As Washington state slowly reopens, dark clouds hover over budget

An ominous new analysis warns the pandemic may deliver a multibillion-dollar blow to state coffers as Gov. Jay Inslee continued Tuesday to slowly crank up a rebooting of the economy, shoring up of the social service safety net and restoring a degree of normalcy to public life in the coming weeks.

The report prepared by the state’s chief economist suggests revenue collections could be down $756 million through the end of June and nearly $3.8 billion by the end of the current budget in mid-2021.

And it projects lawmakers could face another $3.3 billion drop in tax receipts for the ensuing two-year budget which they will be crafting in the next regular session.

Economist Steve Lerch drafted the unofficial revenue forecast for members of the Economic and Revenue Forecast Council at the behest of its chairman, Rep. Ed Orcutt, R-Kalama. He cautioned that there is “substantial uncertainty” at this point on what could happen because key sources of data about the economic impacts of COVID-19 are not yet available.

One big hole, for example, is the amount of tax collections in April, the first full month of closures of non-essential businesses. That information will be available for his next scheduled forecast June 17.

“There is a great deal of uncertainty around spending behavior,” he wrote in an email May 5. Like with restaurants.

“Some will have shifted to take out/delivery, but will average spending be the same?” he wrote. “How much has shifted to groceries and cooking at home? Spending at restaurants is subject to sales tax, but groceries aren’t so the extent of this shift is important.”

The numbers didn’t surprise Inslee. For some time, he’s said the stay-home order, a blunt instrument intended to curb the spread of coronavirus that has shuttered much of the economy since late March, would result in a loss of billions of dollars for state operations and programs.

“This is obviously a very significant hole,” he told reporters May 5.

He and legislative leaders are reportedly talking about a special session, possibly following release of the June forecast. Inslee said an extra session is “probable” before January but a “definitive decision” has not been made.

The June forecast will be very informative, Orcutt said.

“I am sure we will have to make changes to the budget,” he said. “The sooner we make those changes the better we are.”

Meanwhile, Inslee has found himself the target of another lawsuit alleging restrictions contained in the stay-home order violate rights under the First Amendment to exercise religious freedoms and peaceable assembly. It seeks to lift the stay-home order which is now in force through May 31.

Four Republican state lawmakers filed the suit. They are represented by a private attorney, Joel Ard.

”Judicial review of the governor’s claim of emergency must be available,” Ard wrote in the filing. “Without review, a legitimate statute designed with flexibility to allow quick response to true emergent threats becomes a tool for long-term imposition on Constitutionally guaranteed civil liberties from the mere whim of the state’s executive.”

Though Inslee said he had not read it closely, he had very strong words for those who filed it. It showed them to be “ignorant” of the danger of lifting restrictions allowing the virus to surge back and “heartless” toward the human toll it has, and continues to take.

Statewide, there were 15,905 confirmed cases at the close of May 5, with at least 870 deaths, the state Department of Health said.

State health officials say there continue to be around 200 new cases each day. However, they point out, the number of tests conducted is rising and the overall percent of those testing positive has declined to around 4%, less than half of what it was in March.

On Tuesday, Inslee announced formation of three advisory groups to provide him input as the state begins to reopen. Those groups will be focused on public health, economic recovery and social supports.

The announcement coincided with the first of a four-staged reopening.

Under Phase 1, construction activity is restarting, outdoor recreation areas are opening and non-urgent surgeries will soon be occurring at more hospitals. Hunting, fishing and golf are allowed.

In a matter of days, auto dealers and boat sellers could welcome customers and retailers could complete curbside sales. Additionally, restrictions will loosen for landscaping and pet walking businesses, and drive-in worship services with a limit of one household per vehicle are allowed.

In Phase 2, now penciled to start June 1 at the earliest, restaurants will be able to open at 50% dine-in capacity with no more than five people at a single table; in-store shopping will return, while hair and nail salons and barber shops can reopen. Camping and gatherings with no more than five people outside a household will be allowed.

The third phase will allow recreational sports with five to 50 people, gatherings of fewer than 50 people, all non-essential travel and open facilities like public pools, libraries and museums. Restaurants could operate at 75% dine-in capacity, bars at 25% and indoor gyms and movie theaters at 50%. Professional sporting events without a crowd are allowable in this phase.

In the final stage, the limit on crowd size will be lifted, enabling nightclubs and concert venues to reopen, restaurants to operate at full seating capacity, and major sporting events to be held with fans. It still encourages social distancing for those most vulnerable to the disease.

Another element of the staged approach will allow counties with a population of fewer than 75,000 that have not identified a resident with COVID-19 for the past three weeks to seek a variance to move to Phase 2 before the rest of the state. Those counties currently eligible to apply are: Columbia, Garfield, Jefferson, Lincoln, Pend Oreille, Skamania, Kittitas, Ferry, Grays Harbor and Wahkiakum.

Officials said Monday the state could develop guidelines enabling quicker reopenings in other counties in the coming weeks.