<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=192888919167017&amp;ev=PageView&amp;noscript=1">
Thursday, March 28, 2024
March 28, 2024

Linkedin Pinterest

State revenue forecast worsens

By Kathie Durbin
Published: November 20, 2009, 12:00am
3 Photos
STEVE BLOOM/The Olympian
STEVE BLOOM/The Olympian Photo Gallery

Tax hike among the options as deficit grows to $2.6 billion

Washington’s budget outlook grew darker Thursday with the release of a new revenue forecast that shows the state can expect $760 million less revenue over the next year and a half than it expected just two months ago.

That brings the state budget deficit to a projected $2.6 billion by mid-2011 and means Gov. Chris Gregoire and the Legislature will have to slash spending more deeply than expected, raise taxes or approve some combination of the two to balance the 2009-11 budget.

Gregoire called the widening deficit historic, noting that the new numbers bring the total shortfall for the two-year budget period to $11.6 billion.

“That’s almost a third of our last budget,” she said in a statement. “We have not seen a shortfall like this in 80 years. … All options must be on the table to produce a budget that works.”

Budget director Victor Moore said the supplemental all-cuts budget the governor will release next month will be “extremely ugly, a reflection of the unprecedented magnitude of our budget dilemma.”

The new forecast set off an immediate squabble over whether the time has come for Gregoire and the Legislature, which is controlled by Democrats, to consider new sources of revenue next year. That becomes more politically feasible in 2010, when Initiative 960, which requires a two-thirds majority in each legislative chamber to raise taxes, expires.

“There is nothing creative and innovative about raising taxes,” said state Sen. Joe Zarelli, R-Ridgefield, a member of the Revenue Forecast Council. “However, I figure that’s where the majority is headed now that it’ll be able to do away with the Initiative 960 law. … I just don’t think the commitment is there in Olympia to live within our means.”

Zarelli repeated his call for a special session while lawmakers are in Olympia in early December so they can get a head start on making additional cuts to the two-year budget.

Rep. Ed Orcutt, R-Kalama, blamed the state for an “appalling” failure to protect and create jobs.

“Instead of increasing taxes, we need desperately to increase employment,” he said in a statement. “Rate, fee, or tax increases will only hamper employers, leading to more layoffs and longer delays in returning our citizens to their jobs.”

Top Democratic lawmakers, including Sen. Craig Pridemore, D-Vancouver, say new revenue must be part of the budget-balancing plan in order to avoid crippling cuts in social services and other discretionary programs. “Sin” taxes on alcohol and tobacco and the closure of tax loopholes reportedly are under discussion, with general tax hikes on sales and business revenue considered a last resort.

“There’s no way you get to $2.6 billion without looking at absolutely everything that’s left,” said Senate Ways and Means Committee Vice Chairman Rodney Tom, D-Medina.

Arun Raha, the state’s chief economist, said Washington is going through a “revenue-less recovery” from the national recession.

“The good news is that the economy is finally recovering,” he told the Revenue Forecast Council. “The bad news is that the revenue growth is not.”

Washington consumers are saving or using discretionary money to pay down debt rather than spend it on taxable items, he said. “To me, it seems like the consumer’s mind-set is stuck within a band of pessimism at recessionary levels.”

Hiring typically lags behind economic recovery, and Washington’s 9.3 percent unemployment rate is expected to peak at about 9.8 percent next spring.

In a double whammy of grim financial news, State Insurance Commissioner Mike Kreidler released figures Thursday showing that the number of Washington residents without health insurance has increased by more than 80 percent since 2002 and will soon reach 1 million.

The cost of providing subsidized medical care to those without health insurance will reach $1 billion annually by 2011, Kreidler said.

About 11 percent of Clark County residents lack health insurance, according to the report.

“The widespread and growing lack of health insurance in Washington state is hurting families, communities and our state’s economy in ways that we can no longer afford to ignore,” Kreidler said.

The Associated Press contributed to this report.

Loading...