By Joseph O’Sullivan / The Seattle Times
OLYMPIA – Driven by a surge in government sales tax collections and other rising revenue, Washington’s treasury continues to surge as parts of the economy revitalize and the COVID-19 pandemic gradually recedes.
Another $ 838 million in existing taxes is expected for the current two-year state budget, according to a new forecast from the Washington State Economic Revenue and Forecast Council. This budget cycle ends on June 30th.
Then the Council is projecting almost $ 1.8 billion more than previously expected in existing taxes for the 2021-23 budget cycle.
It’s a legitimate part of the change to the roughly $ 59 billion operating budget approved by state lawmakers and Governor Jay Inslee this spring. It comes into force on July 1st.
The operating budget funds schools, parks, forest fires, prisons and mental health services and other programs. In addition, the state has earmarked an additional $ 10 billion in federal COVID-19 aid to help businesses and families recover from the pandemic.
At a session of the Forecasting Council on Wednesday, Steve Lerch said the earnings are coming from a variety of sources. The biggest among them is the rise in sales tax collections, said Lerch, chairman of the council. Sales tax finances about half of the budget.
“Most of that is sales tax,” said Lerch. “Retail sales activity has been very, very strong.”
In addition, employment numbers exceeded March projections, Lerch said, and personal income was also higher than expected.
Meanwhile, residential property transactions and cannabis sales have declined from their previous pandemic highs, Lerch said, but still remain elevated. This has raised future projections for both cannabis taxes and state home seller tax.
Republicans, who are in the minority in the legislature, have unsuccessfully opposed several Democratic-enforced tax hikes over the past year. In view of the new forecast, they again called for tax cuts on Wednesday.
“It is time to look at tax breaks,” said Rep. Ed Orcutt, R-Kalama, at the meeting.
Meanwhile, Senator Christine Rolfes, D-Bainbridge Island and editor-in-chief of the Senate Democratic Budget, warned against taking too much from just one forecast.
The state will probably not do anything with the new funds this year. Another forecast will be made in the fall. Legislators and Inslee will take this into account when drawing up the supplementary budget for the next year, which optimizes the expenditure plan.
“That is certainly good news,” she said at Wednesday’s meeting. “But I wouldn’t start writing a budget based on those numbers.”