State Fiscal Office Confirms Long-Term Challenges
Updated on September 20, 2012; shortfall estimates revised
As we have noted previously, Washington state will not take in the necessary resources to maintain current investments in education, health care, and public safety for years to come.
This week the State Office of Financial Management (OFM) released a four-year outlook showing that the state is facing a shortfall of $2.1 billion in the next two-year budget cycle and $2.9 billion in the subsequent cycle (see graph). (1)
The root of the problem comes from the fact that Washington has what’s called a structural deficit — year in, year out we don’t take in enough money to meet our needs because we haven’t created a tax system that can do the job. The solution is to fix our revenue structure so that it can match the needs of the 21st century. That means eliminating wasteful tax breaks, modernizing our sales tax to include more consumer services and taxing high-end capital gains.
Despite claims by gubernatorial candidates and others, our state cannot provide a high-class education, adequate health, a clean environment, economic security or safe neighborhoods without fixing our broken revenue system.
1. Includes estimated costs of House Bill 2776