Gregoire to set special session

CLE ELUM, Wash. – The state’s economic outlook is likely to get worse in the next two months. Until she knows how much worse, Gov. Chris Gregoire said Wednesday she won’t call the Legislature into a special session until November.

“It would be premature for me to call them back before the next forecast. They need to know how large the problem is,” Gregoire told about 250 business leaders gathered at the Suncadia Lodge for the annual “policy summit” of the Association of Washington Business.

The revenue outlook is already so bad it can’t be handled by preparations she made this summer, when state agencies were told to find ways to cut 5 percent and 10 percent out of their current budgets.

“Neither of those would be enough” to cover the current projected shortfall, she said.

When the next forecast is released in November, the state’s chief economist, Arun Raha, has told her it’s about four times more likely the state’s revenue outlook will be worse than better, Gregoire said. That would come on the heels of last week’s forecast, when Raha said the state can expect a drop of about $1.4 billion from the amount the Legislature thought it had when writing the 2011-’13 general fund budget.

The governor didn’t mention closing tax preferences or a tax hike in her talk to the business leaders, and none asked her about them in the brief question-and-answer session after her speech. But she left open the prospect that the state would consider some, telling the luncheon crowd “everything is on the table” – presumably taxes as well as cuts.

The state can’t make many more cuts in the Department of Corrections without closing prisons or eliminating community supervision for most released inmates. It may have to cut early learning programs, and even basic education “is not sacrosanct,” she said. “I’m asking you … not to draw lines in the sand.”

But outside the lodge’s entrance, a group of protesters led by the Washington Community Action Network, was drawing lines in the sand, demanding the state raise taxes to cover at least part of its budget problems. They want the state to eliminate certain business tax preferences, which they call loopholes.

AWB members arriving for the luncheon drove past more than 100 demonstrators who were chanting and holding signs like “I pay my taxes, you pay yours.” It was part of a series of demonstrations around the state targeting Chase Bank, and one of the tax preferences they want the Legislature to eliminate is an exemption for some mortgage profits for out-of-state banks.

Bank officials countered that would raise the cost of mortgages, hurting people trying to buy a house.

At the exit from Interstate 90, four protesters used large helium-filled balloons to raise two signs in arrows: “Top 1%” was in an arrow pointing up; “Rest of us” in an arrow pointing down. Among that small group was Brock Baker of Greenacres, who said he got up at 3 a.m. to join a group from the Peace and Justice Action League of Spokane in the protest.

As Baker and others held guy lines that kept the signs aloft without blowing away, Bill Moyer, director of the Backbone Campaign from Vashon, repeated the mantra of closing corporate loopholes. But what’s really needed, he added, was a state income tax for the wealthiest people.

A ballot measure that proposed such a tax last year was soundly defeated, Moyer was reminded. But that was due to an expensive campaign funded by the people who would have to pay the tax, he insisted.

The Legislature should pass an income tax on the wealthy, despite that vote, he said, and despite the fact that raising taxes in the Legislature requires a two-thirds vote, not a simple majority like a ballot measure: “They should have the political courage and the moral courage to call for what’s right.”