Washington’s budget situation just got a whole lot worse. The state’s $6 billion deficit has now ballooned to around $8 billion. That means it’s all but certain majority Democrats in the Legislature will put a tax measure on the ballot sometime later this year.
Chief revenue forecaster Arun Raha gave lawmakers the bad news Thursday afternoon. Basically Raha was giving lawmakers a “sneak peak” at the official revenue forecast which is due out March 19th. Raha explained that after he delivered his November forecast, dire as that was, Washington’s economy “hit the wall.” As a result, he predicts Washington will lose another $2.3 billion in anticipated tax revenues for the coming two-year budget period, through 2011.
Raha managed a laughing-through-the tears moment when he attempted to balance the dire economic situation with the good news that Ken Griffey Jr. is returning to the Mariners. “Everything we feared could go wrong did,” said Raha about the state's economy. “That doesn’t mean that always has to be the case. Sometimes we get unexpected good surprises. Did I mention Ken Griffey Jr. is coming back?”
So how will majority Democrats and Gov. Chris Gregoire (who firmly pledged not to raise taxes during her reelection campaign) close this gaping budget hole? Here’s one scenario based on some rough math coupled with semi-informed guesswork. First, the state expects to reel in about $1.7-2 billion in Medicaid funds from the federal stimulus bill just passed. That knocks the problem back down to $6 billion. From there it seems reasonable to expect Democrats will find $3-4 billion in cuts, one-time savings, and assorted budget gimmicks (including tapping the rainy day fund). After all that dust settles, it leaves a $1-2 billion hole.
This is where the real pain — if you’re a Democrat — comes. These are the cuts that Democrats will likely ask voters to “buy back” in the form of a tax increase to fund some of the more popular, unthinkable-to-cut programs. What will that tax increase look like? Sales tax, B&O tax, a green tax to discourage wasteful energy consumption, even a new tax? What programs will be earmarked for elimination-or-rescue? Education, social services, assistance to the most needy? Finally, when will the tax measure be on the ballot — April, May, November? All these questions are yet to be answered.
A wildcard in all of this is several key Democrats have said they want to leave around $1 billion in the bank when they go home in late April. That cushion would be in case the economy deteriorates even more before lawmakers reconvene in January 2010. It's tricky to make the case for a tax increase when you’re leaving $1 billion in the bank.
So where are minority Republicans in all of this? They think Democrats aren’t moving fast enough to cut spending now, in the current budget. And they recoil at any mention of the T-word. Rep. Ed Orcutt, R-Kalama, sums it up this way: “As far as the talk that we’re starting to hear about tax increases, I just don’t think we should be throwing in the towel and asking the taxpayers for the bailout.” The Democrats may have to swallow the bitter tax medicine all by themselves.
Like what you just read? Support high quality local journalism. Become a member of Crosscut today!