The exact effect of Tuesday's initiative votes still is being sorted out at the state Capitol, but one thing is known: Budget writers in Olympia have deeper spending cuts to make.
Voters overwhelmingly repealed a collection of new taxes on pop, candy and gum, erasing $272.4 million in revenue that the state would have received through mid-2013.
Initiative 1107, which the national soda industry backed with more than $16 million, was passing by a wide margin.
At the same time, voters were rejecting a pair of liquor-privatizing measures that also could have cut into state and local government revenue. And voters overwhelmingly approved Initiative 1053’s requirement for two-thirds approval of any new tax increases, which means new revenue will be hard to come by next year in a Legislature with smaller Democratic majorities.
Gov. Chris Gregoire was headed to Germany on Wednesday in a trade trip related to BMW’s opening of a factory that will use carbon fiber manufactured in Moses Lake. She put out a statement acknowledging the $4.5 billion budget shortfall already predicted for next year could be larger and harder to close.
“There’s no doubt I’m disappointed that voters decided to repeal the temporary sales tax recently imposed on soda and candy. We are currently closing a $520 million budget gap and going into the next biennium we face at least a $4.5 billion shortfall. The additional cuts we will have to make due to this loss of revenue will have significant consequences,” Gregoire’s statement said.
“I look forward to working with elected leaders of both parties, as well as the public, on finding solutions to our budget crisis,” she added.
Mike Gowrylow of the state Department of Revenue said the repeal of taxes won’t take effect until Dec. 2, under rules that apply to the effective dates of initiatives. That means consumers will go on paying 2 cents per 12-ounce can of soda and sales taxes on some candy and bottled water for another month.
Also to remain in effect for a month is a higher business and occupations tax rate for certain makers of canned-food products such as chili.
Gowrylow said the state could lose another $8.7 million in revenue this year “due to taxpayer noncompliance and confusion following the vote.”
Passage of I-1107 eliminates nearly $55 million in the budget cycle ending in June, which means Gregoire might need to order additional across-the-board cuts. Spokesman Glenn Kuper of the Office of Financial Management said budget writers might wait until the Nov. 18 revenue forecast before making that decision.
Gregoire already ordered 6.3 percent across-the-board cuts to deal with shortfalls of a half-billion dollars in 2009-11. That is leading to cuts of an estimated 725 jobs in the short term and additional unpaid furloughs in at least five agencies.
In the meantime, some advocates for health programs fear the worst as lawmakers grapple with the more than $4.5 billion shortfall – nearly $2 billion of which is the loss of federal stimulus money that had helped plug holes in recent budgets.
An additional $1.75 billion of the shortfall is the cost of implementing last year’s public-education reforms, continuing class-size funding enhancements for schools and providing cost-of-living pay increases for school employees.
“These election results will unfortunately add to the struggles of families across Washington who are looking for relief,” Rebecca Kavoussi of the Community Health Network of Washington said in a statement released Wednesday. “In terms of the Initiatives, Washingtonians lost in this election. Unprecedented funding from out-of-state corporations dominated the races, and it shows in the results.”
Gregoire’s across-the-board cuts already target some of the state’s Apple Health for Kids insurance program and the Disability Lifeline, which provides health care and assistance to temporarily disabled workers who don’t qualify for other aid. And Kavoussi said she believes the state’s Basic Health Plan also is on the chopping block, given the size of the shortfall and limited options lawmakers will have to increase revenues.
The health network operates clinics that handle many of the state’s Basic Health and Disability Lifeline clients. The clinics also rely on about $23 million in state grants to provide health care to 70,000 uninsured people and dental care to 35,000 more.
Brad Shannon: 360-704-6869 email@example.com www.theolympian.com/politicsblog