All eyes of state government will be fixated on the state’s economic and revenue forecast when it is released Thursday, Sept. 15. This forecast not only predicts the direction of Washington’s economy by using complicated formulas and indicators, but it also projects incoming revenue to the state based upon the economy and consumer spending. The state budget is built using those revenue projections.
When the Legislature adjourned in late May after a regular session and a special session that finally produced a $32.2 billion operating budget, it left only $723 million in reserves (money unspent in the state’s savings account). When the budget was being written, many of us said this measly 2 percent reserve would not be sufficient to buffer against further dips in the economy. Plus, it demonstrated the Legislature’s failure once again to control its overspending habits.
On June 16, just one day after Gov. Chris Gregoire signed the 2011-13 budget into law, the state revenue forecast was released. The result was a $560 million projected drop in reserves, leaving only $163 million in the state’s savings account for the next two years.
Here’s where some may argue the state doesn’t have enough revenue and should raise taxes to collect more money. As I’ve said before, the state doesn’t have a revenue problem. It has a spending problem. Even with the revenue decline, the state is still expected to collect $3.5 billion more in the next two years than in the previous biennium. Unfortunately, rather than making reforms that would prioritize spending and set aside that additional money, the Legislature went about “business as usual,” appropriating this huge increase for spending in the 2011-13 budget. So again, overspending trumped reforms, leaving a meager 0.5 percent in reserves.
Common sense says it’s unlikely such little savings would be enough to protect the state against another lower revenue forecast. So in August, Gregoire called on state agencies to submit contingency proposals by Sept. 22 for cuts of between 5 percent and 10 percent. If the Sept. 15 forecast is down as many expect, the governor has two choices: across-the-board cuts or calling the Legislature into a special session to create prescriptive reductions that would balance the state budget.
How the Legislature responds if it returns in special session will be very important. Here’s why. If lawmakers merely patch the hole and hope the economy will get better before the 2012 session in January, they will be fooling themselves and doing no one a favor. Under current conditions, state economist Arun Raha doesn’t expect the economy will get better anytime soon. So we would be back in the same rut in January, but likely deeper. The problem with patchwork is that it doesn’t address the root causes of our state’s budget crisis — namely overspending, consumer insecurity, and the lack of jobs in Washington.
The Legislature needs a significant paradigm shift in its thinking. Lawmakers can no longer afford to preserve non-essential wanted programs that are a drag on the budget at the expense of essential needs like education, public safety and protection of the state’s most vulnerable population. When the economy took a nose dive in 2008, employers had to change the way they do business to stay afloat, and families had to set spending priorities by funding only their “needs” and setting aside their “wants.” Unfortunately, state government has been reluctant to do the same. That must change!
The Legislature must also focus on the most effective way to stimulate revenues, improve the economy, and restore consumer confidence – and that is the creation of private-sector jobs.
I’ve written at length about our job-creation solutions, which you can view on our House Republican Web site at: http://houserepublicans.wa.gov/our-solutions/economy/. I also believe we must take a Hippocratic oath-like approach to our economy, which is “do no harm.” That means: extending the governor’s state agency moratorium on non-critical rulemaking, which is set to expire in December; avoiding tax increases which could send our state spiraling into a second recession; and reducing costs to employers so they have the resources to create jobs.
However, the final and most important component must come from our business community. We need to hear from you! What can we do in the Legislature to make it easier for you to create jobs? What do you think would be the most effective approach toward improving our state’s economy?
Our best solutions come not from within the marbled walls of the state Capitol building, but from those who live and work throughout Washington. If you own a business, sign payroll checks, or find yourself fighting an uphill battle against permitting and regulations, I want to hear your stories and your solutions. email me or send me a letter. You’ll find my contact information below.
Rep. Dan Kristiansen, R-Snohomish, represents the 39th Legislative District. He can be contacted at 360-786-7967 or email him through his website at www.houserepublicans.wa.gov/Kristiansen.
