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No Rise In Revenue Expected Gains, Losses In Industry, Employment Will Balance Out

Washington’s economy remains stable, but state tax revenue collections are expected to remain essentially flat in the coming two-year budget cycle, the state’s revenue forecaster said Thursday.

Chang Mook Sohn’s prediction, delivered in his trademark soft monotone, drew sharply different reactions from Republicans and Democrats preparing to write a new state budget and cut taxes.

Democrats, beginning with Gov. Mike Lowry, see in the forecast good reason to be cautious about budget and tax cuts, at least compared to Republicans, who want to do a whole lot of both.

Lowry and Senate Majority Leader Marcus Gaspard, D-Puyallup, said they favor tax reductions between $225 million and $250 million, and moderate reductions in state spending.

House Republicans, led by Speaker Clyde Ballard, R-East Wenatchee, and Senate Minority Leader Dan McDonald, R-Bellevue, said they are looking for tax cuts in the range of $800 million, and big budget cuts.

The House is expected to unveil its budget next week. The House proposal is rumored to be about $1 billion under Lowry’s proposal of $17.9 billion.

Sohn offered no views on tax and spending policy, but gave both sides plenty to consider for the last half of the legislative session.

He predicted the state will receive $17.945 billion in revenue from sales, business and other taxes in the fiscal 1995-97 biennium beginning July 1. That’s about $22 million less than he predicted in November.

The forecast can be attributed in part to big declines in aerospace and Hanford Nuclear Reservation employment, offset by big gains in software, high-technology and international trade employment, Sohn said.

Sohn, however, said the job gains in the service sector are cooling and the state “shouldn’t look for the kind of performance we’ve had.”

About 121,000 new jobs have been created in the state since the first quarter of 1993, despite the loss of 17,100 aerospace jobs, data he presented showed.