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Revenue Forecast Shows Full Recovery Will Remain Out Of Reach Without Reforms

Posted by Andy Nicholas at Sep 18, 2013 06:35 PM |
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Although today’s revenue forecast adds $345 million to projected budget reserves for the current two year budget cycle, available tax resources remain far  below pre-recession levels. Without significant reforms, Washington state's current revenue system will not be able to adequately support important investments like health care, schools, and public safety.

The graph below shows that state tax collections, which finance schools, health care, child care, and many other essential services that support a strong state economy, will remain below pre-recession levels at least through 2016, after adjusting for inflation.

Based on today’s projections from the state Economic and Revenue Forecast Council (ERFC), tax collections for the current fiscal year, which ends in June 2014, are estimated to be $1 billion below 2008 levels, once rising fuel and energy prices and other factors of price inflation are taken into account. Revenues are not projected to reach pre-recession levels again until 2017.

sept-2013_revcollex_real2

The sluggish national economy is a major contributor to the slower-than-adequate growth of tax resources in Washington state. However, no matter what happens in the broader national economy, policymakers in Washington state will  never be able to adequately finance public investments that underpin a robust and competitive state economy unless steps are taken to address serious structural flaws inherent to the state’s 1930s era revenue system.

Reforms such as taxing high-end capital gains and extending the sales tax to include modern goods and services would go a long way toward building a more adequate and equitable revenue system in the long run.

Stay tuned. Next week we will release the third edition of Revenue Trends, a quarterly publication that details how recent projections impact long term economic and historical trends in Washington state.

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Join us and Partners for Our Children for "Forum on Poverty: The Impact on Children and Families" on May 26, 12-4 pm, in Burien. Our policy analyst Elena Hernandez will be a speaker at this forum that will discuss how we can advance policies that prevent intergenerational poverty. THIS EVENT IS FULL, but you can email Partners for Our Children to get on the waitlist. 

Our Legislative Agenda

Our agenda for the 2015-2017 biennium calls for an equitable, sustainable revenue system in addition to state investments that: promote a world-class education system; sustain a strong middle class; produce living-wage jobs, and ensure that all Washingtonians have equal opportunity to get ahead. 

Testimonies in Olympia

We testified in support of a number of important bills during the 2016 legislative session. Take a look:

  • Policy Analyst Elena Hernandez's testimony (at the 23:23 minute mark) on the House Bill that would take a two-generation approach to preventing poverty 
  • Associate Director of Fiscal Policy Andy Nicholas's testimony (at the 1:54:09 mark) on the House bill focused on aerospace-related tax breaks
  • Research and Policy Director Lori Pfingst's House testimony (at the 9:25 mark) and Senate testimony (at the 1:44:54 mark) on the two-generation approach to poverty prevention bill 

Budget Matters Summit

Thank you to all who attended our our Budget Matters 2015 policy summit. If you missed it (or would like to relive it), you can watch a highlight video of the summit or watch the full summit panel -- which featured a range of community leaders talking about how to advance racial equity in state policymaking.