Washington’s state tax surplus now is projected to top the $860 million mark, thanks to a new windfall of nearly $40 million and a vibrant economy, forecasters said Friday.
The state’s boom economy, led by the aerospace and high-tech industries, continues to show the stability of low unemployment and low inflation with no cooling yet in sight, the state’s chief economist, Chang Mook Sohn, said.
The state Forecast Council unanimously approved Sohn’s sunny projections, including a new forecast that $39.5 million in unexpected tax revenue will roll in between now and June 30, 1999. The new dollars go atop the $220 million increase adopted by the panel just two months ago.
The latest windfall isn’t much in terms of the overall state budget of more than $19 billion but shows the economy is holding steady and that lawmakers can consider adding to the state’s “rainy day” reserve fund and giving additional tax breaks, legislative leaders said.
Democrats said it also means the state can afford some new spending in education, child care, worker training, transportation and other services.
“It looks like the economy is continuing to percolate along as we predicted,” said Senate Minority Leader Sid Snyder, D-Long Beach, the council chairman.
He said new state caseload forecasts should free another $100 million that can be spent.
“We’ve got a huge amount of surplus revenue, and having it is a good thing if we deal with it wisely,” said Senate Majority Leader Dan McDonald, R-Bellevue.
The new numbers buttress the Republicans’ position that no tax increase should be authorized for transportation, he said.
Indeed, he came close to endorsing the Democrats’ idea of a cut in the tax paid on vehicle licenses and said other tax cuts are quite possible, too.
McDonald didn’t rule out new spending, mentioning education.
Lawmakers will have to live within the spending limits of Initiative 601, which holds growth to inflation, plus population growth. The current growth capacity is more than $150 million.
Sohn said he expects Washington’s employment and income growth to remain strong but said the population now is expected to grow a little slower than previously forecast. The state’s housing market is healthy but not booming like it was in the late 1980s, he said.
xxxx AT A GLANCE Highlights of Washington’s economic and revenue forecast: Overall economy: Continued strong in nearly all sectors, led by aerospace. New projection: Nearly $40 million added to revenue projections for this biennium. Total income: $19.9 billion, after voter-approved property-tax break of $207 million is deducted. Spending: Budget currently stands at $19.1 billion. Reserve: $861 million.