POLICY HIGHLIGHTER

Volume 14, Number 32
December 17, 2004

Locke's tax increase budget: winners and losers

Out-going Governor Gary Locke is proposing a $598 million tax increase to fund his $26.2 billion 2005-07 budget request. Locke's budget represents a $2.9 billion spending increase over the current budget, including a requested $161 million 2005 supplemental budget. This is a 12.5 percent increase in spending. Forecasted revenue for the next budget is expected to increase by 1.5 billion (6.7 percent), while the implicit price deflator inflation index is expected to be up 3.7 percent. This means Locke hopes to increase state spending by more than three times the rate of inflation and $1.4 billion higher than forecasted revenue (prior to his nearly $600 million tax increase taking effect).

In January, the Evergreen Freedom Foundation will release recommended budget savings based on a review of core functions of government. In the meantime, it is interesting to see which agencies win and lose under Locke's tax-and-spend $2.9 billion spending increase budget request. Below is a select review of how certain agencies fare under Locke's proposal, which assumes passage of a 2005 supplemental budget.

Losers: real reductions in current expenditures
(general fund state)

Winners: increases over current expenditures
(general fund state)

The question for legislators at this time: Will an electorate that just rejected a billion dollar a year tax increase for education programs support a $600 million tax increase to fund the type of spending increases Locke proposes?

Prepared by: Jason Mercier | Budget Research Analyst | 360.956.3482

Evergreen Freedom Foundation P.O. Box 552, Olympia, WA 98507 Phone: (360) 956-3482, Fax: (360) 352-1874 Email: effwa@effwa.org