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September 15, 2011 in News, Region
Washington budget sag continues
OLYMPIA — Washington’s economic outlook has “weakened significantly” in the last three months, and the state could face a drop of $1.4 billion in the money it has available for its main budget over this two-year budget cycle, the state’s chief economist said this morning.
Gov. Chris Gregoire will talk with legislative leaders in the coming days about the prospect of calling a special session to deal with the loss of revenue expected for this fiscal year, which is about $500 million.
The four legislators on the panel that approved the budget forecast agreed that a special session might be called, but disagreed on how extensive it might be. Republicans leaned toward a short session to handle agreed-upon cuts; Democrats said it would require more significant cuts to programs which mean changes to existing statutes, hearings, public input and likely amendments.
Normal economic times “seem like a mirage in the desert, the closer we get to it, the further it moves away,” Arun Raha told the state’s economic forecast council. “It appears that we are in for, at best, an extended period of muddle-through.”
On the plus side, hiring is up at Boeing and the state’s software industry led by Microsoft; farm prices are good and exports, which are a significant factor in Washington’s economy, are improving, Raha said.
But state revenues — the taxes and fees collected for general programs and many state salaries — are down $40 million from the June forecasts. The job market is weaker than expected, with the number of new jobs below projections and the unemployment rate holding steady at 9.3 percent. Home foreclosures are expected to rise, adding to the excess inventory of houses on the market. Construction is down, which is a significant problem because it accounts for only 5 percent of the state’s economy but 10 percent of its revenue, Raha said.
Outside the state, political gridlock in the nation’s capital and economic problems in Europe add to a pessimistic outlook.
Bottom line: “Downside risks outweigh upside risks.”
Raha said he’d like to assure the state the economic nightmare was over. “I see no end in sight.”
He’s not predicting a double dip recession, but he’s less optimistic now than in June that such a downturn won’t happen.
Raha estimates the state will have $500 million less than it is scheduled to spend on all its general fund programs and salaries in fiscal 2012, and $900 million less than projected for the fiscal 2013 budget.
Rep. Ross Hunter, D-Medina, the chairman of the House Budget Committee, said the actual shortfall is more like $2 billion, unless the state finishes its budget cycle with no money to carry it into the next biennium and spends all of its Rainy Day Fund.
So the question quickly becomes how soon does the Legislature begin meeting to tackle the budget problems. It’s not scheduled to meet until next January, but Marty Brown, the head of the Office of Financial Management, said Gregoire “would probably say she’s very uncomfortable waiting until January.”
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WashPIRG on September 15 at 10:30 a.m.
It’s past time for lawmakers to include the closure of wasteful tax loopholes in efforts to rebalance the state budget.
The Legislature has tried an ‘all cuts’ approach to pass budgets that just barely pencil out, and end up revisiting those budgets when revenues don’t meet expectations. Unfortunately, the Legislature doesn’t give equal weight to the loss of revenue through special-interest tax loopholes, and we believe that should be a top budget priority.
In their most recent session, the Legislature looked like a carpenter who only knows how to use one tool – a saw. What’s worse, they only seem to know how to use their saw to cut one kind of lumber – programs that directly impact the quality of life in our state.
The billions and billions in cuts haven’t done anything to help our ailing economy, and today’s news highlights the fact the state’s budget problem is on the revenue side of the ledger. Washington families can’t afford to subsidize unfair and unaccountable tax breaks for Wall Street banks and other special interests.”
There are several approaches available to the Legislature, including closing tax loopholes through legislation or allowing the voters to do so via a referendum.
Enough’s enough – it’s time for lawmakers to look at both sides of the budget ledger.
Steve Breaux
Washington Public Interest Research Group
steptoe_fan on September 15 at 11:11 a.m.
once again, the tax and spend types come here and beg for more money to waste.
until the state stops funding ALL benefits for illegals, stops the continued waste at DSHS, makes those who receive the ‘money’ card take drug tests to qualify and overhauls management at DOT and the ferry system - I say no.
it is FAR from time to look at both sides, the state continues to waste too much money that it has now.
Medicaid recipients need to pay more for their benefits.
Make the irresponsible in this state START to become more responsible for their actions !
listen to the democrats whine !
Hiker on September 15 at 11:38 a.m.
steptoe_fan: “Make the irresponsible in this state START to become more responsible for their actions !”
Does this mean that Spokane and the rest of Eastern Washington should give up the huge subsidies they receive from the state?
People around here love to complain about taxes and government spending while at the same time enjoying the benefits of it. I just don’t understand it. Either walk the talk or be quiet.
Squid on September 15 at 12:00 p.m.
Maybe we should make more taxpayers, instead of more taxes? Just a thought.
Coffee on September 15 at 12:14 p.m.
Here is a link to a story that covers tax breaks in Washington state. Microsoft seems to be a big winner and professional services are not taxed ( sales tax) looks like power companies get a break all so, You know the iferstructure that Avista needs to charge us more for they are getting a tax brake to do.
.
http://crosscut.com/2011/02/02/washington-legislature/20597/State-tax-breaks-for-businesses-need-scrutiny-now
gotcha on September 15 at 2:58 p.m.
After 2012 elections there will be less Progressives in office thus less Union influence over what goes on with the tax dollars that are spent. Thats the good news.
dataxman on September 15 at 3:12 p.m.
Clearly loopholes are a problem - and we need to look at them. The first one to repeal is the sales tax exemption on food. Then let’s eliminate the sales tax exemption on gasoline and services. Just like that the budget gap will be plugged, our rainy day fund will be replenished and all will be right in the State.
Oh, you only want loopholes closed that you don’t benefit from? My bad…
oneanddone on September 15 at 6:28 p.m.
Spelling and grammatical mistakes should disqualify those who attempt to post their drivel. Right, Coffee?
DickAdams on September 15 at 9:00 p.m.
Seems to me, the legislature brought a lot of the red ink on themselves. I know for a fact, Spokanites cross over into Idaho to purchase lots of stuff that`s cheaper and fill their gas tanks while their at it. Everybody knows Washington gas tax is one of the highest in the nation.. All and all, it more than pays for the short trip. Oh, yeah, cigarettes, you know if you smoke its a one way ticket to hell according to Gregoire as she keeps taxing the living day lights on sin taxes. I`ll wager the number of cigarettes coming from Idaho to Washington must hurt the increased revenue the state expected caused by taxing it so high. I`d guess it backfired. That`s what Gregoire, the reckless spender, deserves.