By Curt Woodward
The Associated Press
OLYMPIA — Washington’s tax revenue is expected to drop another $2.3 billion through mid-2011, pushing the state’s projected deficit to about $8 billion, state officials said Thursday.
The rapidly worsening deficit will almost certainly force legislators to begin discussing plans for new taxes.
But that’s no slam-dunk: Voter-approved tax limits would require new revenue streams to be sent to the ballot, in the middle of a lingering recession.
The new revenue projection was unveiled late Thursday afternoon in a special meeting of the state’s economic forecast council.
Arun Raha, the state’s chief economist, said Washington state and the nation remain in the midst of “an unprecedented economic crisis.”
“The state economy is caught up in a downward spiral that has devastated the national economy,” Raha said.
Gov. Chris Gregoire earlier proposed a no-new-taxes budget that cut more than $3 billion from state expenses.
At that time, the deficit was pegged at about $6 billion, and the shortfall has since grown by about a third.
Immediate cuts
State lawmakers passed and Gregoire signed into law on Wednesday some immediate spending cuts and money transfers that freed up several hundred million dollars to help the state’s bottom line, helping to ensure the deficit wasn’t even worse.
Republicans on the state forecast council reiterated their call for even more immediate spending cuts, saying the Democratic majority isn’t moving fast enough in the face of a massive budget hole.
Democratic leaders, however, said they still must wait until March, for a more firm projection of revenue and state spending growth, before writing their budgets in earnest. The governor’s budget director, Victor Moore, agreed.
Top Democrats also said it was premature to begin publicly discussing new streams of tax revenue, despite the widely seen need for the Legislature to create some kind of revenue package to send to voters.
The state will have federal money from the stimulus package to help backfill the deficit, and the new “rainy day” fund will also help.
Gregoire had hoped to save that rainy day fund for the next two-year budget, but raiding the account is now clearly on the table to help the state stay in the black through June 30, Moore said.
