Washington’s projected Near General Fund revenue collections for the 2019–21 state budget have decreased by nearly $4.5 billion, according to estimates released today by the Washington State Economic and Revenue Forecast Council.
“Forecasting right now is clouded by uncertainty around federal interventions, global pandemic trends and how quickly the economy responds if COVID19 wanes,” said Steve Lerch, forecast council executive director. “This update is our best attempt at capturing the decline in revenue sources using the best data we can assemble.”
Total Near General Fund revenues are now projected at about $47.8 billion for the current two-year state budget cycle, which began July 1, 2019. The dramatic decline in projected revenues would leave the state with a net $1.4 billion shortfall — including reserves — at the end of biennium.
KING 5 reports the governor want to avoid what he sees as mistakes made during the recession. He thinks they relied too much on budget cuts. While he hasn’t explicitly called for new taxes, he seems to believe that unless the Feds come through with another large relief package, taxes will be required.
The governor said the budget cuts made during the Great Recession, during Gov. Chris Gregoire’s second term a decade ago, are still being felt in the state.
“As we look forward I hope that we heed the lessons of the last recession, which we are still under the shadow of in mental health and the like,” said Inslee.
However, Inslee said he wants to see what federal aid might help the state deal with the deficits before commenting on any new tax proposals that would off-set cuts.
In Crosscut, Melissa Santos reports on the partisan divide in how to handle the budget.
Top Democratic leaders have said they expect they will have to approve some combination of spending cuts and new revenue to solve the budget crisis. That is likely to happen in a special session sometime later this summer or in early fall.
“Everything is on the table right now,” said state Sen. Christine Rolfes, a Democrat from Bainbridge Island who is the lead Senate budget writer. ..
Top Republicans reviewing Wednesday’s revenue forecast said they don’t think now is the time to enact new taxes, given the state of the economy and the challenges businesses are already facing. “Many of them will not survive, and the ones that do survive will be right on the edge,” said state Sen. John Braun of Centralia, the ranking Republican on the Senate budget committee.
Santos also mentions the history of the voter veto of unpopular tax increases.
That’s what happened in November 2010, when 60% of voters rejected taxes the Legislature had passed earlier in the year on candy, soda and bottled water.
Also in 2010, 64% of Washington voters rejected a ballot measure that would have imposed an income tax on high earners, while simultaneously reducing property taxes.
More recently, voters also rejected two versions of a proposed tax on carbon emissions — first in 2016 and again in 2018.
A special session may be announced as early as next week, The Spokesman-Review reports.
“It’s not a question of if, but when,” said Rep. Timm Ormsby, a Spokane Democrat who sits on the Economic and Revenue Forecast Council and is chairman of the House Appropriations Committee.
Democrats and Republicans on the council didn’t agree to an answer of the “when” question.
Ormsby said the forecast was the “triggering event” to discussions about when a session should be held, and a big question remains regarding how much, if any, financial help will come from the federal government.
Senate Ways and Means Committee Chairwoman Christine Rolfes, D-Bainbridge Island, said a decision will be made in “the next week or so” after discussions between Democrat leaders in the Legislature and Inslee.
The Tri-City Herald editorial board thinks the governor should get lawmakers involved soon.
The governor needs to allow state lawmakers to do their job, represent their constituents and make some budget adjustments now when we still have time to lessen the damage.
The new budget begins in two weeks. A reduction in state spending must start before then, and state legislators should be the ones to make that happen.