Critics say the spending plan for the next two years is too high and existing revenues provide plenty of money to meet state services. They point to the most recent state Economic and Revenue Forecast Council report which found the state should collect $307 million more in the rest of the current two-year budget, and an additional $553.5 million in 2019-21, the budget legislators are tackling during this session.
The new expenditure plan is also based on an unusually long period of economic prosperity. One of the brightest segments has been aerospace led by Boeing
An updated study by Aerospace Works for Washington, a coalition of business and elected officials, shows Washington’s aerospace industry is responsible for more than 83,000 direct jobs, 224,000 total jobs and total revenue of $94.4 billion. That’s 10 percent of the state’s economy.
AWW estimated that in 2018 the aerospace industry made direct tax payments — including B&O, sales and use and other tax categories — of $192.3 million. The total fiscal impact of the aerospace industry, including taxes paid by businesses associated with aerospace through indirect and induced impacts, added up to an estimated $567.1 million last year.
Unfortunately, there are signs the economy is weakening and the AWW study was completed before the 737 Max 8 crashes in Indonesia and Ethiopia and the subsequent grounding of all Max aircraft until software and sensor equipment is modified.
That grounding is having a dramatic impact of Boeing’s production at the Renton plant. It is expected to be extremely costly. Already, 737 output has been reduced to 2014 levels, dropping from 52 planes per month to 42. The financial impact will trickle down to state and local revenue collections.
While Boeing engineers are working feverishly to make modifications and get approval from the Federal Aviation Administration and other government regulators across the world, the company sales team is attempting to prevent order cancellations and additional delays. No one knows how much it will cost or when the Max will go back into service.
Before heading home later this month, lawmakers should do an 11th hour reassessment of the budget and the revenues with which they plan to balance the new budget. It would be better to adjust it now, rather than later in a special session.
