Lawmakers need to re-examine budget before adjourning

Lawmakers need to re-examine budget before adjourning

Before lawmakers wrap-up their work in Olympia, they should re-examine their hefty new state spending plan. The budget may not be sustainable even with a substantial increase in taxes. It may force legislators to return to the State Capitol to cut workers, programs and services; or, even hike taxes yet again.

It has happened in the past.

For example, in the early 1980s, Gov. John Spellman (R) and a Republican legislature were forced to meet in special session continuously to deal with rapidly dropping revenues. They had to raise existing taxes and add new ones to bail out the inflated budget.

In 1979 before leaving office, Gov. Dixy Lee Ray (D) and Democrat legislators insisted on implementing statewide funding for basic education ahead of schedule. There was added revenue coming from a prosperous economy, but the economy quickly tanked a year later.

State spending jumps by 18 percent ($8.150 billion) over the next two years and $1.4 billion in new taxes are required to balance it. This increase comes on top of a nearly 17 percent hike in the current budget.

The new $52.6 billion budget requires a new 9.9 percent “extraordinary profits” capital gains tax, a two-thirds increased business and occupation taxes on service-sector employers, with an even higher rate on large tech companies, and a graduated real-estate excise tax.

Critics say the spending plan for the next two years is too high and existing revenues provide plenty of money to meet state services. They point to the most recent state Economic and Revenue Forecast Council report which found the state should collect $307 million more in the rest of the current two-year budget, and an additional $553.5 million in 2019-21; the budget legislators are tackling during this session.

The new expenditure plan is also based on unusually long period of economic prosperity. One of the brightest segment has been aerospace led by Boeing

An updated study by Aerospace Works for Washington, a coalition of business and elected officials, shows Washington’s aerospace industry is responsible for more than 83,000 direct jobs, 224,000 total jobs and total revenue of $94.4 billion. That’s 10 percent of the state’s economy.

AWW estimated in 2018, the aerospace industry made estimated direct tax payments — including B&O, sales & use and other tax categories — of $192.3 million. The total fiscal impact of the aerospace industry, including taxes paid by businesses associated with aerospace through indirect and induced impacts, summed to an estimated $567.1 million last year.

Unfortunately, there are signs the economy is weakening and the AWW study was completed before the 737 Max 8 crashes in Indonesia and Ethiopia and the subsequent grounding of all Max aircraft until software and sensor equipment is modified.

That grounding is having a dramatic impact of Boeing’s production at the Renton plant. It is expected to be extremely costly. Already, 737 output has been reduced to 2014 levels dropping from 52 planes per month to 42. The financial impact will trickle down to state and local revenue collections.

While Boeing engineers are working feverishly to make modifications and get approval from the Federal Aviation Administration and other government regulators across the world, the company sales team is attempting to prevent order cancelations and additional delays. No one knows how much it will cost or when the Max will go back into service.

Before heading home later this month, lawmakers should do an 11th hour reassessment of the budget and the revenues which they plan to balance the new budget. It would be better to adjust it now, rather than later in special session.

Don C. Brunell is a business analyst, writer and columnist. He recently retired as president of the Association of Washington Business, the state’s oldest and largest business organization, and now lives in Vancouver. He can be contacted at theBrunells@msn.com.


Talk to us

Please share your story tips by emailing editor@rentonreporter.com.

To share your opinion for publication, submit a letter through our website https://www.rentonreporter.com/submit-letter/. Include your name, address and daytime phone number. (We’ll only publish your name and hometown.) Please keep letters to 300 words or less.

More in Business

Robert Toomey, CFA/CFP, is Vice President of Research for S. R. Schill & Associates on Mercer Island.
News of market volatility has felt like a pinball machine lately | Guest column

Webster’s dictionary defines the word volatility as “characterized by or subject to… Continue reading

Kinwell clinic lobby in Renton (Courtesy of Kinwell Medical Group)
Kinwell Medical Group opens new clinic at The Landing in Renton

Kinwell clinics offer in-person and telehealth visits, online appointment scheduling, and they tout reduced wait times.

A chicken sandwich from Yummy Meats Deli (Photo by Cameron Sheppard/Sound Publishing)
Here’s a Szechuan-style take on Nashville hot fried chicken

Why a literal hole-in-the-wall chicken joint is worth the trip to Renton.

Robert Toomey, CFA/CFP, is Vice President of Research for S. R. Schill & Associates on Mercer Island.
Volatility and disciplined planning in 2022’s stock market | Guest column

The stock market in January experienced significantly increased volatility. In the first… Continue reading

Menchie’s location in Federal Way. (Photo by Cameron Sheppard/Sound Publishing)
Investigation: Menchie’s locations failed to pay workers, stole tips

Multiple King County locations involved, including Federal Way, Bellevue and two Renton shops.

Snoqualmie Casino. Courtesy photo
Kirkland-based company sues to challenge ‘tribal gaming monopoly’ in Washington

Company called the state’s policy an “erroneous application of the Indian Gaming Regulatory Act.”

Robert Toomey, CFA/CFP, is Vice President of Research for S. R. Schill & Associates on Mercer Island.
The forces behind our current COVID-induced inflation | Guest column

Recent inflation numbers have been quite high and at levels not seen… Continue reading

Robert Toomey, CFA/CFP, is Vice President of Research for S. R. Schill & Associates on Mercer Island.
The ‘year end’ elements of financial planning | Guest column

With the end of the year fast approaching, we remind clients that… Continue reading

Robert Toomey, CFA/CFP, is Vice President of Research for S. R. Schill & Associates on Mercer Island.
How financial planners address plan uncertainty | Guest column

One of the key challenges we face as financial planners is dealing… Continue reading

Robert Toomey, CFA/CFP, is Vice President of Research for S. R. Schill & Associates on Mercer Island.
Is cryptocurrency really an investment? | Guest column

Undoubtedly you have heard about the new form of money known as… Continue reading

Stock photo
Grocery store workers have right to wear Black Lives Matter buttons

National Labor Relations Board ruling against ban by Kroger-owned QFC, Fred Meyer

Big Island Poke in Renton (courtesy of The Intentionalist Facebook page)
Small-business advocacy group wants you to try minority-owned businesses and put it on their tab

The Intentionalist is opening up $400 tabs for folks to use this weekend at select businesses.