If you buy wholesale items and resell them at your business, you’ll want to read this: In 2010, things are changing. If you don’t have a permit, you’ll end up paying sales tax on your wholesale purchases.

Businesses that purchase items at wholesale and then resell them do not pay sales tax. Instead, sales tax is charged on the item when the consumer purchases it. In the past, businesses have used self-issued resale certificates to avoid paying sales tax. But the Department of Revenue estimated that about $100 million in sales tax was lost because some businesses were buying items for office use and not paying sales tax.

So: If you resell items, you must have a resell permit. You can get one here. DOR estimates that about 20,000 people haven’t bothered filling out the form yet.

What happens if you don’t have a form? Wholesalers may not sell to you, according to the Department. So, do it!

Tags: DOR, reseller permit, revenue, taxes

For this week’s Q&A, I sat down separately with Rep. Ross Hunter (D) and Rep. Ed Orcutt (R) to talk to them about this morning’s revenue forecast, in which it was revealed that the Legislature will have to cut — or otherwise come up with — $2.6 billion in the short Legislative session.

Below is the full text of both interviews, in which each was asked the same questions. I’ve posted the interviews in the order in which they were conducted, with Rep. Hunter first. Enjoy.
Q: Can you put $2.6 billion figure into perspective?

Hunter: Every year, we do a budget. We do a big budget every two years that lasts for the next two years. And then we make corrections on the second year.

This time, something really big happened last session: We had a precipitous drop in revenues. If you do a trend line of the amount of revenue that we’ve taken in over the last couple of decades, the state grows at about 4.7 percent per year. So that means if you had projected that out, just straight line growth, if state revenues came in consistently from year to year and didn’t have wild swings, we’d grow about 4 to 5 percent a year.
That didn’t happen last year. Last year, the amount of money that came in fell. It almost never falls in actual dollars.
The cost of providing exactly the same set of services from year to year is what we start our budget from.  That’s what’s called the current law budget. We looked at that number and the amount of revenue we thought we were going to have. Only now, instead of about a $35 billion budget for these two years, it’s going to be $9 billion less. We lopped off 25 percent of our budget in a two-year cycle.
Some of that is we projected state employees are going to get a raise, we didn’t do that. We’re not going to do it this year.
So, we project how many people will wind up in prison, how many will need unemployment insurance, how many will be eligible for Medicaid? All of the people who are eligible for those services went up. There are more poor people, and they need more services from the state.

So you combine all those things together and (we have of difference of) $9 billion. About a third was help from federal government. And about $3 billion was cut.

This year, we will have to cut $2.6 billion out of the budget in the second year of the two-year budget. Instead of cutting 3 billion in a two year period, we wind up cutting $2.6 billion in a one-year period.
If you assume that we’re even remotely rational, we cut the programs that were less effective last year. So that everything we get into now is better stuff. We’re getting down to the real basics. We look at our education system: The voters approved by overwhelming margins funding for Initiative 728 to reduce class sizes. (more…)

Tags: Budget, Q&A, revenue, taxes

Those are the words of Governor Chris Gregoire talking about the latest revenue forecast and the possibility of having to cut up to a billion more dollars from the state budget.

Gregoire  met with capitol reporters this morning to talk about a range of issues – everything from the case to keep Boeing’s 787 Dreamliner production line in Washington to the latest revenue forecast. And she even talked taxes. Gregoire was opposed to any tax increase last legislative session.  She says she is now open to lawmakers coming to her with a plan on how to raise revenue that won’t impact the economy.

“I’ve told the leadership, come make your case.  My door is open, you can make your case,” said Gregoire.

Tags: Gregoire, revenue, taxes

Taxable retail sales in Washington dropped nearly 13 percent from the first quarter of 2008 to the same period in 2009, according to the Department of Revenue. They released the figures today.

The 12.8 percent drop means $23.2 billion fewer taxable sales for the first three months of this year.

Here’s the breakdown:
“Among the largest industries, retail sales from construction dropped 20.4 percent to $4.3 billion; motor vehicle and parts dropped 23.3 percent to $2.1 billion; accommodations and food services dropped 5.1 percent to $2.4 billion; general merchandise stores declined 0.9 percent to $1.5 billion, the retail component of wholesale trade declined 18.3 percent to $1.8 billion, miscellaneous retailers dropped 12.2 percent to $1.3 billion, information services dropped 0.7 percent to $1.2 billion, and building materials, garden equipment and supplies dropped 21.2 percent to $851 million.”

It looks like Clark and King counties were hit especially hard. Go here for the detailed county-by-county charts.

Tags: revenue

Tonight on The Impact, host Jennifer Huntley will talk to Representative Ed Orcutt and Senator Craig Pridemore. They’ll talk about tomorrow’s preliminary revenue forecast and what programs stand to get cut.

Pridemore and Orcutt are in the studio now. Here’s a small preview of what they have to say:

- Both expect the revenue forecast to be worse. Pridemore said he expects it to be “significantly worse” — around $8 billion.

- Pridemore said cuts will start coming through next week. He said that, because about half of the budget goes to things that can’t be cut (like debt service and education), that leaves about $8 billion in cuts from $17 billion or so of the biennial budget. He said some programs could get cut “20, 40, 100 percent.”

- Tune in tonight at 7 and 10 p.m., or watch online at tvw.org.

- Speaking of revenue forecast, it will be liveblogged here, and broadcast on TVW and webcast at tvw.org tomorrow live at 4:30 p.m.

Tags: Budget, cuts, revenue, taxes

The Economic and Revenue Forecast Council just released statistics for January’s General Fund-State tax payments between Dec. 11 and Jan. 10.

The collections “once again fell short of the November forecast. Receipts for the month were $97.5 million lower than expected.”

That’s 9.4 percent lower than what they’d planned for, according to the forecast.

In total, since the already-dire November revenue forecast, collections are down $134.1 million, or about 5 percent.

What’s this all mean? The state is already facing an unprecedented revenue shortfall of about $5.7 billion for the 2009-2011 biennium. If the numbers don’t turn around, that gap will keep growing.

Here’s the full document. One item to note: The year-over-year decline is the biggest since the council started compiling these statistics in 1989. They beat the Jan.-Feb. 2002 decline by more than 2 percentage points.

Stay tuned. And check out Budget Basics in the meantime.

Tags: Budget, revenue