We're already well into the 2009 legislative session, and we are facing historic challenges in Olympia.
Our nation's financial crisis is the greatest of its kind since the Great Depression and is having devastating effects on state budgets across our country. At least 46 states are facing operating budget shortfalls.
Our state is no different.
Last week, we received a preliminary revenue forecast that shows over a $8 billion dollar shortfall between our current operating budget commitments in education, health care, public safety, environmental protection and other essential services and the revenues needed to support these commitments.
The unsound lending practices that brought on the mortgage crisis has upended homeowners' finances all across the country brought the world's financial market to its knees. Consumer and business credit is virtually frozen, making it very difficult for many businesses to make payroll or meet inventories.
In Washington, where there is no personal or corporate income tax, sales tax accounts for over half of the state's revenue. As consumer confidence has declined, so has our sales tax collections, which has resulted in a drastic downturn in revenue which is a major factor in creating a $8 billion gap between money coming in and money going out.
With this latest revenue forecast, our state is now facing the largest shortfall in modern state history. This shortfall represents almost a quarter of our whole budget. If we eliminated all of our state's prison system, all our public colleges and universities, all the care for our vulnerable seniors and those with developmental disabilities - we would almost bridge the shortfall.
Though all of us in Olympia welcome the federal economic recovery package signed into law last week by President Obama, it will provide just a fraction of what's needed to close the state's budget gap. We have a problem that is four times larger than what we will receive from the federal stimulus funds.
The Legislature is now faced with horrific decisions and no option is off the table.
We cannot ignore the vulnerable and eliminate all funding for public safety and higher education altogether. But, there will be cuts. We are working, however, to ensure that these cuts are not short-sighted and end up costing our taxpayers more money and harm to our citizens in the long-run.
Economists predict that a reduction in state spending by $1 billion could lead to 15,000 public and private sector jobs being lost. As our state faces historic unemployment, over 90,000 people applied for unemployment benefits in December alone, we cannot take steps that will put more people unnecessarily out of work as it will only prolong our recession.
We cannot responsibly cut our way out of this budget deficit. Nor, can we responsibly tax our way out of it. It will likely have to be a combination of the two along with finding other ways to enhanced revenue and eliminate some tax breaks and.
Because of 2007's voter approval of Tim Eyman's Initiative 960, any new revenue proposal from the Legislature requires either a two-third vote of the Legislature or a vote of the people. It is unlikely that we will be able to secure a 2/3 vote in the Legislature; ultimately, the voters will most likely be asked to approve a revenue package to move our state out of the current recession.
The question still remains if voters will be willing to approve it.[[In-content Ad]]
