An update on the state of Washington’s economy

This past Tuesday, House Democrats presented their plan to fix the state’s budget shortfall. They have proposed relying on $400 million in delayed payments and reduced support for local governments, while mainly protecting basic education from further cuts.

The House Democrat’s plan saves over $890 million without asking voters for a sales tax increase, which was initially suggested by Gov. Chris Gregoire. On top of this, the Democrats propose to leave $504 million in reserves. The proposal does, however, open the door to higher local taxes.

The largest savings come from delaying the $405 million in payments to schools until the next budget cycle. That budget cycle begins in July of next year. Their proposal also calls for $65 million in cuts to higher education, and $224 million in cuts to health care and human service programs.

Democrats suggest decreasing distributions to local governments by $82 million. This will include support for criminal justice programs, along with the elimination of a sales tax credit for rural counties. To make up for that, the state would essentially give local governments authority to make tax increases without a public vote.

Another $18.1 million will come from the elimination of another tax break. This tax break allows out-of-state banks the ability to claim the break on interest earned on first mortgages. The plan also accounts for nearly $54 million in fund transfers, including more than $37 million in unspent agency money being returned to the state’s general fund.

The Democrats are looking to save an additional $130 million in other areas, including reductions to the Department of Corrections’ chemical dependency treatment and community supervision programs.

In a statement on Tuesday, Gov. Gregoire called the budget proposal “a good start”, stating “I’m pleased this budget leaves a sizable ending fund balance as we must continue to plan for unforeseen circumstances.”

Senate Democrats are expected to unveil their budget proposal next week. The 60-day legislative session ends March 8.

Many experts believe that we may be headed for another recession. Don’t enter a second recession with mountains of debt. I can help you to understand the options available to you for dealing with your debts. I am sure that I can be of assistance to you, to a family member, or to a friend as we all know people experiencing trouble these days even if we are not experiencing our own financial troubles. Please do not hesitate to make contact with me. I emphasize courteous and discrete consultations that fill your time with useful information. The impact to your life after an in-person consultation with me may be substantial, and life-long. You will enjoy a new peace of mind and a fresh hope for the future with a new roadmap for financial success that we develop together. You can contact my scheduler through our website for your free 30 minute consultation. If you wish, you may schedule your free 30 minute consultation by phone by calling us at 253-383-1001 Monday through Thursday from 9:00 AM until 5:45 PM, and on Friday from 9:00 AM until 12 noon.

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