February 19, 2020

Rising State Revenue Gives Lawmakers More Money to Work With

By: Andrew Lenderman   Comments: 0
State tax collections are expected to be more than 13% above the last state budget, the Washington State Economic and Revenue Forecast Council announced Wednesday. (Photo: Brian Temple/AWB)

State government continues to collect more tax revenue than expected, thanks to a strong economy.

Washington’s projected tax collections will increase by $606 million for the current budget cycle and $536 million for the next, officials announced today. That means revenues for the current 2019-21 state budget will come in at more than $52.3 billion. It's an increase of 13.6% compared to the revenue for the 2017-19 state budget.

The major tax sources "still saw very good growth in the fourth quarter," said Steve Lerch, executive director of the Washington State Economic and Revenue Forecast Council. The growth was slightly slower compared to last year, he noted, but overall the state is "still seeing good strong collections from the Revenue Act."

That growth is expected to continue for the next two budgets, a council report shows.

Revenue collections for the 2021-23 budget are projected at $55.7 billion, and revenues for the 2023-25 budget are projected to be $59.2 billion. This represents growth of 6.4 and 6.3% over the prior two year budget cycle, respectively.

State revenues continue to rise over time. 
(Courtesy Washington State Economic and Revenue Forecast Council.)
The strong revenue report gives state budget writers more money to work with, and bolsters the argument they can manage the budget without raising new taxes.

Lawmakers are expected to release their plans to adjust the current state budget next week.

"We have a very robust budget," said state Sen. John Braun, R-Centralia, noting the Legislature has about $1.5 billion more in revenue compared to when lawmakers adjourned in April 2019.

Lawmakers welcomed the positive report, noting it will help them address some of the challenges facing the state and — possibly — cut taxes.

Rep. Timm Ormsby, chair of the House Appropriations Committee, mentioned homelessness, housing, early learning and behavioral health as challenges.

"All of the areas that we've been making improvements in, we're going to be able to maintain them certainly with this, and then strategic investments to improve our position," said Ormsby, D-Spokane.

Braun highlighted Wednesday's news as a historic opportunity.

"This gives us a specific opportunity to affect key problems in our state," Braun said.

He highlighted transportation, homelessness and childcare as issues where the Legislature could make an impact.

Rep. Ed Orcutt, R-Kalama, saw the revenue boost through a different lens: Tax relief.

Orcutt highlighted the state's property tax formula, which was changed in 2017 and 2018 when lawmakers overhauled the public school budget as a result of the McLeary lawsuit.

"Because some of this additional revenue is being generated by property taxes, we should be looking at some property tax relief," Orcutt said.

For more information on tax and fiscal policy issues, please contact AWB's Tommy Gantz at TommyJG@awb.org.