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Rep. Susan Fagan

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Dear Friends and Neighbors,

Corner on the Economy

The National Association of Home Builders/Wells Fargo Housing Market index surged to 52 in June from 44 in May, easily topping forecasts for 45. This is the first time the index has been above 50 since April 2006, suggesting more homebuilders view conditions as favorable than those who see them as poor.

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State’s average jobless rate drops to 6.8 percent – the lowest since November 2008! According the report from the state Employment Security Department, here is a breakdown of growing industries:

  • Education: 2,500
  • Health services: 2,100
  • Leisure-hospitality: 1,500
  • Transportation and warehousing: 600
  • Retail: 300

As the second special session moves along – albeit slowly – I am pleased to report some progress to find compromise on the state operating budget. Not only have we received a positive revenue forecast that adds additional tax collections to the $2 billion increase we are expecting in the 2013-15 budget, but the bipartisan Senate Majority Coalition Caucus has reached even further to the middle by taking their reform bills off the table so the focus can be squarely on the budget.

My sincere hope is House Democrats and the governor will do the same and compromise by abandoning their tax-increase demands so we can adjourn by June 30, or sooner.

Below is a brief update on what is happening on the budget, where we are on tax-increase proposals and a little bit about what I have been doing while budget negotiators hammer out a deal we can vote on, hopefully, soon.

As always, please feel free to contact me with questions and ideas.

In service to you,

Susan Fagan

The state revenue forecast – some good news, some cautions

On June 18, the state Economic and Revenue Forecast Council released the quarterly report on state tax collections. There was some good news: The state is expecting an additional $231 million in tax collections on top of the additional $2 billion already being added. Below is a chart showing the uptick in tax collections since the March forecast and how it translates to the current and next two budget cycles:

Forecast March June Net change
2011-13 $30.5 B $30.6 B $110.3 M
2013-15 $32.5 B $32.7 B $120.9 M
2015-17 $35.3 B $35.4 B $50.9 M

Source:  Economic and Revenue Forecast Council

The increase in revenue, or tax collections, is due to home sales and other large-ticket items, such as automobiles. On the caseload side, a $90 million savings is being realized because there will be less reliance on state government programs. You can read the report presentation here. Along with the good news that our economy is starting to see a recovery was a caution from the council that we are not out of the woods yet. It was made clear that this slight recovery is extremely fragile and state and national economies must still be treated delicately.

Budget negotiations move toward compromise

We are approaching the final week of the special session – the deadline is June 30 – and movement toward a final budget continues. As I mentioned last week, I honestly never believed the governor’s threat of a government “shutdown” would happen. The forecast this week only affirms that with more money available, a deal on the budget can be struck quickly and without more delays.

The House Democrats’ and the Senate Coalition’s budgets are getting closer together. The Senate announced it would abandon several reform bills, such as education and workers’ compensation, if Democrats and the governor abandon their tax hike proposals. This should end the stalemate on budget negotiations. You can read a great article on the status of budget negotiations and the Senate compromise here.

I support the Senate’s no-new-taxes budget plan for many reasons, not the least of which is that it invests more in K-12 education and the McCleary enhancements required by the state Supreme Court ruling. I also believe now is not the time to increase taxes on struggling Washingtonians.

The good revenue forecast and the Senate’s willingness to move further toward a middle ground on reforms and spending are great steps forward. I believe if House Democrats and the governor come to the table in good faith, we can get a budget out in the next few days and head back home to work and meet with constituents. And, from the e-mails I’m receiving from all of you, you’re ready for the Legislature to go home, too.

State Representative Susan Fagan
9th Legislative District

E-mail: susan.fagan@leg.wa.gov
Web site: www.houserepublicans.wa.gov/fagan

406 John L. O'Brien Building - P.O. Box 40600 | Olympia, WA 98504-0600
(360) 786-7942 or Toll-free: (800) 562-6000

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