As problems go, this is a good one to have. Washington’s state government is flush with cash, and the revenue forecast released last week provides more good news.
State revenue forecasts routinely have exceeded previous projections over the past two years, with the state effectively managing the impact of the COVID-19 pandemic. And the latest projection for the 2023-25 biennium is $681 million higher than the previous estimate.
So, what should the state government do with that money?
Leading up to the recent election, The Columbian’s Editorial Board asked that of every Southwest Washington candidate for the Legislature. We also asked it of Gov. Jay Inslee during a visit three weeks ago.
From those conversations, we have culled some suggestions from a wide variety of perspectives, from liberals and conservatives who all want to see our state prosper but might disagree on how to facilitate that.
“We need to put some money into the rainy day fund, and we need to give some money back (to taxpayers),” said state Rep. Paul Harris, who has been elected to a seventh term in the House of Representatives.
Washington’s rainy day fund, formally known as the Budget Stabilization Account, sets aside money for when the state government is in a pinch. The Legislature dipped into the fund during the pandemic, and Inslee has said: “To assure financial stability, my plan will build the reserve back to pre-pandemic levels in just four years from now.”
If leaders from both parties seem to agree, refurbishing the rainy day fund should be a priority. Washington has weathered the economic storm; now it is time to prepare for the next one.
But that likely is where the agreements end.
Inslee and Democratic lawmakers are expected to seek ways to spend the budget surplus, pointing to needs such as housing and education. Republicans will push for tax cuts such as a reduction in the sales tax or the business and occupation tax.
In the wake of the latest revenue forecast, Sen. Lynda Wilson, R-Vancouver and the ranking member of the Ways & Means Committee, said, “Our state could be just one negative forecast away from a collision course with a financial iceberg — and a shortfall would mean painful spending cuts, painful tax increases or both.”
That might be a bit of hyperbole, but it makes valid points. While Washington’s state government is on solid ground, a shaky economy and high inflation pose threats.
Inslee next month will present a proposed budget for the Legislature to consider when it convenes in January. Lawmakers then will be tasked with formulating an operating budget for the next two years.
The two-year operating budget passed in 2021 represented a 9.2 percent increase over the previous two years, addressing what lawmakers saw as urgent problems. Washington’s economy has remained sturdy during the pandemic, but another large increase would be irresponsible.
Replenishing the rainy day fund should be the first priority; saving for the future when money is available is the prudent thing to do. Beyond that, help for taxpayers is necessary; high inflation rates have burdened family budgets, increasing the cost of food, fuel and medicine. A reduction to the sales tax would be effective, providing the most relief for the residents most in need.
But the paramount task will be for Democrats in the Legislature to engage with Republicans. Neither side has a monopoly on the best ideas for spending — or saving — taxpayer money.