OPINION: Ferguson, new Legislature must contain runaway budget

This editorial was published in The Seattle Times.

Washington’s economy is growing, the state’s unemployment rate remains below 5% and tax collections for public services are up. Yet come January, lawmakers claim they’re facing a $12 billion shortfall over the next four years.

What gives? This bleak budget is not the result of a recession or any external economic factors — it’s a self-inflicted wound by Gov. Jay Inslee and ruling Democrats in Olympia who managed to outspend even dramatic rises in tax revenues over the past decade.

The 2025 Legislative session must be a return to budget sustainability, emphasizing a reining in of spending before any increases to taxes are considered.

The unglamorous job of cleaning up this fiscal mess falls to Inslee’s successor and fellow Democrat, Bob Ferguson, who will unveil proposed budgets for how best to close the gap — through potentially painful cuts, unpopular tax increases or some combination of both.

Ferguson, in a recent interview with Times reporter Jim Brunner, has wisely signaled that a scouring of the budget is his first priority. Yet some Democratic leaders in both the state House and Senate have telegraphed tax increases are already on the table. Sen. Jamie Pedersen, the Senate’s new majority leader, suggested recently that the failure of three anti-tax initiatives at the ballot in November is a permission slip to pursue more revenue.

“If revenue is paired with important purposes, then I think we have a signal from the voters that they’re willing to accept that,” said the Seattle lawmaker, speaking at The Washington Observer’s Re-Wire Conference earlier this month. He added options include “taxes on wealthy individuals and wealthy companies.”

Voters by strong margins did maintain the carbon auctions created by the Climate Commitment Act, a payroll tax for long-term care and a capital gains tax to fund education. But that doesn’t necessarily mean they have an appetite for more increases.

Since the start of Inslee’s three terms as governor, he and the Legislature have been the beneficiaries of increasing revenues for each two-year budget cycle, according to the Washington Research Council. They still managed to outpace those revenues with expenditures. Democratic budget-writers ignored the realistic predictions of state forecasters that revenues in 2024 would go up only by 1%-2%, and possibly even decrease. Instead, those lawmakers opted to assume the largest revenue increase they could by law — 4.5%. And they enacted policies and new programs that spent it all.

For example: In 2011, state spending per person in the state, from the main government funds, was nearly $6,000 per year; today it is more than $9,000, a 50% increase. Those numbers aren’t adjusted for inflation. But that measurement is nowhere near a 50% increase.

Inslee ordered a freeze on hiring of nonessential personnel earlier this month. But lawmakers shouldn’t have been surprised by the shortfall; estimates by the Washington state Economic and Revenue Forecast Council have predicted for several years that revenues would slow in 2024.

Washington’s state government, like many others around the country, received pandemic-era aid. But those funds have now dried up, along with an increasing chunk of the state’s rainy-day fund.

In sum, the can cannot be kicked further down the road. Time for Ferguson and the Legislature to get to work.

TNS