Sounds like the last analysis, the $5.1Bn number did not include, "caseload analysis." Or, analyzing increased case-loads to state agencies due to really bad economy. It sounds like when that is factored in, the projected deficit is closer to $5.8Bn.
Why is Washington State racking up the deficits? It's simple, we're more vulnerable to economic downturns than other states. That's because Washington has no Income tax, so most of the income for the State government comes from Sales Taxes. Sales Taxes are different from Value Added Taxes in that the taxed entity is the terminal consumer rather than the whole supply chain as a whole, so it is your average citizen that bears the full responsibility for the 8.3% tax on that new car. Consumer spending is projected to drop way off, and that in turn creates a major budget shortfall for the State government.
The Washington State sales tax is 6.5%, but Counties and Cities can add to that. Here in Bellingham, the sales tax rate is 7.8%, and down in downtown Seattle the rate is 9.0%. Counties and Cities also earn income through Property Taxes, which are less vulnerable to declining economic times (i.e. dropping house prices) due to how the taxes are calculated.
Here's hoping that the projections have been overly pessimistic.
Why is Washington State racking up the deficits? It's simple, we're more vulnerable to economic downturns than other states. That's because Washington has no Income tax, so most of the income for the State government comes from Sales Taxes. Sales Taxes are different from Value Added Taxes in that the taxed entity is the terminal consumer rather than the whole supply chain as a whole, so it is your average citizen that bears the full responsibility for the 8.3% tax on that new car. Consumer spending is projected to drop way off, and that in turn creates a major budget shortfall for the State government.
The Washington State sales tax is 6.5%, but Counties and Cities can add to that. Here in Bellingham, the sales tax rate is 7.8%, and down in downtown Seattle the rate is 9.0%. Counties and Cities also earn income through Property Taxes, which are less vulnerable to declining economic times (i.e. dropping house prices) due to how the taxes are calculated.
Here's hoping that the projections have been overly pessimistic.