This editorial will appear in Sunday’s print edition.
Arun Raha didn’t crack a single joke. That’s all you need to know about the dismal revenue forecast the state’s chief economist delivered to state officials last week.
Sometimes introduced as “the economist with a sense of humor,” Raha has developed a reputation for injecting economic analysis with levity. But on Thursday, he had only distress to dispense.
Raha noted “considerable drag in the economy,” “little sign of an impending acceleration” and “greatly increased uncertainty” before announcing that the hole in the state budget had grown by another $1.4 billion.
Some punchline. The devastating revenue forecast left no doubt – if any had remained – that state government is in crisis. Gov. Chris Gregoire immediately ordered state agencies to cut $516 million out of an already deeply stressed state budget.
Thursday’s news also argues compellingly against Initiative 1107, which seeks to repeal taxes that the Legislature imposed this year to cover the last budget deficit. The first rule of getting out of a hole is to stop digging.
I-1107 would roll back temporary taxes on soda and bottled water and a permanent sales tax on candy. It would drain $272 million from state coffers by June 2013.
Any tax increase in the midst of a recession is suspect, but these targeted hikes were a necessary evil. They preserved crucial social service programs and, just as significant, allowed the Legislature to avoid a commerce-chilling boost in the general sales tax.
Now the American Beverage Association has come to Washington to mount the same assault that it’s successfully pushed elsewhere. It has contributed almost every penny of the $14 million the I-1107 campaign has in the bank.
That campaign has tried mightily to bill the initiative as a fight against “grocery taxes” – a spin job that hangs by such a small thread of truth as to be nearly fraudulent.
True, lawmakers did rescind a preferential tax rate makers of some processed food products had enjoyed for several years. But that accounts for less than 5 percent of the total tax package. Using it to conjure the bogeyman of a general food tax reeks of desperation.
The soft-drink industry knows it probably can’t win the election any other way. There is no grass-roots rebellion fueling this fight against taxing products that Washington consumers would largely agree are discretionary purchases. The industry has to manufacture one.
Most Washingtonians, while they may wish state lawmakers had shown more fiscal restraint and sooner, get that the state budget is in dire straits.
Health and human services will take the brunt of the hit the governor ordered last week. Higher education and the state prison system are also in for wallops. And that’s just for starters. Staring down lawmakers when they return in January will be a $4.5 billion shortfall in the 2011 and 2012 budget years.
Those who hope for perfect fixes hope in vain. Some may quibble with the Legislature’s tax targets, but they can’t deny that the state budget would be in even worse shape without the revenue they produce.
The News Tribune urges a no vote on Initiative 1107.