Gov. Gregoire released her tax package Wednesday to deal with what is now a $2.8 billion gap between revenue and spending.  While the revenue forecast shows a slightly improving economy, job and revenue growth are still in the future.

Attached is her nine page letter to the four legislative caucus leaders.  Now that the legislature has overturned Initiative 960, which required a 2/3 vote of the legislature to raise taxes, it is essentially a done deal that taxes will go up.

These new revenues will restore cuts in the Governor’s budget that she submitted to the legislature back in December.  The restorations are across the board in K-12, higher education, health care and social/human services.

There are still a number of wild cards out there that remain to be played.  The legislature is under a great deal of pressure from all kinds of social services advocates, labor unions and others to increase revenue even more than the approximately $600 million the Governor’s proposal raises.  There are sure to be various tax “loopholes” that will be closed or limited.

However, the sales tax is the one tax that raises serious dollars.  Every 0.1 cent increase raises about $100 million so a 1 cent increase would yield about $1 billion.  While there is little public support for a sales tax increase, it may be the last resort, short of budget cuts that almost no one wants to contemplate.

Another “Damocles Sword” hanging over the legislature’s head is the recent decision from Judge John Erlich in King County in the McCleary case that ruled the state is not adequately funding basic education.  This will mean additional billions that will have to be spent on K-12 in the next few years.

What is rather disconcerting, though, is the lack of truly dealing with the structural problems of state spending, such as unfunded pension liabilities, state employee health care costs, overly generous Medicaid and other health related eligibility requirements, a dysfunctional worker’s compensation system and rising unemployment taxes.

This situation is faced by 47 other states and there are no easy solutions.  What do you think should be done to set the ship of state on the right course?  WTIA needs your comments and feedback to represent your interests adequately in Olympia.  WTIA’s legislative priorities are improving K-12 education, particularly around math and science, increasing STEM degrees from the state’s universities and improving the business climate for the technology industry to succeed.