November Revenue Forecast: Big Threats Loom to State Economy
If our state doesn’t generate additional new sources of revenue, it will not be able to maintain existing investments in schools, public health, and other essential programs over the long term. This is according to the November revenue forecast. What’s more, the four-year budget outlook shows that our state will be facing a nearly $500 million budget shortfall by 2019.
The revenue forecast did show some welcome news in the form of increased revenue, primarily from home sales and marijuana revenue – an additional $101 million for the remainder of the 2015-2017 biennium, and $25 million more in 2017-2019. However, state resources continue to fall far below what’s actually needed to fund high-quality K-12 education, as required by the Supreme Court’s McCleary ruling. That’s not even taking into consideration the continued funding needed for other important state investments.
To top it off, the forecast doesn’t factor in the potential havoc that Initiative I-1366 would wreak on state spending if the Supreme Court upholds the initiative’s constitutionality. The recently passed Tim Eyman ballot initiative seeks to force the Legislature to adopt a two-thirds majority to raise taxes; if it doesn't, the state sales tax will be cut by a full percentage point. At a time when our state needs continued investments in education, firefighting resources, affordable housing, and more, such a sharp drop in the sales tax rate would eliminate $1.5 billion in tax resources that support these investments in the current budget cycle. That amount would rise to nearly $3 billion in lost resources in future budget cycles, according to the state Office of Financial Management.
The recent forecast and the threat of I-1366 loom large for the people and economy of Washington state. With state resources barely bouncing back to pre-recession levels, our ability to make progress on essential investments continues to be hindered by an upside-down revenue system that disproportionally relies on people with the lowest incomes to pay into.
The children, families, and communities of Washington state deserve a revenue system that provides a foundation of equal opportunity so everyone can thrive. The only way to get there is to fix our broken revenue system with common sense reform – like through a capital gains tax, the closure of wasteful tax breaks, and a tax structure that isn’t rigged in favor of the wealthy.
While it’s certainly a small step forward to have some additional revenue in our state budget, it’s not nearly enough for Washington state to reach its full potential. More investments are required to ensure we can be a place where everyone has the opportunity to get ahead and to live in safe, healthy, thriving communities.