Despite Better Revenue Forecast, New Resources Still Needed to Bolster Economic Growth
Updated at 2:50pm; shortfall estimates revised.
By Andy Nicholas and Kim Justice Washington state tax collections are now expected to be slightly higher than previously estimated for the two-year budget cycle beginning in July 2013. While that’s welcome news, Washington isn’t out of the woods yet. Now more than ever, policymakers must work together to find new resources to help rebuild ailing communities and bolster public investments that promote long-term economic growth.
Despite yesterday’s improved forecast, state tax revenues will fall about $1.1 billion short of the amount needed sustain Washington’s existing commitments to education, health care, job training, and other core economic investments in the coming budget cycle, based on estimates from Office of Financial Management. On top of that, the State Supreme Court ordered the state to spend a minimum of $1 billion in new funding to shore up Washington’s education system. That means the state will be short about $2.1 billion, leaving policymakers with few easy choices.
To put the upcoming shortfall in perspective, $2.1 billion is equivalent to:
- More than three-quarters of all state funding that supports seniors and people with developmental disabilities ($2.6 billion).
- All state funding for our 34 community and technical colleges and six public four-year colleges ($2.1 billion).
- More than three-quarters of funding for our prisons, juvenile rehabilitation, and mental health services ($2.7 billion).
If lawmakers continue the same cuts-only strategy they’ve pursued over the past few years, they could further undermine Washington’s economic recovery. Investments that support a strong state economy – such as higher education, child care, job training, and health care – already have been slashed by some $10.6 billion since 2009. Another round of severe cuts to these important priorities would be a disaster, both for the state economy and for millions of residents from Forks to Walla Walla.
Fortunately, there’s a better alternative. As they have done during previous recessions, policymakers should generate new resources to build a more prosperous future. This would enable the state to create the world-class education system it needs to compete in the 21st century economy, without jeopardizing equally important investments in health care, transportation, and public safety.
New revenues could be generated quickly and efficiently by adopting a new tax on high-end capital gains, updating the 80-year old sales tax to include modern goods and services, and curtailing wasteful tax breaks that don’t create jobs for large profitable corporations.