Increase in Budget Means New Taxes for Business (Don’t pass the buck!)

By Cara Coon, Public Affairs Director


The 2019 legislative session is past the half-way mark and we’ve learned a few things.

The good news?               Our legislature has almost $4 billion in new anticipated revenues for the next biennium.

The bad news?                 The business community is being told that is not enough to cover the new spending.

The 2019 legislative session is proving to be challenging for businesses of all sizes. The Governor’s proposed budget, released in December 2018, calls for a nearly 20 percent increase in spending, going from $44 billion to $52 billion, an $8 billion increase. For this reason, GSI partnered with AWB to run a full-page ad in the Spokesman Review. The increase in budget comes mainly in the form of new taxes on business, and close to nothing in the new budget supports economic development.

The Governor-negotiated labor contracts establish new K-12 spending mandates for the McCleary funding solution and for expanding benefits to all state workers. New tax revenue will be spread out among other important investments in behavioral health, clean energy, orca habitats and broadband access to name just a few. While the Governor’s budget is mostly viewed as an “everything and the kitchen sink budget,” we expect to see State House and Senate versions within the week, shortly after the next statewide economic forecast numbers come out on March 20. We anticipate slightly less than the Governor’s budget proposal, but continued levels of unprecedented spending.

This budget crunch is set against a backdrop of a slowing economy as most economists are predicting an economic slowdown toward the end of 2019 and into 2020. The U.S. economy is currently in a record period of growth, but there are signs of slowing. We should all be concerned about an elevated go-forward budget in the face of slowing key economic indicators. With low housing starts and availability, strong job growth and low unemployment, this recession will look different than that last one. Can our statewide economy, with slowdown headwinds, support an 18 percent higher budget going forward? Seems like a bet that doesn’t have a winner.

Already, businesses in our state pay a disproportionate share of the overall tax burden compared to other states. We urge our state lawmakers to make tough choices. We also urge them to invest in areas that make our state competitive and our economy diverse, so we are better equipped to buffer us against a downturn.

GSI believes that investments to grow private-sector jobs is how our state succeeds, broadening the tax base and increasing overall economic development in our region and across the state. And on behalf of our investors, we aim to pursue that goal on behalf of you and our broader community.

Call the Washington Capitol Legislative Hotline at 1-800-562-6000 to tell your state lawmakers how you feel about a nearly 20 percent increase in the state budget on the backs of business.



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