The mountain of money keeps getting bigger.
In mid-February, state officials released the latest economic forecast, and it showed revenue up again, this time to the tune of $2.8 billion. That’s on top of multiple previous forecasts showing strong growth.
Between the surging state treasury and a $2.1 billion drop in the cost of continuing services, lawmakers now have roughly $14 billion surplus to work with as they enter the final days of the legislative session, not counting billions in one-time federal relief funds and state reserves.
All of this means there has never been a better time for budget writers to be champions for the economy and to provide needed tax relief and support for Washington employers and employees.
Washington isn’t unique among the states. The pandemic era has been surprisingly good for state tax revenues, and governors and legislators throughout the country — both Democrats and Republicans — are looking at ways they might cut taxes and give some of that revenue back to the taxpayers.
The website Stateline reported that in Illinois, Democratic Gov. J.B. Pritzker wanted to freeze the gas tax for a year, suspend grocery taxes for a year and give property owners a refund up to $300. Lawmakers in New York, Maryland, South Carolina, Mississippi, Connecticut, New Mexico and Iowa, to name a few others, were also debating various forms of tax cuts.
Here in Washington, lawmakers have introduced some tax relief bills this year, but it’s not clear which if any will be adopted by the time lawmakers adjourn March 10. The proposals include Senate Bill 5957, which would cut the business and occupation (B&O) tax for manufacturers roughly in half. Given unanimous passage last year of a bill calling on the state to double the manufacturing sector in Washington in 10 years, it would be an especially timely move.
“Now is the year to do it,” said the bill’s sponsor Sen. Mark Mullet, D-Issaquah.
Other tax relief proposals include Senate Bill 5932, which would reduce the state’s sales tax by a full 1%, and Senate Bill 5769, which would eliminate the B&O tax for manufacturing, repeal the capital gains tax and offer significant property tax relief.
Finding a way to give some of the state’s surplus back to employers would allow employers to reinvest in their businesses and create jobs. And for some small businesses, it could be a lifeline.
While it’s true that the last two years have been good times for the state treasury and for some businesses, that’s by no means a universal experience. Some employers — especially small businesses — have experienced severe hardship, moving from early-pandemic lockdowns and closures to limited reopening followed closely by labor shortages, supply chain disruptions, new variants and now rising inflation.
One of the few bright spots of the last two years is how well the state budget has fared during this time. This means that lawmakers have a unique opportunity to use a portion of the state’s surplus to help those who have been hardest hit and to make smart investments that will position the economy to really take off.
Going into this year’s legislative session, Washington was on a three-year taxing streak that saw lawmakers raise 22 different taxes that will generate $40 billion over 10 years.
Now, in the final days of the session, lawmakers have the opportunity to not only bring the streak to an end, but to reverse it. There’s still time — in fact, there’s never been a better time — to be champions for the economy.
Kris Johnson is president of the Association of Washington Business, the state’s chamber of commerce and manufacturers association.