No Matter What the Revenue Forecast Holds, State Faces Staggering Shortfall
Unless we take bold steps to reform our flawed revenue system, Washington state residents risk losing the chance for a full and prosperous recovery.
On Thursday, the state Economic and Revenue Forecast Council (ERFC) will release updated projections of state revenue collections for the remainder of the current year and future years. Whatever the ERFC forecast says, our state will continue to face an enormous challenge: depressed state revenues will be far short of what is needed to maintain core investments in health care, child care, education, and other public structures essential to our future economic prosperity.
Even if the ERFC forecasts stronger than expected revenue growth, available state resources will remain far below pre-recession levels, as shown in the graph below. As a result, lawmakers will continue to face a roughly $2 billion gap between available tax resources and the amount needed to maintain essential public services. Addressing this gap solely through damaging cuts to our vital health and education systems would be counterproductive and short-sighted.
As our recent analysis shows, the very foundation of our economic infrastructure has already weathered more than $10 billion in damaging cuts since the start of the Great Recession. The impact of the cuts has been broad and deep, undermining our economic security, public education, and health systems. They have impacted everyone; however they have taken an especially severe toll on women. The result of these cuts has been:
- Over 60,000 low-income working adults have lost health coverage;
- Over 40,000 elderly and disabled Washingtonians are getting less care in their homes, potentially forcing them into more expensive options;
- More than 180,000 people have been hurt by cuts in coverage for critical medical devices such as hearing aids and eyeglasses;
- Over 27,000 people have lost critical work supports (TANF), most of whom are women and children;
- Over 23,000 families have lost access to child care support; and
- Over 46,000 fewer women are receiving family planning services to reduce unintended pregnancies.
We don’t have to continue down this path. Regardless of the news on Thursday, lawmakers need to shore up our economic footing by raising revenues to prevent deeper cuts to our core health, education, and community safety systems. In the short run, this can be accomplished simply and efficiently by modestly increasing the state sales tax. In the long run, enacting a new excise tax on capital gains – profits on the sales of stocks, bonds, and other financial assets – would begin to address the fundamental flaws of our state revenue system.