Speaking to the Gig Harbor Chamber of Commerce today, Association of Washington Business President Don C. Brunell said Washington lawmakers coming to Olympia next week need to carefully craft a solution to the $2.6 billion revenue shortfall in the 2009-2011 state operating budget so we don't end up in the situation in which California and Oregon find themselves.
"They need to carefully re-prioritize the way we spend our sparse tax dollars," Brunell told chamber members. "It won't be easy, but we must not get trapped in the old paradigm of simply cutting across the board or trimming around the edges and then raise taxes. To do so only opens up a bigger revenue hole when lawmakers return to Olympia in January 2011 to write the next two year state budget!"
Brunell said Gov. Gregoire and lawmakers must avoid the rancor and chaos currently happening in neighboring Oregon and California and in our nation's capital. "And, just as the private sector has had to find new ways to provide products and services, our state government must do the same. We cannot, for example, rule out contracting out state services. Simply, we do not have the revenues to do things as they are normally done. We must innovate!"
Oregonians are locked in heated and acrimonious battle over ballot initiatives challenging the $775 million in taxes which were increased by the 2009 legislature to balance the state budget. That election is January 26.
"Between opponents and proponents of Measures 66 and 67 in Oregon, the massive media campaigns are costing various groups somewhere north of $10 million and after election day, regardless of the outcome in the tight election, groups will be bitterly divided. That hurts everyone and their chances to recover from the prolonged recession."
In California, the state seems to be in a "free-fall." Voters have killed various tax increase proposals and there is a $21 billion gap in the annual $100 billion state budget. "My counterpart in California tells me the best they can do is reach agreement of $8 billion worth of spending cuts and various revenue proposals which leaves $13 billion in unanswered budget requirements."
In Oregon, business leaders are dealing with 12 to 13% unemployment rates and have seen 131,500 private sector jobs disappear since Nov. 2007. In California, between 2001-09, the state has lost 32% of its industrial base which translates into 600,000 manufacturing jobs alone.
"We don't want what is happening in California and Oregon to happen in Washington," Brunell added.
Finally, as lawmakers deal with the budget and taxes, they need to remember that employers have already seen their unemployment and workers compensation states increase starting January 1 and we are likely to see higher taxes resulting from health care reforms and special earmarks emanating from the nation's capitol. "That all impacts competitiveness and the ability of the private sector to provide jobs and pay taxes to support government."
"We need to empower the private sector to create jobs and generate tax revenues to have a lasting recovery. It is just that simple," he concluded.
Don C. Brunell, President, (DonB@awb.org)
