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Today's Forecast Shows State Tax Revenue Remains Short of Need

Posted by taral at Mar 20, 2013 02:50 PM |
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By Andy Nicholas--The amount of tax resources needed to support schools, health care services, and safe communities in the coming 2013-15 budget cycle will be about $40 million greater than previously anticipated, according to today’s forecast from the State Economic and Revenue Forecast Council -- a positive revision of $60 million for the current biennium along with a $20 million drop in revenue for the upcoming cycle.

While today's numbers appear to be good news, it is important to note there remains a huge shortfall between the amount of revenue needed to maintain existing levels of public services and comply with court-ordered improvements to education -- $2.6 billion in the coming budget cycle.

Without new resources, it will be impossible for policymakers to develop a state budget that responsibly maintains these and other critical investments that create jobs and support a strong state economy.

The Great Recession and the sluggish economic recovery continues to drag down state revenue collections – a dynamic that continually plagues policymakers’ ability to adequately fund important public investments.

Although revenues will finally recover to 2008 levels by 2014 (see graph below), it’s important to note that fuel and energy prices and other factors of inflation have all grown since 2008, driving up the expenses related to heating classrooms, fueling buses and police cars, and other costs of maintaining public services.

3_20 forecast

Without sensible reforms to generate additional tax revenues, such as narrowing tax breaks and taxing high-end capital gains, state revenues will remain far below what is needed to maintain the schools, colleges, and health care investments needed to keep Washington state competitive in the 21st century global economy.

For more details on today’s revenue forecast, stay tuned. Next week we will be releasing our first edition of Revenue Review – a quarterly brief detailing current and historical revenue trends in Washington state.

Learn more this Friday with the Budget Beat 

Join us for the next Budget Beat call - this Friday, (March 22nd) at noon. Our guest is Rep. Ross Hunter, Chair of the House Appropriations Committee, who will help unpack the today's revenue forecast and explain its implications on the budget process.

Register here

 

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