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Legislature’s revenue-forecasting panel set for deliberations

The joint legislative committee that sets the revenue estimate for Idaho's next state budget convenes on Thursday at 1 p.m., and its task is a weighty one: Figure out what's going on in Idaho's economy, and agree on a tax revenue forecast for fiscal year 2012 that's realistic. "For the most part, we're amateurs at economic forecasting, but we're good listeners," said Sen. John Goedde, R-Coeur d'Alene, co-chairman of the Economic Outlook & Revenue Assessment Committee. "We listen to presenters who are supposed to be a fair reflection of Idaho's revenue streams, the businesses that contribute to our revenue stream. … I think if you look at past performance, that the Economic Outlook Committee has done as well or better than economists that have done their own predictions on our revenue stream."

Since 1999, the joint revenue committee's estimate has matched the governor's Division of Financial Management revenue forecast every year but the last two. In both of the last two years, the committee has set its projection lower than the governor's, and, as a sharp economic downturn hit, actual collections slipped even lower. So far this year, since the start of the 2011 fiscal year on July 1, Idaho's tax revenues have been coming in ahead of projections, and were $30.9 million ahead by the end of November. But lawmakers have been skeptical of the administration's estimate of 4.7 percent revenue growth this year.

On Thursday, the committee will hear from DFM, the Idaho Department of Labor, and representatives of paper manufacturers, Realtors, contractors and more. On Friday, the panel will meet from 8 a.m. to 4 p.m. with an array of public and private sector representatives and financial experts making presentations (with a break to attend the noon inauguration on the Capitol steps). The panel is set to make its decision on Jan. 13; you can see its agenda, read background information or listen live to the meeting online here.

New website to help combat fraud, unlicensed businesses…

Worried about “fly-by-night roofers, unlicensed movers and fake mortgage brokers,” among others, the state Department of Revenue has set up a website where you can quickly check to see if a business is licensed, has paid its taxes, and find out where to get help if you’ve been defrauded.

In a press release, Gov. Chris Gregoire said the idea is to get people to “check with the state before it’s too late. We don’t want your pain to be their gain.”

State officials estimate that the underground economy costs the state treasury $457 million a year, with more than a third of that loss from contractors. Much of the loss comes from businesses that are happy to charge their customers sales tax — and then keep the money. (That’s a felony.)

The new website’s called www.suspectfraud.com.

More on the porn tax…

From an interview last night with Rep. Mark Miloscia, who’s proposed tacking on an extra 18.5 percent sales tax onto adult videos, cable shows, etc.

“Somebody brought this to me and I said `Wow. Well, why not?’” said Miloscia, D-Federal Way.

His bill is actually a nearly-verbatim copy of a 2004 proposal from Sen. Val Stevens: SB 6741. That bill never even got a hearing.

Unlike a lot of business taxes, Miloscia said he’s not worried about hurting the business climate for porn.

“My constituent, while they care about Microsoft or Boeing, I don’t think the adult entertainment industry is an industry that my constituents would worry about going out of state,” he said. He also said that in a decade in the statehouse, this is the first tax bill he’s ever prime-sponsored.

He gives his own bill “low odds” of passing.

“Tax increases tend to be the issue that people do not support,” he said. To improve its odds, he’s willing to have a statewide vote on the proposal. He said he’s confident that voters would approve.

But even if it passed, one big loophole would remain: Internet pornography.

“The Internet is really tough to tax,” said Miloscia. “The Internet is wild west.”

He spent much of Tuesday fielding calls from reporters about the proposal.

“I didn’t think it was going to get as much attention as it has,” he said.

Budget: not getting better…

The news continues to get worse for Washington’s treasury.

The state Economic and Revenue Forecast Council today said that state revenue is down about $63 million lower than expected over the past four weeks. Revenue from Jan. 11 to Feb. 10 — which due to delays in tax payments largely reflects December sales and business — were expected to go down less than 6 percent over the same time a year ago. But the drop was steeper: just over 10 percent.

Since November, revenues are $197 million less than expected.

“Preliminary industry detail of tax payments…shows widespread weakness,” today’s report says, with particularly large drops in furniture sales (-30 percent), car dealers (-27 percent), gas stations and convenience stores (-20 percent), and clothing and accessories (-19 percent).

“The auto sector, the largest retail trade category, has now reported a year-over-year decline in tax payments for thirteen consecutive months,” reads the report, written by senior economic forecaster Eric Swenson.

The number of real estate transactions in December was down 24 percent from a year earlier — and the average price was down by a third.

Gov. Chris Gregoire and some Republican lawmakers want the Legislature’s Democratic leaders to move faster on budget cuts. Gregoire yesterday said she’s frustrated at lawmakers’ pace, and the GOP budget person in the Senate, Sen. Joe Zarelli, says that the state now faces the prospect of cutting a billion dollars in spending between now and June 30. Zarelli’s been calling for immediate legislative cuts since early December.

“While the Legislature waits, non-entitlement caseloads grow, salary increases for union employees continue to be granted, and agencies seeking flexibility to make cuts are hamstrung,” he said in a written statement. That will mean deeper cuts, “more one-time money and gimmicks” to balance the budget, and “tax increases will be proposed,” he said.

Gregoire: Don’t look for a revenue uptick until December, folks…

I spent a couple of hours yesterday sitting in on meetings between state officials and a large group of business/political/community leaders from Spokane. Among the things that came up:

-Gov. Chris Gregoire said she expects the state’s revenue picture to keep getting worse for a while. The March, June and even September revenue forecasts, she believes, will all be worse.

“The hopes are that it won’t be down in December,” she said.

-If she mentioned a source on this I missed it, but by way of good news, Gregoire also said that Washington is the second best-positioned state to emerge quickly from the recession.

-She said that the likely federal infrastructure money — $535 million — was less than the billions the state had been hoping for.

-And she also repeatedly cautioned that that other federal money will come with a lot of strings, conditions and restrictions attached, rather than just being a big check that state budget writers can use to backfill any cuts.

“They (the feds) have kind of learned the lesson of giving $350 billion to Wall Street with no strings attached,” she said.

-Also, one observation: this is a business-organized trip, but this year, business people were pretty scarce among the 85 Spokane-area folks who made the trip. Far more numerous: local government officials (mayors, city council members) and people with a direct stake in how the state’s budget pie is divvied up (WSU, hospital folks, community organizations, the Armed Forces and Aerospace Museum, SIRTI, the MAC, etc.). In a year of cuts, organizer Rich Hadley said, many were there largely to play defense.

Here’s the print version:

OLYMPIA _ Gov. Chris Gregoire once was asked by a reporter if there was anything she didn’t like about the job.

Yes, she said. She hated getting the news that a child in the state’s care had died.

Four years later, Gregoire says there’s a second thing she doesn’t like: getting notice after notice that companies are about to lay off workers.

“And it comes in a wave, every day,” she said.

Gregoire spoke Thursday to politicians, business leaders and other Spokane-area officials on their annual lobbying trip to Olympia. Some 85 people from the region are spending three days in the capital pushing local priorities and trying to keep Spokane on lawmakers’ radar.

The message from Gregoire and top lawmakers: Things are bleak, but Washington is well- positioned to rebound quickly. And as in the other Washington, Olympia is trying various tactics to kick-start the economy.

“No one knows what to do right now, to be perfectly honest with you,” Gregoire said. “We are in uncharted territory.”

The state’s economy relies