As I noted in the first part of this series, revenues during the Great Recession dropped by $10.259 billion. That figure includes the impacts of legislative changes to revenues. Economic changes to the November 2007 through November 2011 forecasts alone reduced general fund–state revenues by $12.640 billion.

The second part of this series outlined how the state responded. Tax increases in 2009 and 2010 made up 11.9 percent of the response and transfers to the near general fund–state (NGFS—the GFS plus the education legacy trust account) from other funds (not including the rainy day fund) made up 9.6 percent of the response.

In 2009, the Legislature passed two bills to improve tax compliance. SB 6173 was estimated to increase revenues by $102.6 million in 2009–11 and $160.9 million in 2011–13. ESSB 6169 was estimated to increase revenues by $8.8 million in 2009–11 and $9.1 million in 2011–13.

In 2010, Gov. Gregoire proposed increasing taxes by $759.1 million in 2009–11. The House and Senate each passed separate tax packages in March of that year. The House-passed version would have increased revenues by $681.0 million and the Senate-passed version would have increased revenues by $890.4 million. Gov. Gregoire called a special session that year in order for the Legislature to finalize the budget. As we noted at the time, the Legislature needed the full 30 days of the special session because the House and Senate could not agree on the tax package until the last minute.

Ultimately, the tax package adopted in 2010 (2ESSB 6143 and ESHB 2493) increased state revenues by $769.1 million in 2009–11 and $1.65 billion in 2011–13. Some of the major provisions included:

• Temporary business and occupation (B&O) tax surcharge on service businesses ($241.9 million in 2009–11, $491.1 million in 2011–13). (This surcharge increased the B&O rate from 1.5 percent to 1.8 percent and expired as scheduled on June 30, 2013. In 2020, the Legislature increased the rate to 1.75 percent to fund the workforce education investment account.)
• Direct seller B&O exemption ($155.0 million in 2009–11, $199.4 million in 2011–13).
• Minimum nexus standards ($84.7 million in 2009–11, $395.0 million in 2011–13).
• Temporary beer tax increase ($59.0 million in 2009–11, $106.8 million in 2011–13). (The tax increase expired June 30, 2013.)
• Temporary tax increase on carbonated beverages ($33.5 million in 2009–11, $82.4 million in 2011–13). (This was repealed by I-1107 in 2010.)
• Sales and use taxes applied to bottled water ($32.6 million in 2009–11, $69.2 million in 2011–13). (This was repealed by I-1107; in 2017, the Legislature again applied sales and use taxes to bottled water.)
• Sales and use taxes applied to candy ($30.5 million in 2009–11, $62.4 million in 2011–13). (This was repealed by I-1107.)
• Cigarette and other tobacco products tax increases ($101.5 million in 2009–11, $198.3 million in 2011–13).

(Before coming to agreement, the Senate’s version included a temporary sales tax increase that would have increased revenues by $313.3 million, and both versions included more modest increases to the service B&O tax rate.)

The Legislature regularly uses fund transfers to help balance the operating budget. From 2009 through 2013, transfers to the NGFS from other funds totaled $2.179 billion. These funds came from 60 other accounts, including $589.2 million from the public works assistance account, $249.6 million from the education savings account, $211.7 million from the education construction account, $177.8 million from the local toxics control account, and $147.0 million from the liquor revolving account.