Today’s revenue forecast predicts substantial increases in the General Fund-State revenue for the 2017-2019 biennium and 2019-2021 biennium. The increases are $647 million and $671 million respectively.
The forecasted revenue for the current biennium is now $44.213 billion, or a 15.4 percent increase of the 2015-2017 biennium.
“Today’s forecast is very encouraging,” said David Schumacher, director of the Office of Financial Management. “We face some significant budget challenges, such as meeting this year’s deadline to fully fund basic education and making critical investments to improve the state’s mental health system. Our strong economy and increased revenue collections will help us meet these challenges.”
Both sides of the aisle in the legislature are celebrating the positive outlook.
Democrats focused on creating a balanced budget and ensuring economic opportunity across the entire state.
Senator Christine Rolfes, Chair of the Senate Ways & Means Committee, said:
“The extraordinary revenue growth will allow us to meet our legal and moral obligation to our public schools and to mental health care. It also will allow us to reduce the property tax burden imposed by Senate Republicans last year.
“With this information in hand, I am confident that the House and Senate can deliver a balanced budget — one that does not rely on new taxes — on time and set the state on solid ground entering the 2019-20 biennium.
“This news is a testament to the talented workers in our state who continue to innovate and grow Washington’s economy at a historic pace.”
“The revenue forecast obviously was great news, it means our economy is doing very well. But that’s not the case in every corner of our state and that’s why we’re focusing on rural economic development and making sure that the booming economy is felt not only in the Puget Sound region, but across the entire State of Washington.”
When asked about if he would commit to no new taxes in the budget this year, he replied:
“I don’t think we ever planned on general tax increases this year. We haven’t seen any proposals that I’m aware of. This year the focus was, again in a supplemental budget year, really looking at those key areas of the budget where we need to put additional funding in.”
Republicans also spoke to creating more opportunities in rural areas, and cautioned against creating taxes.
Senate Republican Leader Mark Schoesler said:
“This should completely scuttle the Democrats’ unconscionable scheme to impose a multibillion-dollar energy tax on hardworking families and employers, forcing them to pay 30 cents more for a gallon of gas in addition to higher heating and cooling bills. I question why the Senate budget committee would still go forward with a hearing on the energy tax later today, in light of this news.
“Today’s forecast should also end the Democrats’ perennial quest for a new state income tax, especially this year’s proposal for a new income tax in exchange for reducing the state property tax that pays for education. Clearly there’s enough revenue in hand already to offer relief from this year’s tax spike, before the lower rates take effect in 2019.
“I’m reminded of a dozen or so years ago, when Democrats used their one-party control to go on a spending spree with a similarly strong stream of revenue. They grew state government by more than one-third, and when the inevitable downturn came they responded with record tax increases.
“This good news is no excuse to launch even more programs and services. Any spending of this unforeseen revenue in the supplemental budget should focus on opportunities for targeted financial relief – not only for property owners, but also manufacturers and maybe college students too. And there are other one-time investments to consider, like expanding behavioral-health facilities or catching up on state park maintenance, that would bring good returns without making government bigger than it already is.
“There’s no question that the five years of tax stability our side of the aisle brought to the Capitol made for a friendlier business climate and in turn contributed to the solid economic performance we’re seeing. The last thing our state needs are new taxes that will discourage employers and hurt families simply to score political points.”
Representative Terry Nealey, ranking minority member on House Finance Committee:
“There are several reasons for the increased revenue. Collections are stronger as a result of a booming Puget Sound economy, something we’d like to see in our rural parts of the state. Changes in the federal tax law will allow people to keep more of their money, which they are expected to invest back into our state’s economy by purchasing goods and services. And for this year, property tax revenues are up as the result of legislation we passed last year to address the McCleary education lawsuit.
“This is a significant increase in our state’s revenue. However, there are still proposals in the Legislature to take even more money from our citizens to further boost state revenue. Governor Inslee is pushing hard for a carbon tax in excess of $3 billion, little of which would even be used to reduce carbon in our state. There’s a public hearing tomorrow on House Bill 2967, which would impose a capital gains tax on the citizens of our state.
“Not only are these tax increases unnecessary, given the fact that we have increased revenues projected for Washington, but I’m concerned their implementation could harm the gains we have made in our state’s economy. Today’s forecast is good news for Washington. I would caution the Legislature against taking action that could reverse this economic windfall.”
Washington State Treasurer Duane Davidson called on the Legislature to use the expected increase to pay for existing obligations and to plan for future shortfalls.
“It is good financial management to use unexpected revenue to pay down your most expensive debt. Many families do this when they get a windfall – they might pay off their credit card. Washington State’s most expensive debt is our unfunded pension liability. We are currently short about $13.8 billion in our pension funds (as of August 2017 SIB report). Today we’ve received news that the State now expects an additional roughly $1.3 billion to come into State coffers from now through 2021. While some of this windfall will go into our rainy day fund and portions are needed to address education and mental health court decisions, the remainder should be used to pay down some of this pension obligation.
There have been 10 recessions since World War II. Another one will inevitably come. Times are good today and this is the time to maximize our rainy day funds. We’ll certainly want them when the economy isn’t as rosy as it is today.”
Note: This story has been updated with additional quotes from Treasurer Duane Davidson.