As promised by Senate Majority Leader Lisa Brown last week, the legislature has released a list of cuts and fund transfers to consider during special session. The grand total? $479 million. The House and Senate drafts should be available online soon. I’ll be sifting through the cuts and transfers and posting more. In the meantime, here’s Brad Shannon and Jordan Schrader’s story.

TVW will cover both the House and Senate Ways and Means committees today at 3:30 p.m. You can watch them on the web right here.

Tags: Budget, cuts, revenue, special session

This week’s Q&A is with Sen. Joe Zarelli. I spoke with him about SJR 8206, a Constitutional Amendment that will bolster the Rainy Day Fund by requiring the state to put “extraordinary revenue growth” in the bank.

Q: First, tell me what this would do in your own words.

Zarelli: Well, it builds upon what we put out a couple of years back establishing the Rainy Day Fund. For me, it’s one of those long-term lessons learned from the current revenue scenario we’re in, where we saw revenue grow way outside a typical scenario (earlier in the decade).  What this does is this sets up a process in the future where if this ever happens again, we’d be required to capture a percent of extraordinary revenues and move it to the Rainy Day Fund. That does two things: First, it makes us save some of that money and second, we don’t spend it — so it has a double effect of making the budget more sustainable over time.

Q: You mentioned that it saves money in two ways — the second being that you don’t create new programs with extraordinary revenue. Can you say more about that?

Zarelli: Well, the biggest problem is that when you have a spike in revenue that you know isn’t going to continue and then you spend that spike, it creates a bow wave — you have no way to support that spending. When revenue comes back down to its historical growth pattern and then spending is way out of balance, that creates problems like we’re in now. The idea is to harmonize the spending pattern so it stays consistent with what is long-term growth instead of the ebbs and flows.

Q: There hasn’t been much opposition to this Constitutional amendment. Does that reflect bipartisan support across the state?

Zarelli: Well, there are some of those in the social services arena who think that we can’t commit to saving money, we have to spend it because there’s a huge need. There is a small group, but my message to them is that it does us no good if we commit to spending that we then have to withdraw from. (more…)

Tags: Budget, budget stabilization, Q&A, Rainy Day Fund, revenue, SJR 8206, taxes, Zarelli

Gov. Chris Gregoire is holding a press conference now on the economic and revenue forecast (see below). You can watch live on TVW.org now.

“The size of the shortfall means we cannot trim our way out of it,” she said. “Everybody will sacrifice … we cannot wait for better numbers,” she said. “In 2009, we hoped that things would turn. In 2010, we hoped that things would turn. In 2011 … and they haven’t.”

“This must be a year of decision, not of deferral,” she said. “We need a budget that is both sustainable and long-term.” Speaking of: The 25th month, she said, is not sustainable. She said the last time it was used, “it took us 16 years — 8 full biennial budgets — to buy back that quick fix loan.”

How about securitization? “In 2002, the legislature borrowed money by securitization of tobacco payments … but quick cash is expensive.” She said the quick fixes look good now, but won’t in years to come.

“Two last reminders to myself, if no one else: In November, the voters told us decisively that they do not accept new taxes,” she said. And second, the legislature must balance the budget.

Asked about taxes, she said “what do we want to tax? … it’s much easier said than done.”

As for other revenue sources, like gambling? “I don’t like gambling … but I’m not going to remove gambling. I’m not going to remove liquor,” she said, adding that she’s not taking anything off the table. “They’ve given us an early heads up, there will be proposals,” she said.

She said releasing offenders early is “the last place I’d go.” She said Washington has truth in sentencing, plus she doesn’t want to do anything that would put the state’s residents in fear.

On the subject of marijuana: “The people of the state said that they wanted medical marijuana,” she said, and so she’s in favor of the Senate bill, with some “clean up.” But she said the House bill to legalize and tax marijuana is “of little interest” to her.

Workers’ comp: She said she’s concerned with a House bill that would allow retrospective rating groups to manage some claims.

Tags: Budget, Governor, revenue, shortfall

The first quarter revenue results are in, and there’s good news and bad news. The good news: Retail trade increased 1.9 percent statewide over the first quarter of last year. That’s $10.2 billion in retail trade in the first three months of 2010.

Bad news: Overall taxable retail sales were down by 2.9 percent, to $22.6 billion, according to the Department of Revenue.

The difference: “Overall taxable retail sales” includes industries like construction, which has been hit hard by the recession. Retail trade excludes that and other services.

Overall results continued to be held down by weakness in the construction sector, which was down 18.3 percent to $3.5 billion over year-earlier results.  Sales by new and used car dealers were up 1.8 percent to $1.7 billion, while accommodations and food services sales were up 1.8 percent to $2.5 billion.  Building materials, garden equipment and supplies sales were up 8.3 percent to $921 million.

Tags: revenue, state budget

Find out the latest on high-speed rail — Is it worth the $590 million price tag? — the latest on whether Gov. Gregoire will soon be Solicitor General Gregoire and the latest from Arun Raha on the state’s revenue on this week’s edition of The Impact:

Tags: Budget, Gregoire, High speed rail, revenue, The Impact

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