Another $760 million goes 'poof' from state checkbook
OLYMPIA, Wash. - Washington's state checkbook has lost another $760 million, pushing the state's budget deficit to $2.6 billion through mid-2011.
Thursday's official revenue forecast sets the table for Gov. Chris Gregoire to write an updated state budget next month. The Legislature will start working on the problem in January.
It's a pretty big problem, as with only $11 billion of the budget open for cuts, State Rep. Ross Hunter (D-Medina) said it would be impractical to make that level of cuts and revenue options will have to be on the table.
That means taxes, and State Sen. Rodney Tom (D-Bellevue) said would be difficult in this current economic climate to raise the business and occupation tax or the sales tax. And for that reason, he says the Legislature may have to concentrate on so-called "sin taxes", like taxes on liquor or cigarettes, and closing tax loopholes.
Over the years, the Legislature has granted various loopholes to spur current businesses or attract other businesses to the area, but Tom says the tax breaks are costing state more than they are worth, although he did not have an estimate of how much could be saved by closing those loopholes. He says we need a combination of closing the tax loopholes, increasing taxes and program cuts to resolve an "unprecedented deficit."
Dr. Arun Raha, the state's chief economic forecaster, said consumer confidence remains -- if not in the basement, then at least treading water. Raha says that confidence is mainly based on two things -- the price of gas and level of unemployment.
The state's current unemployment rate is 9.3 percent, but Raha predicts it could increase to 9.8 percent before it turns around in the second quarter of 2010. For that reason, he expected consumer confidence and spending to remain low until that second quarter of 2010.
Raha warned legislators there is a 10 percent chance the downturn could be even worse than the current prediction, and that will be determined by one factor: The ability of small businesses to get loans or financing. Those businesses create nearly 50 percent of the jobs in the state, and many of the state and locally owned charter banks, which help to fund small businesses, have been hurt been by failures of commercial loans and some are holding on to their money.
Republican members of the forecast council, including Ed Orcutt (R-Kalama), said that increasing taxes is totally unacceptable in a recession like this. Sen Thom warned if the state is going to get through this it, it will require comprise between Democrats and Republicans putting together a balanced program of cuts and taxes.
Thursday's official revenue forecast sets the table for Gov. Chris Gregoire to write an updated state budget next month. The Legislature will start working on the problem in January.
It's a pretty big problem, as with only $11 billion of the budget open for cuts, State Rep. Ross Hunter (D-Medina) said it would be impractical to make that level of cuts and revenue options will have to be on the table.
That means taxes, and State Sen. Rodney Tom (D-Bellevue) said would be difficult in this current economic climate to raise the business and occupation tax or the sales tax. And for that reason, he says the Legislature may have to concentrate on so-called "sin taxes", like taxes on liquor or cigarettes, and closing tax loopholes.
Over the years, the Legislature has granted various loopholes to spur current businesses or attract other businesses to the area, but Tom says the tax breaks are costing state more than they are worth, although he did not have an estimate of how much could be saved by closing those loopholes. He says we need a combination of closing the tax loopholes, increasing taxes and program cuts to resolve an "unprecedented deficit."
Dr. Arun Raha, the state's chief economic forecaster, said consumer confidence remains -- if not in the basement, then at least treading water. Raha says that confidence is mainly based on two things -- the price of gas and level of unemployment.
The state's current unemployment rate is 9.3 percent, but Raha predicts it could increase to 9.8 percent before it turns around in the second quarter of 2010. For that reason, he expected consumer confidence and spending to remain low until that second quarter of 2010.
Raha warned legislators there is a 10 percent chance the downturn could be even worse than the current prediction, and that will be determined by one factor: The ability of small businesses to get loans or financing. Those businesses create nearly 50 percent of the jobs in the state, and many of the state and locally owned charter banks, which help to fund small businesses, have been hurt been by failures of commercial loans and some are holding on to their money.
Republican members of the forecast council, including Ed Orcutt (R-Kalama), said that increasing taxes is totally unacceptable in a recession like this. Sen Thom warned if the state is going to get through this it, it will require comprise between Democrats and Republicans putting together a balanced program of cuts and taxes.