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Spokane, Washington  Est. May 19, 1883
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News >  Spokane

Windfall no budget silver bullet

Richard Roesler Staff writer

OLYMPIA – After months of bad budget news, the state’s top economist on Thursday said Washington’s economy is rapidly picking up steam – and that growth will put an extra $739 million into state coffers over the next 2½ years.

“It’s great news – and we really appreciate good news,” said Chang Mook Sohn, who heads the Office of the Forecast Council, the state’s economic forecaster.

Since late January, state lawmakers have worried about a $2.2 billion to $2.3 billion projected budget shortfall between the state’s general fund and its expected bills for the next two years. Thursday’s forecast shrinks that gap to $1.5 billion to $1.6 billion.

“I am really pleased,” said Gov. Christine Gregoire, who had been expecting a much more modest forecast of $200 million to $300 million in additional tax revenue.

Sohn attributed the unexpected growth to the continued booming real estate market, stronger sales and hiring by Boeing, and to higher-than-anticipated consumer spending. The biggest worries, he said, are the weakening dollar, rising oil prices, and terrorism and global unrest.

Gregoire said she’ll work through the weekend to finish her budget proposal, set for release Monday. State printers will be standing by on Sunday.

“Over the last several weeks I’ve been looking at Draconian cuts,” she said. “I am heartened by the fact that Draconian cuts, I do believe, will not be necessary.”

But the governor noted that most of the new money will just make up for several waves of bad budget news in January. A court ruling on a meat processing tax stripped the state of an expected $60 million. Another ruling threw out the state’s estate tax, eliminating $427 million. And increases in demands for government services, such as the growing numbers of children enrolling in public schools and convicts being sent to prison, will cost the state another $100 million.

“Make no mistake,” Gregoire said. “The new forecast is not a silver-bullet solution to our problem. … We still face a $1.5 billion budget shortfall.”

The Legislature’s top Democrats have said they will likely do what lawmakers usually do in such cases: bridge the gap with a mix of cuts and tax hikes. But what those tax increases might be remains uncertain. Gregoire has said she won’t support a general tax increase – meaning in sales, property, or business and occupation taxes.

“We cannot look at any revenue increase that would harm the economic recovery of the state,” she said. Her predecessor, Gov. Gary Locke, suggested boosting “sin taxes” on liquor, beer and soda pop.

Republicans – who have said for months that they could solve the budget shortfall without raising taxes – said that Thursday’s news makes taxes even less necessary.

“I think it takes a lot of the wind out of their (Democrats’) sails,” said Rep. Ed Orcutt, R-Carrolls.

“This means there are 700 million more reasons why tax increases are totally unjustified,” said ballot measure promoter Tim Eyman, author of several anti-tax initiatives.

Sen. Brad Benson, R-Spokane, said Thursday the better-than-expected revenue growth projection helps bolster GOP efforts to block tax increases in the Democratic-controlled Legislature.

“It takes a lot of pressure off of the budget as far as raising new revenues,” Benson said.

Fellow Republican Sen. Mark Schoesler of Ritzville agreed: “This provides a little bit of breathing room for us.”

Democrats, however, said that Thursday’s good news doesn’t do anything to change the state’s fundamental problem: that the bills are growing faster than the state’s general fund.

“We have to worry about that long-term solution,” said Rep. Jim McIntire, D-Seattle.

Still, in a nod to both the money news and St. Patrick’s Day, McIntire showed up for Thursday’s revenue forecast with a neatly folded $20 bill pinned to his lapel.

“I thought it was appropriate to wear a bit of green today,” he said.

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