Washington State raises taxes, but its deficit continues to grow

They can't say no one told them so. Earlier this year, facing a huge $2.8 billion budget deficit, Washington State enacted a budget package that made some spending cuts but also included $840 million in new taxes. NTU opposed the tax hike, arguing that "[a] job-killing tax increase on families and businesses makes even less economic sense in light of Washington's 9.5 percent unemployment rate." Instead, we urged that Washington State's policymakers restrain spending, just as hard-working families have done to ride out the worst of the recession. Unfortunately, the politicians in Salem did not heed our message. Governor Gregoire and others said that higher taxes on things like cigarettes, candy, liquor, and even bottled water, were necessary to balance the budget and to avoid devastating cuts to public services.

But now it looks like the politicians will face an even larger budget deficit when they return to Olympia. A new report from the Washington State Office of Financial Management shows that next year's budget deficit will be at least $3 billion. Further, the report notes that "[a]lthough stronger-than-predicted revenue growth would help remedy (the deficit situation), revenues would need to grow by more than 9 percent per year to make up most of the projected gap, a rate which is unlikely to be achieved." One has to wonder what the politicians in Olympia will do to fill the budget gap when they return to the State House. If they are willing to tax bottled water, there is little else they won't tax. Bill Gates Sr. wants to tax income. Maybe they will also tax chewing gum, Starbucks coffee, and air. Perhaps the budget deficit and the prospect of more, insane tax increases are the reasons why the governor is actively lobbying Congress to quickly approve a $24 billion bailout for the states.

Washington State does not have a revenue problem, it has a spending problem. Spending in Washington State has far outpaced inflation and population growth over the last decade. If the politicians in Olympia are serious about closing the budget gap - for more than a year - they need to restrain public spending. By reducing spending to a more manageable level, they could eliminate the deficit without resorting to tax-increases that nickle-and-dime every hard-working Washingtonian. Let's hope that Washington State shows some fiscal restraint next time.