Gov. Mike Lowry, fresh from a meeting with his economic advisors, said Thursday that some legislatively approved tax cuts may not be prudent given the softening Washington economy.
But the governor said he will wait for the quarterly revenue forecast June 15 before deciding what, if any, part of he $501 million tax cut package he will veto.
He said he still is studying “how much jeopardy fiscally we put the state in with $500 million in tax cuts.”
His Council of Economic Advisors, with whom he met Thursday for nearly two hours behind closed doors, confirmed what he already knew, he said.
The council told him Washington is feeling, or about to feel, the effects of a sagging national economy, looming federal budget cuts, feared layoffs at Hanford and new layoffs at Boeing.
“I think they counsel caution in the overall situation,” the governor said.
Bret Bertolin, a top revenue forecasting official, had no opinion on the tax cuts but agreed with Lowry that this is a time for caution. He said there is nothing to be alarmed about, but there are signs the economy is cooling. For instance, he said, revenue collections have lagged a bit recently.
Another member of the council, Seattle economist Dick Conway, said the state likely will see a “soft landing, certainly not a recession.”
The only tax cut discussion by the council, Lowry said, was the $148.5 million sales tax exemption for manufacturing equipment and expansion. The council, he said, thinks the reduction “has a real chance of doing some good for the economy” by creating new, family wage jobs.
Lowry intends to sign that tax cut next Thursday in Vancouver.
But he still is studying whether to veto other parts of the legislative package, including big reductions in business and occupation and property taxes, and an array of smaller cuts for the insurance industry, agriculture and other sectors.
Republican House leaders, who pushed the big cuts through the Legislature, have said Lowry will hurt the economy if he vetoes the cuts.
They argue that tax reductions can only stimulate the economy and help citizens.