State still needs to raise new revenue

Washington legislative budget writers received $274 million worth of good news in last week’s revenue forecast. The expected money would land on top of a projected $2.9 billion increase — measured from one biennium to the next — that the state has been counting on for the 2015-17 budget cycle.

Some lawmakers have taken this expectation of about $3 billion more in revenue as a sign the state is swimming in cash. That rosy glow is why Senate Ways and Means Chairman Andy Hill, the Redmond Republican, has claimed since January that the state should have enough money — about $37 billion — to cover the cost of carrying forward existing programs in the next biennium, without a shortfall.

In a bit of myth-making, Hill even called the shortfall described by Gov. Jay Inslee’s budget office a myth.

But as has been documented by news reporters, this $3 billion is not the whole story. Even before the new forecast, the state was actually looking at a sizable shortfall.

Deferred decisions from past years are part of the reason. For instance, the price tag to answer the state Supreme Court ruling in the McCleary school funding case is at least $750 million for materials and operating costs, and millions of additional dollars are needed for K-12 staffers’ pay increases required under years-old Initiative 732. Even before the forecast, Hill acknowledged the state might need potentially $500 million more than the bare minimum for public education and teacher pay.

Then there are unavoidable state costs — for interest payments on state debt, for increases in employee pension costs, for rising health care expenses for the elderly and infirm, and so on. Not last or least, there are legitimate compensation costs for state employees and home care workers.

Hill left out the labor costs in his own myth about revenue adequacy. But if the roughly two dozen labor contracts for state paid workers are funded, as we think they should be, the price tag is significant — $440 million-plus to give employees in general-government agencies and universities across-the-board wage increases and to hold the line on their negotiated health care costs. Add in the cost for teacher raises and pay increases for home care workers, and other compensation adjustments — the impact on the state general fund is more than $800 million during the next two years.

The projected shortfall gets even more daunting if one considers the $2 billion investment required for K-12 class size improvements under Initiative 1351, which voters approved last fall.

Of course, lawmakers could suspend I-1351, send it back to voters for a second opinion, or send it to the ballot with a tax increase to pay for it. Even then, the books don’t balance without cuts that Hill’s fervently anti-tax colleagues in the Senate have yet to specify.

Of course, lawmakers might not be serious about fulfilling their responsibility to fully fund K-12 schools — despite the state Supreme Court finding them in contempt last fall. And lawmakers may not be serious about boosting the morale of state employees or teachers with the first general wage adjustments since July 2008.

Taking revenue needs seriously will show this Legislature is serious about paying the costs of running a government.