Today’s revenue forecast makes our choices clear

Washington state has lost billions of dollars in revenue in the wake of the recession, weakening the state’s ability to support the essential public structures necessary for economic recovery and job creation.  More bad news from today’s revenue forecast emphasizes the need to balance cuts with responsible increases in revenue.

The Economic and Revenue Forecasting Council (ERFC) projected today that tax revenues for the remainder of the 2011-13 biennium would shrink by $1.4 billion due to the continued weakness of the economy. As we noted in June, state revenue collections continue to be far below pre-recession levels. 

Earlier this year, policymakers developed a state budget designed to provide about $32 billion in funding for health care, education, and other important priorities over the 2011-13 biennium. At the time, available tax resources were projected to cover these costs while leaving a comfortable amount in reserves.

Since then, the worsening economic outlook has cut deeply into our budgeted reserves, which stood at about $163 million prior to today's forecast. On top of eliminating these reserves, the new revenue forecast of $30.3 billion means available resources will fall short by about $1.4 billion of the amount needed to sustain our public priorities throughout the current budget cycle.  This means tough choices will need to be made.

Whenever the legislature convenes to consider the budget, jobs must be the number one priority. Despite what some may say, job creation will not be accomplished through an all-cuts approach. Laying off teachers, nurses, and childcare workers will make our economic woes worse.

Since the recession began in 2008, we’ve taken an unbalanced approach, relying heavily on cuts to deal with the unprecedented drop in revenue. In fact, there have been $9 in spending cuts for every $1 in increased revenue.

In anticipation of further revenue declines, the Governor has directed state agencies to prepare for additional cuts. And funds from the federal government—help that allowed our state to avoid even more layoffs, and reduce the size of cuts in education and healthcare- has run out. In fact, the focus on deficit reduction at the federal level could mean big cuts in federal programs that help Washington State families. 

Further reductions to education, health, and public safety could not come at a worse time for Washington residents, as newly released census data reveals alarming trends.

As we highlighted earlier this week more employers are dropping health insurance coverage for employees, leaving a greater percent of families uninsured.  The rate of uninsured people in Washington increased from 12.5 percent to 14.9 percent since the recession began, and more than 880,000 Washingtonians currently lack health insurance.

We will continue to propose solutions to our state’s fiscal crisis including revenue enhancements such as eliminating tax breaks for big businesses and potentially expanding the tax base to include currently untaxed goods and services.

As always, we will continue to push a balanced approach to solve Washington state’s fiscal crisis. Cutting access to crucial public structures at a time when Washingtonians need them most will hurt our economy.

For more, check out our Executive Director Remy Trupin's guest column in Publicola today, "Further Cuts are Not an Option."