Revenue forecast remains grim

spending: State faces projected $900 million deficit for next biennium, plus court-mandated education funding

The Associated PressNovember 15, 2012 

Gov.-elect Jay Inslee will take office in January facing a projected $900 million deficit for the next two-year budget ending in mid-2015, not counting money lawmakers will need to spend to improve funding for education as directed by the state Supreme Court earlier this year.

A four-year outlook released Wednesday by the Washington state Economic and Revenue Forecast Council showed that the projected revenue shortfall for the following biennium ending in 2017 would be even larger, at $1.1 billion.

The outlook was released along with the state’s quarterly revenue forecast, which showed that the income projection increased slightly — $8 million — for the current biennium that ends next summer. But it showed a reduction of $88 million for the next two-year budget cycle that begins July 1.

The outlook doesn’t take into account lawmakers’ court-ordered requirement to increase the amount the state spends on public schools.

The Supreme Court ruled in January that the state was not meeting its constitutional duty to fully pay for basic education. The court is asking for yearly reports on the Legislature’s progress.

A task force has a December deadline for reporting back to the Legislature with a recommendation about how it should proceed toward meeting the Supreme Court’s orders, which were to find a way to pay for the reform plan by 2018.

Inslee, a Democrat who will succeed Gov. Chris Gregoire next year, has said that he will work to make government more efficient and that he would be able to balance the state’s budget without new taxes.

“There’s going to be a lot of conversations to be had about ways we will have to make efficiencies, and what the real priorities are that we have to fund,” Inslee spokesman Jaime Smith said Wednesday. “There’s going to be a lot of hard choices to make. We just aren’t going to be able to afford all of the things we have been doing.”

But during Wednesday’s meeting, Rep. Ross Hunter, a member of the Revenue Forecast Council and chairman of the House Ways and Means Committee, said he has long stated that he doesn’t think it’s “numerically possible to have a budget that doesn’t have a revenue increase.”

He said that trends show “the growth in the economy is not matched by the growth in revenue.”

Hunter said he figures the real budget shortfall will reach $3 billion to $3.5 billion once lawmakers account for school-funding obligations and leave a fund balance to cushion against unforeseen hits to the budget. But he said legislators haven’t given up trying to cover the gap without new taxes.

“I actually don’t think it’s going to be numerically possible, but we’re going to look at that effort and we’re certainly doing that effort first,” said Hunter, D-Medina.

Republican Sen. Dino Rossi, a fellow council member, said he agreed with Inslee on the issue of taxes, saying “we really shouldn’t be raising taxes in this environment.”

Budgeters are not counting on any money from voters’ decision to legalize and tax marijuana. The state budget office thinks Initiative 502 could bring in as much as $800 million in extra state revenue in the next budget period, but says there are too many uncertainties to count on the money.

News Tribune reporter Jordan Schrader contributed to this report.

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