Washington Roundtable review of state fiscal practices emphasizes need to maintain reserve;
raises concern that state bow wave is highest in a decade

SEATTLE – FEBRUARY 14, 2008 – Practice fiscal restraint. That is the conclusion of an annual review of state spending practices released today by the Washington Roundtable.  The business organization is calling on state lawmakers to make every effort to maintain high reserves and reduce carry-forward costs in the 2008 supplemental budget.  (The carry-forward, or bow wave, is defined as the increased cost of maintaining current services in the next two-year budgeting period.)

“It is clear that Washington state cannot avoid the economic pain of a national recession,” said Steve Mullin, Washington Roundtable president.  “Washington enjoys a surplus this year, but in all likelihood a significant reduction in state revenues is coming.”

“The combination of declining revenue growth and high bow wave is a clear sign that fiscal restraint is needed.  We urge lawmakers to save as much of the surplus as possible and take calculated steps to reduce the carry-forward. That is our best opportunity to bring stability and sustainability back to the state budget,” Mullin said.

The Roundtable’s 2008 Fiscal Management Performance Review analyzes state performance against specific benchmarks.  Key findings include:

• At 14.7 percent, the carry-forward leading into the next biennium is the highest it has been in the last decade. 

• The state currently projects a healthy ending fund balance for the 2007-09 biennium.  However, that would be adversely impacted by any reduction in anticipated revenue growth, which is likely.

• The state and local tax burden is tracking with the national average; however, the business tax burden remains high.  As compared to the 50 states, Washington has the 10^th highest business tax share with employers shouldering 53 percent of the state and local tax burden.  This creates an obvious competitive disadvantage for employers operating in Washington.

The 2008 Fiscal Management Performance Review is available online.  The Roundtable provides this assessment of state fiscal management regularly to review performance against a set of established benchmarks.

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