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Inevitable Downturn is Here
Gary Chandler AWB Vice President , Government Affairs
When the 2020 legislative session began in January , AWB was calling on lawmakers to adopt a sustainable budget . Since the end of the Great Recession , state spending had grown at a record pace , fueled by a naturally growing economy and billions in new taxes over and above the economic growth .
We were concerned this growth in spending was occurring too fast and was not sustainable over the long-term , especially in the event of an economic downturn — something we knew was inevitable .
Little did we know how timely this message would be . By the time the session adjourned on March 12 , the coronavirus was beginning to spread in Washington , and we were days away from a lock-down that would close thousands of businesses and trigger an unprecedented surge in unemployment .
By late June , the state ’ s chief economist was predicting a nearly $ 9 billion revenue shortfall over the next four years and nearly 600,000 Washingtonians were out of work .
We didn ’ t know a pandemic would be the cause of the downturn , and we couldn ’ t have predicted how fast and severe it would hit . But AWB and our members spent the last several years urging responsible state spending precisely because we knew that some kind of economic downturn was inevitable .
Now that we ’ re in the midst of an economic crisis , the focus has shifted to rebound and recovery . How can we rebound from this downturn and begin the long , hard work of economic recovery ? That ’ s the challenge waiting for lawmakers in the next legislative session .
And yet the calls for new spending haven ’ t subsided . At a time when lawmakers should be doing everything possible to help employers survive this crisis , we are hearing calls for new and higher taxes in an attempt to sustain the unsustainable spending that was adopted over the last several years .
This will likely be an ongoing issue for years to come as our state and nation attempt to dig out of the biggest hole we ’ ve faced in most of our lifetimes . The good news is employers are resilient and innovative , and I have no doubt we will remake our state economy .
It ’ s also worth noting that as big as the challenges are , the state ’ s Economic and Revenue Forecast Council is predicting state revenue will continue to grow — just not at the rate previously predicted . At the start of the decade , the state ’ s two-year budget was $ 31.4 billion . Even with the huge loss in revenue from the pandemic , the new forecast for the 2019 – 21 biennium is $ 47.8 billion .
Before the spread of the coronavirus , employers were faced with a legislative session filled with familiar challenges , including a low-carbon fuel standard ( LCFS ) proposal and a myriad of employment law proposals from restrictive scheduling and wage and hour laws to creating new employer requirements for workers ’ compensation .
The LCFS would have raised the cost of fuel for employers and families working to make ends meet , without any real benefit to the environment or Washington ’ s aging infrastructure . The bill passed out of the House , but fortunately failed to move out of the Senate Transportation Committee .
Many of the employment law bills also failed to move out of the Legislature , even though Democrats controlled both the House and Senate .
Another issue that saw considerable attention in the 2020 session is early learning and child care . A report AWB released last fall along with a number of partners showed the lack of high quality , affordable child care isn ’ t just a problem with for families but is also costing employers more than $ 2 billion per year the total cost to the state economy is more than $ 6.5 billion . The pandemic only makes this issue more urgent .
As always , many of the issues we saw in the 2020 legislative session will return in 2021 , including child care , taxes , employment law , transportation and climate . Only now we will see them all through the lens of the pandemic , which turned out to be the rainy day we hoped would never come .
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