Revenue forecast is rosier

OLYMPIA – Revenue projections for the next two years suggest Washington’s budget will grow by about $2 billion. That’s more than some legislators expected and more than enough to fuel the debate between Senate Republicans and House Democrats over spending cuts and tax increases.

The March economic and revenue forecast says the state is slowly coming out of the recession, with housing starts and car sales up, overall consumer confidence down and significant questions about future hits the state coffers could take from economic problems in Europe, a slowdown in China or the continuing budget stalemates in Washington, D.C.

“We still see lots of uncertainty out there,” said Steve Lerch, the state economist. Although legislators were bracing for a drop of as much as $300 million, the March revenue forecast didn’t change significantly from December.

The state should have about $32.5 billion in its general operating fund for the two-year budget cycle, which begins July 1. That would be up from about $30.5 billion it will collect, and mostly spend, for the biennial cycle that ends June 30.

That extra $2 billion wouldn’t be enough to cover all the current programs, policies and salaries, plus make changes to the public school system the state Supreme Court is requiring.

Some programs will have to be cut, said Sen. Andy Hill, chairman of the Senate Ways and Means Committee, because a coalition controlling that chamber isn’t going to raise taxes. What programs and by how much will have to wait five to 10 days for the Senate budget.

On an easel in the hallway on the Republican side of the Senate, someone placed a large sign that said “$2 billion more.”

“We’re still finalizing things,” said Hill, R-Redmond. “In general, the goal is not to extend expiring taxes and not to initiate new ones.”

Some additional revenue will have to be found, said Rep. Ross Hunter, chairman of the House Appropriations Committee, because with inflation, growth in demand for current programs and new education costs, there’s not going to be enough money. The House Democrats’ budget will be released shortly after the Senate budget.

“It’s a hard problem to resolve, but this doesn’t make it worse,” Hunter, D-Medina, said of the revenue forecast. “The revenue growth and the population growth tend to cancel each other out over time.”

Sen. Mark Schoesler, R-Ritzville, said the Legislature shouldn’t just adjust the current budget for inflation, but instead should set priorities and fund them first: Budget like a family or a small business, deciding what it can afford, what it can’t and what it needs to change.

But Hunter said the state budget is more complicated than a family or small-business spending plan, with $32.5 billion, some 400 different accounts, federal money and double-entry bookkeeping. “If you simplify it too much, you can actually misstate what’s going on.”