarter of more-money-than-expected good news for budget writers in 2006 and 2007.

Idaho’s not much better, coming in third worst on the list, down 9.3 percent from last year. (Tennessee’s second, if you’re keeping score.)

None of this bodes well for state services in tough times. Or, as the report put it:

Many of the actions states take to balance their budgets will be harmful to families and to the economy. State taxes pay for state aid to K-12 schools, support for public colleges and universities, health coverage for children, families, seniors and people with disabilities, public safety, and transportation. States are enacting cuts in all these areas already. They are also increasing taxes and fees. Both spending cuts and revenue increases take money out of state economies, deepening the nation’s economic problems.

Or, as a Wall Street Journal article put it today:

The decline in state tax receipts has potentially broad economic significance. The federal government is expected to keep spending relatively steady to prop up the failing economy. But states generally have rules requiring balanced budgets, and so must either cut spending or raise taxes — both the opposite of what many economists, including some deficit hawks, say is needed during the current economic downturn.

In the gubernatorial race, Republican Dino Rossi’s campaign today said the news is evidence that Washington state needs a more business-friendly climate. The campaign scheduled simultaneous press conferences in Spokane, Vancouver and Seattle today, saying that Rossi would set the state on a new course.


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Richard Roesler covers Washington state news from The Spokesman-Review's bureau in Olympia.

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