business backgrounder | budget
“We’re still growing, we’re just
not growing at the extraordinary
rates we were over the last
couple bienniums.”
— State Sen. John Braun, R-Centralia
Four major takeaways were clear as of July. First, state
lawmakers say everything is on the table, including major
cuts and tax increases to balance the budget. Second,
lessons from the Great Recession a decade ago offer
practical solutions to move forward. Third, it’s still raining
as coronavirus cases flare up around the country and the economic recovery
remains uncertain. And finally, AWB is urging lawmakers to do everything they
can to help struggling businesses keep their doors open in the midst of a major
recession.
The state Senate’s chief budget writers spoke to AWB’s Board of
Directors in late June about state finances.
“Everything is on the table right now,” said Sen. Christine Rolfes,
D-Bainbridge Island, who chairs the Senate Ways and Means Committee
— including tax increases. “What I am looking at is how do we rebalance
the budget using the reserves, using some budget moves that would save
us money in the short term, that we may need to pay off in four or five
years, making cuts, and then...is there revenue that would be appropriate
to generate, is there tax reform that would be appropriate right now given
the situation that we’re…facing.” Rolfes said the state has about $3 billion
in reserves and the rainy-day fund.
But it’s not enough to close the gap alone. State Sen. John Braun, R-Centralia,
said the state missed an opportunity by failing to call a special session and make
necessary cuts earlier. Gov. Jay Inslee and House Majority Leader Pat Sullivan,
D-Covington, downplayed the need for a special session in early July.
Braun also pointed out that the state’s revenues are still on track to grow by
about 4% during the current budget cycle, even with the coronavirus impact to
state finances.
“We’re still growing, we’re just not growing at the extraordinary rates we
were over the last couple bienniums,” he said.
Braun said he appreciates Rolfes’ position that all options are on the table,
but, “I think it would be an entirely wrong move to consider additional taxes
which will almost inevitably land on our business community. Keep in mind in
this biennium we have roughly $3 billion in new taxes,” he said. Businesses will
also pay more in unemployment insurance taxes over the next year and have
lost revenue due to the shutdowns, he added.
Still, there is some positive news on the state budget front thanks to those
hard lessons and four years of cuts and special sessions from 2007-11, the
Washington Research Council reports. In 2011, voters approved a constitutional
“Everything is on the table right now.”
— State Sen. Christine Rolfes, D-Bainbridge Island,
chair of the Senate Ways and Means Committee
amendment requiring extraordinary revenue growth to go
into the state’s rainy-day fund.
Also, lawmakers must now balance the budget over four
years, a requirement that started in 2013.
“Thanks to these strong budget sustainability practices, the
state budget is much better prepared to weather the current
recession than it was in 2008,” the council wrote in a July
special report on the budget.
Other lessons from the Great Recession include:
• Use the rainy-day fund
• Don’t lead with tax increases
• Treat federal aid as a stopgap
• Cut spending early
• Eliminate low-priority programs
summer 2020
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