Friday, March 18, 2011

Online shopping is shortchanging our budget

In yesterday's recap of the revenue forecast meeting, we mentioned that leakage in sales tax revenue from people buying online will cost the state $740 million in 2011-13.

Some online retailers, such as Washington's own Amazon, are great at collecting sales tax from Washington shoppers. Many others, unfortunately, are not. It's an issue Rep. Ross Hunter, chair of the Ways & Means Committee, has been working on nationally.

The PI has a great story today digging a little deeper into the challenge of collecting sales tax from online shoppers.

Thursday, March 17, 2011

Hundreds rally to protect basic services

Just as legislators began listening to the latest revenue forecast in the Senate's Cherberg Building, several hundred people of the Our Economic Future Coalition rallied on the capitol steps to protect basic state services. Instead of slashing education programs and critical safety-net services, participants urged the governor and legislators to end certain tax exemptions to free up revenue in the face of the budget shortfall. Check out some photos from the rally:

Revenue forecast news widens budget gap another $700 million

The Economic and Revenue Forecast Council met today and adopted revised General Fund-State revenue forecasts for the current (2009-11) and next (2011-13) biennia.

Legislators and Olympia insiders have been anxiously awaiting the numbers to understand exactly how large the budget problem for 2011-13 will be. Up until today the problem has been defined as $4.6 billion. Today, based on the latest forecast, that number grew to about $5.4 billion.

Our chief economist, Dr. Arun Raha, newest prediction is another $698.4 million less than predicted in November. The amount of state revenue anticipated for the 2011-13 biennium is $31.9 billion.

At the council meeting, our state's chief economist, Dr. Arun Raha, made the following statements:
  • There is still a high degree of uncertainty associated with this forecast due to the tragedy in Japan and the political unrest in the Middle East. Raha was unable to pinpoint what the cost to our state will be but mentioned agriculture exports will be affected immediately.
  • Gas prices are rising. The forecast assumes higher prices - if oil is $20 per barrel above the assumptions in the forecast, next biennium’s forecast would go down by another $196 million.
  • Construction employment is still a drag on the state’s economy – construction contributes greatly to overall revenues.
  • Online sales have been growing causing even more leakage in the state’s revenues. The Department of Revenue estimates we will lose $740 million in revenue in 2011-13.
  • This forecast assumes the Boeing tanker deal. However, the bulk of the impact won’t be seen until after next biennium.
For the current biennium, the forecast is down $79.8 million. The amount of general fund state revenues for the 2009-11 biennium is $28.047 billion.

So, together, the total revenue loss is $778.2 million. Fortunately, last week's caseload forecast predicted about $300 million fewer in future caseload costs (fewer children in school, fewer inmates, etc). That brings the total budget problem closer to $5.1 billion, the number cited by the head of the Governor's budget office, Marty Brown, at today's forecast meeting

You can view the materials from today's forecast meeting here.

Today in the House: Revenue, health care reform and more

Happy St. Patrick’s Day!

All the action today is in committee and at the Revenue Forecast Council meeting later this morning. We will report on the latter after it happens, but for this morning we have this:

8:00 am Early Learning & Human Services
Public Hearing:
1. SSB 5097 – Concerning juveniles with developmental disabilities who are in correctional detention centers, juvenile correction institutions or facilities, and jails.
2. SSB 5428 – Requiring notification to schools regarding the release of certain offenders.

10:00 am Health Care & Wellness
Public Hearing:
1. ESSB 5122 - Making the necessary changes for implementation of the affordable care act in Washington state.
2. ESSB 5371 - Addressing the needs for health insurance coverage for persons under age nineteen.
3. SSB 5445 - Establishing a health benefit exchange.
4. E2SSB 5596 - Requiring the department of social and health services to submit a demonstration waiver request to revise the federal medicaid program.

10:00 am Higher Education
Public Hearing:
SSB 5442 – Requiring the development of three-year baccalaureate programs.

