Rosy revenue forecast is at root of state spending woes

It's time lawmakers initially approve more realistic projections of tax collections to eliminate budgets that overspend.


When Walla Walla's Jeannette Hayner was majority leader of the state Senate in the early 1980s she was fond of saying -- and saying it frequently -- the state didn't have a revenue problem, it had a spending problem.

Now as state Attorney General Rob McKenna, a Republican, ratchets up his campaign for governor he's going old school and asserting the state's "problem isn't the revenue -- it's the spending."

And to prove his point McKenna points to the official state revenue forecast for the next two years, which was given the nod of approval by the bipartisan Economic Forecast Council, that projects the state will take in 7 percent more this year and 7 percent more next year.

"I don't know too many families that are expecting their incomes to go up by over 7 percent, or too many companies expecting revenues to grow by that amount," McKenna said.

McKenna's jab is good politics because it stings those now in power, the Democrats who control the House and Senate, and Gov. Chris Gregore, who is not running for re-election.

But while the revenue forecast did call for a 14 percent increase over the next two years, the state won't actually spend that much unless revenue really does increase by 7 percent a year.

The revenue forecast is revised every few months. If revenue fails to meet the projects then the Legislature must adjust spending accordingly.

And that's what is going to occur a few days after Thanksgiving when lawmakers meet in Olympia to trim about $2 billion in spending. The revenue forecast this fall was down about $1.4 billion from the original projections and Gregoire wants another $600,000 trimmed to replenish the state's reserve account.

It's clear to us that the projection was a fantasy from the day it was made by state economist Arun Raha, and accepted by the Economic Forecast Council, a bipartisan group of legislators and executive branch appointees.

Now, to be fair, Raha offers a variety of scenarios from really gloomy to really sunny. It's the Council members who opt for the middle, thus having more money to spend. It seems these folks are deluding themselves and us.

We would agree that, to a point, the state does have a spending problem because it continues to overestimate how much money will be available to spend. This results in more money being spent in the first few months of the budget cycle than is prudent. When the decision is made to reduce spending the cuts must be deeper because of the hole created by the overspending.

The spending problem can be curbed by being far less optimistic in projecting how much money the state will collect in taxes over the next two years.

The state revenue forecast should reflect the harsh reality of the nation's sluggish economy.


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