WASHINGTON'S LEADING BUSINESS MAGAZINE

Bake Sale, Anyone?

It’s the problem that won’t go away: how to fill the state’s ‘two-billionish’ revenue gap.
Erik Smith |   February 2013   |  FROM THE PRINT EDITION

When Jay Inslee was running for governor last fall, he found himself backed into a corner. You don’t get elected by promising to raise taxes, so he made a remarkable promise: “I would veto anything that heads the wrong direction, and the wrong direction is new taxes in the state of Washington,” he said.

Now that Inslee has won, Republicans are taking bets on how long it will take for the new governor to change his tune. Governor Inslee seems to be the only one who thinks the Legislature will be able to avoid a tax increase this year—or at least a rollicking debate about one. Around the statehouse, the main difference between the political camps is that Democratic leaders say a tax increase is inevitable and Republicans say a tax increase proposal is inevitable. Senate Republican Leader Mark Schoesler claims he’s running a pool at his farm in Ritzville and the slots are filling fast. He says, “I think having a calendar of dates for promise breaking is going to be lots of fun.”

Just goes to show some people are so cynical. Governor Inslee doesn’t have to break his promise. Lawmakers can raise taxes without him—though, of course, you might be considered doubly cynical for wondering if that could have been the plan from the beginning. Exactly how things are going to play out this year is anyone’s guess. As always, it comes down to the final few plays of the session. But the way things are shaping up, it’s hard to see how lawmakers are going to avoid at least talking about taxes. At the starting gate, the more useful question might be which ones?

But first things first. Before the debate begins, lawmakers have to decide how big the budget shortfall really is. Which points up the big difference between this year’s problem and those of recent years. This time around, lawmakers at least get to choose how big a problem to make for themselves. Lawmakers have been forced to cut billions in real and projected spending since 2009, due to the recession and unsustainable spending plans from the boom years. But after four years of belt-tightening, they have just about brought things into line.

Now, the economy is lurching back into motion again. When lawmakers write their next budget, for 2013-15, they will have about $2 billion more to spend than last time, the first good news in ages. Currently,