10:00 am Judiciary
Public Hearing:
SSB 5439 – Regarding oil spills.

Tuesday, March 15, 2011

Newest job figures show slight decline in unemployment

The state's Employment Security Department released its latest jobs report today showing another slight decline in unemployment from 9.2 percent in January to 9.1 percent in February. This is a relatively significant improvement from last February when unemployment was 10 percent.

The most significant gains were in the construction industry, welcome news for a group of workers hit hard in the aftermath of the recession.

The unpredictability of predicting revenue

Thursday is a big day for our state's budgeteers. Our chief economist will present the latest revenue forecast to the Economic and Revenue Forecast Council. Given that legislators are already facing a $4.6 billion shortfall, worries that predicted revenues might fall as much as another $1.5 billion have members feeling very nervous.

Another thing making members nervous is how "off" our recent forecasts have been - "off" to the tune of more than $1 billion in the past year.

Arun Raha, our economist, has struggled to make accurate predictions at a time when our nation's economic recovery is agonizingly slow and all the typical indicators and tools used for forecasting simply aren't panning out. During the most recent forecast meeting in November, council members had a lively discussion about whether Raha's numbers were "overly pessimistic" or "wildly optimistic."

Ways & Means Chair Ross Hunter talks here about the unpredictability of predicting future revenues. He points out Washington is actually doing a better job than most states. While our forecasts have been about 2.8 percent higher than actuals, 70 percent of states have been 5 percent higher.

In the House today

There is no action on the floor today, but plenty of Senate bills up in House committees:

10:00 am Agriculture & Natural Resources
Public Hearing:
1. SSB 5688 – Concerning shark finning activities.SSB 5356 – Allowing the use of dogs to hunt cougars.
2. SSB 5264 – Requiring a study of Mazama pocket gophers.

10:00 am Public Safety & Emergency Preparedness
Public Hearing:
1. SSB 5545 – Addressing police investigations of commercial sexual exploitation of children and human trafficking.
2. SSB 5691 - Streamlining the crime victims' compensation program.

1:30 pm Business & Financial Services
Public Hearing: ESB 5730 – Concerning usage-based automobile insurance.

1:30 pm Environment
Public Hearing:
E2SSB 5769 – Regarding coal-fired electric generation facilities.

1:30 pm HHR C Labor & Workforce Development
Executive Session:
1. ESSB 5068 - Addressing the abatement of violations of the Washington industrial safety and health act during an appeal.
2. SSB 5538 - Concerning members of certain nonprofit conservation corps programs.
3. ESSB 5594 - Regulating the handling of hazardous drugs.
4. SB 5674 - Creating the aerospace training student loan program.

Monday, March 14, 2011

Energy-focused town hall with Rep. McCoy coming up this Saturday

So what does this new Green Century have in store for us in the world of power? No, not economic or political power. We’re talking energy power – the kind of power you need to run stuff, to produce widgets, and to make things happen. The power that keeps people working, keeps society humming, and keeps the wheels of commerce rotating.

Want to get the scoop on the latest goings-on in the powerful world of energy? Set aside an hour or two Saturday afternoon, March 19, for state Rep. John McCoy’s “Green Workers Keep the Evergreen State Working” Town Hall in Monroe.

McCoy’s Town Hall will power up at 1 and run till around 4 at the Qualco Bio-Gas Energy Facility, which is located at 18117 SE 203rd Street. Folks on hand for the afternoon’s events will no doubt enjoy hearing from representatives of – not to mention viewing informational booths provided by – Snohomish County Public Utility District No. 1, as well as Silicon Energy, Sunergy Systems, The Light Doctor, Puget Sound Energy (tentative), and, of course, Qualco Energy.

McCoy, who chairs the House Technology, Energy & Communications Committee, has also invited other legislators from around the region to join the Qualco tour and other educational activities. McCoy will talk about the 21st century economy and he’ll review what’s up in the Legislature as far as fuel for economic development is concerned.