Unofficial numbers show $7 billion hit to Washington state revenue through 2023 from coronavirus downturn
OLYMPIA — Preliminary numbers show Washington could lose $7 billion in state revenue through 2023 as the coronavirus pandemic takes its toll — making a special legislative session likely to adjust the state’s budget.
Prepared by the Washington Economic and Revenue Forecast Council, the numbers are based on assumptions and come with “substantial uncertainty” given state tax data isn’t yet available for March and April.
But the unofficial forecast suggests Washington lawmakers will be likely forced to make difficult decisions about how to shore up the current, two-year state operating budget.
That could mean painful cuts to parks, prisons, schools, and mental-health and other social-service programs.
The current 2019-21 spending plan — taking into account spending added this spring by lawmakers and cuts since then by Gov. Jay Inslee as revenue started to plunge — totals about $52.9 billion.
In the unofficial forecast numbers, the state would lose $3.8 billion in revenue this current budget cycle. An additional $3.27 billion would be sheared off the 2021-23 budget cycle.
Since Washington has a four-year balanced budget requirement, lawmakers are tasked with looking at not just the current spending blueprint, but also the 2021-23 budget. Legislators will officially draft that spending plan when they convene for their scheduled legislative session in January.
David Schumacher, director of the state Office of Financial Management, said it was still too early to know the exact economic damage from the coronavirus, but the unofficial forecast “gives us a good first look.”
“I think we all thought that the problem was going to be somewhere in this range,” he said.
While the state has enough reserves to cover some of the shortfall, Schumacher said, lawmakers will have to trim the budget before they return in January.
Budget forecasters will make their official projections in June, after which lawmakers could convene to “use some reserves and make some budget changes,” he said.
“And then that set us up for January, where we have even more information.”
Aside from the precise numbers of tax revenue lost, Schumacher said it remains to be seen how much — if any — assistance cash-strapped states will get from the federal government.
Responding to the economic disruptions of the COVID-19 outbreak, Inslee early last month vetoed $445 million in new spending through 2023. The cuts — in the form of budget vetoes — slashed some spending from the current budget and some from the planned 2021-23 budget.
With one in five state residents having filed for unemployment benefits, Republicans have increasingly criticized Inslee’s extension of the stay-at-home order and its effect on the economy.
In a statement last week responding to that extension, GOP Senate Minority Leader Mark Schoesler of Ritzville said, “The enormous damage being done by the stay-home order to the state budget cannot be overlooked.
“There will be a direct correlation between the length and extent of the governor’s shutdown and the size of the cuts he will likely have to propose later this year to a budget that goes mostly to educate our children and support social services, including programs for people with developmental disabilities, seniors, foster families and people experiencing homelessness,” Schoesler said in prepared remarks.
Meanwhile, Inslee on Tuesday announced he was forming three advisory groups to guide the state’s recovery from the coronavirus.
“They’re going to help inform our decision-making, and they’ll provide a vehicle for input with our administration,” said the governor.
Those groups would focus on public health and the health care system; safe work and economic recovery; and the social supports, such as shelter and food security. Each of the three groups would be led by a member of Inslee’s cabinet and would include members of labor groups, businesses and advocacy organizations.
Over the past few weeks, Inslee had taken actions to slowly reopen the state’s economy, including reopening state parks, allowing for some construction to restart and allowing fishing and hunting to resume.
As of Tuesday, the state has had 15,594 confirmed cases of coronavirus, with 862 deaths, according to the state health department. Of those who have died, more than 90% were 60 years or older.
During Tuesday’s news conference, Michael Byun of the Asian Counseling and Referral Service cited the virus’s disproportionate impact on people of color, saying “our background determines the severity of the pandemic’s impact.”
Named to the social-supports group, Byun said part of its focus would be on equity and inclusion, with the goal “that we do not leave anyone behind.”