Revenue forecast up as tax idea loses steam

Feb 17, 2012

Governor Chris Gregoire is backing off her proposal for a half-penny sales tax increase. The shift comes after Thursday’s positive revenue forecast. It shows a nearly $100 million bump in state revenues.

Just a few days ago, Governor Gregoire was standing in the Senate wings surrounded by reporters. And she reiterated her support for a temporary sales tax increase to offset budget cuts.

“We’re in tough times," Gregoire said. "We need a little help from the public to get us through for the next three years until we get our feet on the ground again.”

Now the governor is changing her rhetoric. The revenue forecast is in and it’s up by $96 million. Plus, she’s seen a positive caseload forecast. It says demand for state services like health care is on the decline. That frees up $340 million. Combined, this takes a big dent out of the current budget hole. So the governor now says maybe a budget solution can be found in Olympia, not with voters at the ballot.

Senate Budget Chair Ed Murray agrees there’s now some doubt that majority Democrats will hit up voters. “A week ago I would have said it’s not a question," Murray says. "Now I think it’s a question.”

“And from my standpoint it never should have been a question in the first place,” says Republican Ed Orcutt, chair of Washington’s Revenue Forecast Council. He’s long maintained a tax increase would be bad for the state’s economic recovery.

Despite the bit of good news lawmakers received this week, there’s still a sizeable budget hole to fill. And as the state revenue forecaster cautioned: unemployment remains high, consumer confidence is still at recessionary levels and the threat of a European debt crisis still looms. In the governor’s words, “we’re not out of the woods yet.”