Harger: Record tax revenue can’t keep up with Olympia’s spending addiction

If the state budget outlook were a car dashboard, that red warning light would be blinking like crazy. But in Olympia, it sure doesn’t seem like anyone’s looking.

Washington’s chief economist delivered some rough news on Tuesday: Tax collections for the current two-year budget are now expected to come in $412 million short. Over the next four years, we’re expected to be over $900 million short.

Here’s the thing, revenues are still growing by nearly 11%. We’re taking in more tax money than ever, so why are we in the hole? It’s because we’re spending even faster.

Since 2013, state spending has more than doubled, from $33.6 billion back then to $78 billion today. That’s not inflation. It’s not population growth. Caseloads for services aren’t surging either; they’ve been flat or even declining.

It’s just more spending

This year alone, lawmakers approved $775 million for special education expansion, $450 million for universal pre-K pilots, $500 million for behavioral health programs, and $400 million for climate initiatives. Last year brought a $900 million forensic hospital, $698 million in housing programs, and hundreds of millions for salmon restoration and toxic cleanup.

Important goals? Sure. Can we afford them all? Probably not.

We also just passed the largest tax increase in state history — roughly $9 billion. And then revenue projections started falling. That’s what happens when you raise taxes during a slowdown: businesses adjust, people change behavior, and the economy pulls back.

The economy isn’t exactly humming. We lost more than 13,000 jobs in August. Unemployment is ticking up. Consumer confidence is slipping. Home sales are down 5%. Big employers like Microsoft are trimming staff. Moody’s even put Washington on its “high risk” list for recession.

On top of that, the Trump administration has flagged Washington as a sanctuary state that could lose federal dollars. That’s potentially billions more disappearing from a budget that’s already underwater.

We can’t tax our way out of this

When you raise taxes during a downturn, businesses have less money to hire people. Families have less to spend at local stores. That means fewer jobs, less spending, and ironically, less tax revenue.

It’s a downward spiral; every small business owner struggling with payroll knows this. Every family choosing between gas and groceries knows this, but Olympia apparently doesn’t.

Washington can still deliver the basics people count on: good schools, public safety, essential healthcare, and roads that work. What we can’t do is fund every ambitious program that sounds great in a press release, especially when spending is outrunning even strong revenue gains and the economic clouds are gathering.

Smart spending isn’t about being conservative or liberal; it’s about the same math every household faces. When your income goes up, but your bills go up faster, something has to give.

The difference is that when families ignore the warning signs, they lose their credit cards. When governments ignore them, we all pay the price.

The warning light is doing its job, telling us to ease off the accelerator before something breaks. The question isn’t whether we’ll listen. It’s whether we’ll listen in time.

Because once you ignore enough warning lights, eventually you’re walking home.

And that’s the commentary for Sept. 25. You can always weigh in. Shoot us a note on the text line (888) 973-5476 or leave a comment on MyNorthwest.

Charlie Harger is the host of “Seattle’s Morning News” on KIRO Newsradio. You can read more of his stories and commentaries here. Follow Charlie on X and email him here. 

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