State Getting Unexpected $220 Million Windfall From Booming Economy Must Go Into ‘Rainy Day’ Account

Washington’s booming economy, led by a red-hot aerospace industry, is among the strongest in the country and will pump an unexpected $220 million into state coffers, forecasters said Thursday.

But under the state’s strict spending limits, the latest windfall can’t be spent on schools or other budget increases.

Under terms of citizen-approved Initiative 601, the money is supposed to go into a “rainy day” reserve account and, after a 5 percent budget cushion is built up, to school construction.

Lawmakers also could use it for tax cuts, as they did with a big surplus earlier this year. The Legislature approved $393 million in assorted tax cuts, including a $195 million property tax cut that will require voter approval in November.

The Legislature also could shift some of the motor vehicle excise tax revenue that now goes for general government support over to transportation.

The Boeing Co. is in its fastest expansion since the 1960s and is expected to hire thousands more high-salary workers during the rest of the state’s current two-year budget period, said Chang Mook Sohn, the state’s chief economist. That has ripple effects throughout the Puget Sound economy, including construction and home sales, he said.

The state Forecast Council, which includes both legislative and administration members, adopted Sohn’s projection of a $220.3 million increase in state revenue between now and June 30, 1999, when the biennium ends.

Assuming voter approval of the property tax referendum, that would leave $823 million unspent. The forecast shows $19.9 billion in income. Lawmakers approved a $19.1 billion two-year budget last spring.

However, Initiative 601 gives lawmakers and the governor only $150 million in capacity for new spending in the upcoming legislative session. Democrats are pushing for more funds for education, but Republicans are expected to resist new spending.