Wednesday, April 3, 2013

Good news: personal income jumps in state. Not-as-good news: Help for state budget diminishing

The total personal income for everybody in the state of Washington added together rose by 4.5% from 2011 to 2012, the fourth-highest percentage increase among the states, the federal government says.

So a lot of folks saw their income go up last year, which is certainly good news.

And you might think that would also be good news for the hard-pressed state budget, since a bit of those increased earnings might be spent on stuff that's covered by the state sales tax.

Turns out it's not such a budgetary boon. Why? Because over the last 20-odd years, state government has tapped an ever-declining share of that personal income to pay for education, the State Patrol, bridges and highways, foster care and all the other services the state provides.

Part of the reason for that is that the Legislature is very reluctant to raise taxes.

Another part of the reason is our revenue system – which, according to the Institute on Taxation and Economic Policy, is the most regressive of any state's ("most regressive" means that in Washington, the rich pay less and the poor pay more than anywhere else, in terms of their shares of the total tax burden).

All of that makes balancing the state budget a tough job. That's the main task before the state House and Senate right now, and we will see their ideas for how to do it announced soon.