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Morning Wire: Denny Heck, City & county finances, Economic indicators to watch

Last night, I caught up on your comments and feedback in our Annual Reader Survey. They were generally warm, kind and heartening. So, in a crazy time for us all, I want to say thank you for reading the Wire, for putting wind in our sails and for your continued support.

We’ll keep the survey open one more week. If you haven’t taken it yet and want to offer your two cents – good, bad or indifferent – we would appreciate hearing from you.

With help from Michael Goldberg

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1. COVID’s hit to city and county finances  

Washington cities (and some counties) are like weather stations in Florida. They can see the fiscal hurricane on the radar. Counties’ reliance on property taxes protects them from the worst of the revenue storm. It won’t be until May before we know March revenue collections. This is the metaphorical calm before the fiscal storm. Some cities are planning on 10% salary cuts. It may not be enough. 

Among states, Washington State is uniquely sensitive to drops in sales tax revenue. However, we won’t know how bad the state revenue hit will be until the June 2nd revenue forecast. I think we’ll have to have a special session this year to address the budget shortfall, but it won’t be until at least after this forecast.

2. Q&A with Heck: From retirement to the Senate gavel

Congressman Denny Heck was set to retire from elected office after a long career in public service. However, after Lt. Governor Cyrus Habib announced his own retirement, Heck decided the open seat was an opportunity worth pursuing. He has a decent war chest, assuming he can migrate congressional campaign funds to his state race. Heck is campaigning on fostering civility in the state Senate and helping to rebuild Washington’s economy through market-based forces.

Meanwhile, Sen. Steve Hobbs, also a candidate in the race, has been called up for active duty in the National Guard. He will command Western Washington’s COVID response effort, overseeing up to 200 guardsmen as they support Washington communities.

3. How to know how bad this economy might get 

We may be one more week of jobless claims away from 20% unemployment in Washington State. That would put the enormity of this economic moment on par with the Depression. Some in the business world have argued to me that it’s an “extinction-level event.” Smart policy minds have suggested to me it’ll be more like the disruptive transition from the horse-and-buggy to the automobile.

The key canaries in the coal mine are these. First, watch the credit markets. The largest US mortgage lender won’t service mortgages over $250k, effectively leaving US metro area markets. When money turns off, personal and business bankruptcies will climb. Second, watch small businesses. Washington State lost more small businesses during the Great Recession than most states, and created more new small businesses since then than most states.

4. Wire Insider: Bernal Baca 

Bernal Baca is the Executive Director of Centro Latino, Tacoma and the leader of a group called the Racial Equity Team (RET). He joins us as a “Wire Insider” to discuss the work RET does to evaluate all pieces of legislation in Washington State through a racial equity lens. The team works to provide a forum for community leaders to collaborate with lobbyists in Olympia to promote racial equity in new legislation. 

During session, the RET meets every Tuesday in Olympia to look at whether they need to support, alter, or work to kill the legislation being analyzed by the group that day. The group also regularly engages with allies and Members of Color in the Legislature to provide racial impact analyses on bills. 

5.  Misleading Trump ad features Gary Locke

On Thursday of last week, President Trump released an attack ad which contained footage of former Washington Governor Gary Locke. Attempting to paint former Vice President and presumptive Democratic presidential nominee Joe Biden as “soft” on China, the ad featured a montage of Biden interacting with Locke and various Chinese officials.

Locke was on the trip fulfilling his duties as the US Ambassador to China during the Obama Administration. He holds the distinction of being the first American of Chinese descent to head the US Embassy in Beijing. He was born in Seattle. When asked for his reaction by the Atlantic’s Edward-Isaac Dovere, the mild mannered Locke didn’t equivocate: “It’s anger.”

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