Schmudget Blog
— filed under:

Declining Revenue Projections Show It’s Time for Policymakers to Get Serious about Meeting Washington’s Needs

Posted by Andy Nicholas at Feb 17, 2016 07:05 PM |
Filed under:

The new forecast of Washington state tax collections makes it clear that lawmakers can no longer assume the growing economy will automatically generate the resources needed to fund court-mandated improvements to schools, mental health, and other important priorities for our state.

The Washington State Economic and Revenue Forecast Council’s projection that state tax resources will be more than $500 million lower than previously forecasted over the next four years means policymakers must get serious about generating new revenue to invest in the progress and well-being of our state and its people.

The diminished tax resources ($78.2 million lower for the current 2015-17 budget cycle; $435.6 million lower in the 2017-19 budget cycle) present a significant challenge to House and Senate budget writers. Their budgets must remain balanced for the remainder of the current budget cycle and in the following two-year cycle.(1)

They should be cautious about tapping budget reserves to make up for the reduction in revenues. Doing so would only be a temporary fix. And depleting savings now could jeopardize the state’s ability to maintain core public investment in schools, public health, parks, and other vital services that serve us all if the economy were to enter a downturn.

Nor should budget writers enact more damaging cuts to the investments that strengthen our communities and our state economy. Cuts to programs that help seniors, families that work hard for low pay, and college students in need of financial aid have already made it harder for too many Washingtonians to make ends meet.

A better approach is to preserve the things we rely on by raising additional resources. The Legislature can do this by ending wasteful tax breaks and enacting the new tax on capital gains as proposed by Gov. Jay Inslee in late 2014. It wouldn’t be right to continue giving tax breaks to large profitable corporations and wealthy investors while cutting back on financial aid, making K-12 class sizes bigger, or eroding the independence of seniors.

Given the forecasted shortfall in resources, these new sources of added revenue are key to ensuring that all Washingtonians have the opportunity to live in healthy, thriving communities.

(1). The four-year balanced budget law allows policymakers to assume annual revenue growth of at least 4.5 percent, even during years in which growth is projected to be lower than that amount. This provision allows lawmakers to call their budget balanced even when sizable shortfalls are projected.

Document Actions
HIGHLIGHTS

GiveBig logo for web 2017

GiveBIG Is May 10!

A gift to the Washington State Budget & Policy Center supports our work to advance a just and prosperous state for all Washingtonians! Early giving starts on April 27.

 

We're Seeking Board Members

Want to engage more deeply with the work of the Budget & Policy Center? Then consider joining our Board of Directors! We are looking for three new board members this year. Click here for details.

Watch Our Budget Beat Webinars

We host regular Budget Beat webinars throughout legislative session to bring you updates and breaking news from Olympia and timely policy analysis. Visit our YouTube channel to watch our previous Budget Beats. 

Testimonies in Olympia

To advance our legislative priorities, the Budget & Policy Center team is in the state capitol throughout session testifying on a wide range of bills. Watch our recent testimonies on TVW:
Misha TVW

View Our School Funding Plenary 

Roxana_BMC_plenary_2016View the Budget Matters 2016 conference plenary, "What's at Stake in the 2017-2019 Budget: Funding McCleary and Beyond." Moderated by Ann Dornfeld of KUOW, the plenary features Nathan Gibbs-Bowling, the 2016 Washington State Teacher of the Year; Lew Moore of the Washington Research Council; Roxana Norouzi of OneAmerica; and Sen. Christine Rolfes. The plenary starts after an intro by Executive Director Misha Werschkul and an intro video by Gov. Inslee.