Geekwire reports that in a hearing this week on the proposed wealth tax, Gravity Payments CEO Dan Price said, of the wealth tax, “We have a $3.3 billion budget deficit that needs to be closed. There’s an easy way to close it.”

Washington does not have a $3.3 billion budget deficit. The Economic and Revenue Forecast Council estimated in November that state revenues from funds subject to the outlook will be $3.3 billion below the projections made in February 2020 (over three years). However, collections have come in over forecast since then. Additionally, with actions taken by the governor last year, lower caseloads, and increased federal funding, the current budget is now in balance. (Over four years, the current budget has an estimated shortfall of about $289 million, but that could easily be covered by reserves.)

Meanwhile, in an interview with Washington State Wire, Rep. Ormsby (chair of the House Appropriations Committee) talked about the early action COVID relief bills and the rainy day fund.

HB 1367 and HB 1368 were passed by the House on Monday and are scheduled for executive session in the Senate Ways and Means Committee tomorrow. I wrote about the two early action bills here. They would mostly allocate federal relief funding, but HB 1367 (passed unanimously by the House) would appropriate $164.3 million from the budget stabilization account (BSA, or the rainy day fund). (This state funding would replace previously-allocated federal funding that would then be re-purposed in HB 1368.) This is in contrast to Rep. Stokesbary’s proposal, which would appropriate $1.735 billion from the BSA.

In response to a question from Washington State Wire about using the BSA, Rep. Ormsby said,

Those are our nuts and berries for winter. Those are the things that are going to get us through in the event of lean times coming forward on the revenue side if they are still playing games in Washington D.C. trying to hold off the forthcoming relief package.

The uncertainty we’ve been through over the last 10 months may very well continue. I do not relish the prospect of not having a cushion for the state to be able to continue the programs and services we are currently operating without anything to fall back on.

While there may be an economic benefit to putting a lot of money into the economy in the short term, it does nothing to enhance our prospects during the uncertainty of the future.

It’s certainly true that the economy could worsen. However, if the current economic situation doesn’t require the use of the BSA, then it also doesn’t require higher taxes.

If HB 1367 is enacted, the BSA balance in 2019–21 would be about $1.8 billion.