As storm clouds gather, sock away the surplus
Published 4:26 pm Thursday, February 14, 2008
We’ve avoided the worst of it so far, but the economic chill blowing across the country is finally being felt in Washington.
Today’s state revenue forecast is widely expected to carry bad, if not horrendous, news. A significant reduction in anticipated revenue — something in the neighborhood of $250 million is expected — will underscore the need for fiscal restraint in Olympia this year.
Times have been good recently, so good that Gov. Chris Gregoire was able to propose a supplemental budget that left $1.2 billion unspent. The constitutionally protected rainy day fund would get $430 million of that; the rest would be carried over into the next biennium. It’s fairly clear now that the surplus will be less. Large increases in spending last year are already forecast to leave the state in the red in coming years, at which point spending cuts, tax increases or a big economic rally (got those fingers crossed?) will be needed to balance the budget.
More spending and less revenue — something obviously has to give. Starting now, by keeping spending in check and socking away as much money as possible, will mean fewer painful decisions later.
It will also improve opportunities to invest money where it will pay the biggest dividends — particularly in higher education. The state’s well-documented need to produce more bachelor’s degrees in high-demand fields (that also offer some of the best-paying jobs) must be met in the coming years. Saving now will make that easier later.
Things could be worse. Employment remains high here. The downturn in the regional real-estate market has been offset to a large degree by strength in aerospace and other key sectors. But with the national economy continuing to teeter — Federal Reserve Chairman Ben Bernanke told to a Senate committee Thursday that it hasn’t hit bottom yet — state lawmakers need to prepare for lean times. They should aim to save at least $1 billion of the current surplus, even if today’s revenue news is as bad as feared.
Fiscal prudence today will lead to better opportunities tomorrow.
