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Home / Press Releases - 2002 / Governor Locke Sets Tone with Budget To Return Our State to Prosperity |
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Governor Locke Sets Tone with Budget To Return Our State to Prosperity |
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Written On: December 17, 2002 |
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Written By: Richard Davis |
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OLYMPIA---While no family or business relishes sacrificing because it has a limited amount of money, neither do governors. Governor Locke’s budget proposal released today attempts to deal with the realities of living with $2.4 billion in lower state revenues for the next two years in hopes our state’s struggling economy will rebound.
“Families and our state’s employers—the job providers—are suffering through a prolonged recession and have to cut back on expenses and layoff workers because the money just isn’t there,” Association of Washington Business (AWB) President Don Brunell said. “The reality of our state’s revenue situation is agonizing for the Governor and legislators and they are faced with some very difficult choices. We think the Governor is taking the right approach in facing up to those tough decisions early.”
Governor Locke announced his 2003-05 biennial budget today. The budget would wipe out the revenue shortfall while attempting to fund essential state services.
“Former Governor Booth Gardner summed up the situation best,” Brunell said. “Gardner said every state program has a constituency and a need, but Governor Locke is faced with what the state has to do to survive. It is a difficult situation which no governor relishes.”
“Employers and families in Washington have been in a survival mode for about two years,” Brunell said. “We’ve lost over 60,000 manufacturing jobs and the recovery is slow. Many jobs will not come back when the recession is over.”
“We think Governor Locke realized that structural changes are occurring in our economy. Companies have had to become more competitive to survive and that means they have to produce more products and services at a lower cost with fewer people. If they don’t, a foreign competitor runs them out of business and there are no jobs and no tax revenues for the state.”
AWB supports the recommendations of the Governor’s Competitiveness Council as well as the work of his Priorities of Government (P.O.G.). Both have recognized that Washington has high unemployment and faces a growing competitive disadvantage.
“With employers facing a 29 percent increase in workers’ compensation and a 15 percent hike in unemployment insurance costs starting in January, a huge tax increase would be a “Job Killer,” Brunell said.
Brunell said his organization believes a tax increase even larger than the legislature passed in 1993 would be necessary if lawmakers simply try to fund government the way they traditionally do. “We can no longer just add on to government spending to adjust for inflation and other additional costs. We just can’t afford the size of government we have today, and either take control of change or allow it to control us.”
AWB believes the bulk of any new taxes would fall on employers. In Washington, businesses pay about half of the state and local taxes compared with the national average of about one-third. “In the end, the job providers would feel the brunt of the new taxes unless the legislature follows the Governor’s lead,” Brunell said.
Most states are faced with a similar revenue shortfall. State and local government spending grew during the boom period of the late 1990s. Citizens, on one hand, restricted state and local revenues by initiatives. On the other hand, they mandated additional state tax dollars through initiatives requiring high allocations for education and home health care workers.
“We are in a very precarious situation, and we are going to work to make sure our state roars back when the economy turns,” he said. “We believe the private sector must lead the state back to recovery.”
Brunell said AWB would continue to work with the Governor and lawmakers to pass a budget which stimulates the economy and protects essential services. “We need to all recognize that we are going to lose something, but in the end, we’ll lose a whole lot more if we don’t face reality. The Governor’s budget attempts to do that.”
“There is a lot of work ahead, but the Governor should be commended for his courage in starting the budget process on the right foot,” Brunell concluded.
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