Washington Budget Writers Catch A Break; Revenues Holding Steady

By Austin Jenkins

OLYMPIA, Wash. - Budget writers in Olympia are breathing a sigh of relief. The state’s new revenue forecast out Wednesday is mostly flat. That’s despite the federal sequester and other risks to the economy. Even so, Washington lawmakers still face a $1B-plus shortfall and a court-ordered down payment for public schools.

In advance of this March forecast, the scuttlebutt in the Washington state Capitol was revenues might take a significant hit. The source of the anxiety: lower personal income, lower U.S. GDP and concerns about the federal sequester. Instead, projected state revenues for the next two year budget are off by just $19M. House budget chair Ross Hunter quipped that “flat is the new up.”

Ross Hunter: “From my point of view we have a hard problem to resolve. This doesn’t make it worse.”

That problem is a $1.2 to $1.3B shortfall – a number that grew last week because of higher than expected Medicaid costs. Add to that another $1B - give or take - to start to comply with a Supreme Court ruling that says the state is underfunding schools. Hunter, a Democrat, says it will be hard to resolve that problem without additional taxes. Republican Andy Hill, chair of the Senate budget committee, opposes that idea.

Andy Hill: “The goal is to live within our means.”

Hill notes Washington tax revenues are expected to grow by an additional $2B over the next two years. Democrat Hunter counters that’s not enough to keep up with growing expenses like healthcare. This is the fight that’s looming as the House, Senate and Governor roll out budget proposals in the coming weeks and then have to hammer out a compromise deal.

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