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Washington state budget: It’s gonna get worse before it gets worse

Post by Peter Callaghan / The News Tribune on Nov. 19, 2009 at 1:00 pm with 2 Comments »
November 19, 2009 1:00 pm

It seems the September state revenue forecast that showed some hope for a recovery in state tax collections was a fake. In a revenue update approved today, state economist Arun Raha said the recession is over but state revenue continues to decline.

He dubbed it a “revenue-less recovery.”

As a result, tax increases are no longer being whispered about in Olympia, they’re “on the table.”

The November forecast that will be used to make adjustments to the state budget came in much-lower than anticipated. With the $760 million reduction in estimates for tax collections during this two-year budget period, the state now faces a $2.6 billion budget hole.

That’s on a $31 billion, two-year budget that will only have 18 months left to run by the time session begins. That makes cuts even harder to make. And the fact that legislative leaders and Gov. Chris Gregoire have said they think it will be difficult – legally and politically – to resolve the shortage with cuts alone, taxes will be considered.

Large areas of the budget are off limits to cuts due to federal and state laws and the state constitution. Also, by accepting big chunks of federal stimulus money for higher education and public schools, the state agreed not to cut those areas below 2008 levels.

“I have said that everything is on the table,” said state budget director Victor Moore. “I just need a bigger table.”

Sen. Rodney Tom, the Bellevue Democrat who is No. 2 on the budget-writing committee, said the big three taxes would be looked at last. Those are the sales tax, property tax and the business and occupation tax. That leaves so-called sin taxes and yet another look into closing tax loopholes as the first places Democrats will look.

House Finance Committee Chairman Ross Hunter, D-Medina, said the solution will be both taxes and cuts.

“We’re not going to raise $2.6 billion in taxes,” Hunter said. “You’ll see deep, pervasive cuts. But if we cut $2.6 billion, we’re not going to be making government better.”

Minority Republicans were clear in their attitude toward any tax increases.

“Absolutely not,” said Rep. Ed Orcutt, R-Kalama.

Leave a comment Comments → 2
  1. So accepting fed money as a bandaid to the real problem has restricted us from correcting the real problem? Of course the pet projects and special groups wont be touched. The cuts will get sent directly to core services of GOV to scare everyone into a tax, that by the way will never go down or go away once its in place. Makes you wonder why the real budget issues were not addressed last session, knowing they could not be touched now. Non of this can be a suprise to residents of WA or to the Legislature or OFM. If it is then we have much bigger problems than just the budget.

  2. randydutton says:

    The budget crisis will get MUCH worse, and here’s but one reason. We will lose jobs to China that require rare earth metals that America no longer produces. China has the monopoly, and annually is cutting raw material exports until 2012 when it won’t export any.

    Here is a NYT article I suggest you read. nytimes.com/2009/09/01/business/global/01minerals.html?_r=1 It illustrates the fallacy of government creating thousands of green energy jobs, without a commensurate willingness to produce the raw materials necessary to make the devices. America lost its resource production capacity when environmentalism forced out that type mining. Without these 17 rare earth metals, there is little we can do to create US jobs making the devices. Further, our aerospace and defense industries, advanced electronics, lasers, data storage, and advanced batteries are all held hostage to a growing crisis.

    Having government spending our money to push us into increasing consumption of decreasing raw materials is suicidal. Please remember this as the debate rages about how Washington State spends taxpayer money.

    2010 – VOTE to put common sense into government.

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