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The Politics Blog
Brad Shannon maintains this blog. He is political editor at The Olympian and can be reached at 360-753-1688 or bshannon@theolympian.com.
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UPDATED: Budget gap hits $2.6B; tax hikes suggested
State revenue forecaster Arun Raha said today the state's expected revenue through June 2011 has fallen by another $760 million.
That brings the state's predicted revenues for the 2009-11 period have shrunk by $5.3 billion since February 2008, and it means revenues for the period will be 3.3 percent lower than in the last budget cycle.
Gov. Chris Gregoire's budget director said it means budget cuts will be “ugly” and it makes it all but certain that Democrats will make tax and other revenue increases a serious part of the Legislature’s debate in January, and Republicans already are warning that it could backfire by harming businesses at a time jobs are desperately needed.
"The good news is the economy is finally recovering. The bad news is that revenue is not," Raha said.
Raha's outlook was based on smaller-than-predicted drops in sales-tax and business-occupation tax collections over recent months and a lag in consumer confidence that he does not expect to improve until jobless rates hit a peak of 9.8 percent sometime in the spring.
Raha said personal income in the state is improving but consumers still aren't spending, instead putting money into savings accounts and paying off debts. He said jobless rates and gas prices are the most influential factors for consumer confidence.
Gov. Chris Gregoire's budget director Victor Moore said the forecast means the budget problem is bigger than the $2 billion to $2.5 billion estimated earlier in the week. “We think the problem statement is about a $2.6 billion shortfall," Moore said. "I said last time everything was on the table. I just think I need a bigger table.’’
Moore added that he doesn‘t quite see a path to producing a balanced budget without new revenues. Gregoire's budget is due for release shortly before Christmas, and lawmakers return to session Jan. 11. Gregoire has not decided whether to submit a second budget with tax increases, and Moore said this in a statement:
"It's clear that the supplemental budget will need to contain very deep cuts," said Victor Moore, director of the state's budget office. "Before this forecast, we already were facing a shortfall of $2 billion, with two-thirds of it due to declining revenues. Washington is not alone: 48 states are facing the same problems. But we are limited in our options to cut. The supplemental budget we will release next month will be extremely ugly, a reflection of the unprecedented magnitude of our budget dilemma."
The new forecast drew immediate partisan responses, and Republicans including Sen. Joe Zarelli and Rep. Ed Orcutt of Kalama said the state needs to look at changing the way it delivers services. Orcutt said that businesses laying off workers cannot afford additional tax burdens and would only lay off more people if costs of business go up.
But Democrats were just as quick to open the door to discussions of tax increases. Sen. Craig Pridemore, the Vancouver Democrat who chaired Thursday's Economic and Revenue Forecast Council meeting, said that for him, taxes are on the table because of concerns that needed services would have to be cut for those who can't find work.
Rep. Rodney Tom, a Democratic vice chair of the Senate Ways and Means Committee, said after the forecast council meeting he thinks cuts need to be balanced by new revenues. He mentioned a cigarette tax he’s proposed before that might bring in $70 million to $80 million and a candy tax.
And Rep. Ross Hunter, D-Medina, predicted a balanced approach that includes terrible cuts and new revenues. He suggested closing unspecified tax exemptions and changing the law that led to a state Supreme Court ruling in the Dot Foods case.
The state Department of Revenue says the Dot Foods decision expanded the business-occupations tax exemption for companies doing door-to-door business in Washington, and it now means some products sold in retail outlets are not taxed. And the ruling applies to more than the firm that sued the state, but Hunter thinks legislative action to clarify the state's intent could recoup $150 million for the treasury.
Hunter said cuts could require the state to try reopening pay contracts with state employees in a search for reductions. Employees are working under contracts that lack cost-of-living raises in 2009-11. The same contract changes could become true for local school districts if the state has to cut funding for K-12 schools that is tied to pay and is not protected by the constitutional mandate to fund basic education, Hunter said.
Tom said some obvious programs that will be considered for cuts include the Basic Health Plan and General Assistance Unemployable, which the Governor’s Office and Republicans also have mentioned as vulnerable.
But Remy Trupin, director of the left-of-center Washington State Budget and Policy Center, said in a statement it would be a "sound policy judgment" to balance cuts with new revenues. He quoted national economists as saying tax increases can be less harmful to families and state economies than deep cuts to services.
Zarelli put out a statement renewing his call for a special legislative session in early December that Gov. Gregoire has rejected. He called tax increases as gamble.
UPDATED to correct reference to size of shortfall and other details.
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Revenue update: forecast down $760 million more
State revenue forecaster Arun Raha said today the state's expected revenue through June 2011 has fallen by another $760 million.
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Butt out: Health agency kicking smokers out in Tumwater
Smokers for a long time have been unwelcome in or near the doors of public areas, including state agencies.
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AARP poll: Washington members strongly favor health reform
The AARP says its recent poll shows a 68 percent majority of its Washington state members favor the major elements in the national health-care reform before Congress. About 29 percent oppose it.
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Report: Hunger is up in Washington
The Children's Alliance put out the word today, citing a Department of Agriculture report. Here's from the advocacy group's news release this afternoon that ties the trouble to the economic recession:
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Gregoire: Hands tied for most of $2 billion in needed cuts
Gov. Chris Gregoire talked a little more in length this morning about problems her budget office faces in trying to find $2 billion in cuts in the 2010 supplemental budget. She mostly ploughed old ground but said she thinks the new budget shortfall could grow to $2.5 billion after Thursday's quarterly revenue forecast is delivered.
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Caseloads up, revenue down, shortfall is $2 billion
The latest news isn't so good on the state budget front. Not that this should feel so much like news after two years of dreadful developments.
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Gregoire, lawmakers face 'trial' for budget cuts
It's not quite the International Court of Justice at The Hague, and no one is alleging war crimes — not yet. But the Seattle Radical Women group plans to convene a "People’s Court" trial Saturday in the Seattle area's Columbia City.
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Supreme Court rejects Federal Way's teacher pay-gap claims
The decision that came out this morning was a unanimous 9-to-0 ruling and written by Justice James Johnson. Its opening paragraph says this:
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Marking 120 years of statehood
Today is Veterans Day, but Nov. 11 also marks Washington 120th year of statehood.
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