The Washington state government needs to rightsize operations to fit budget realities, rather than put a greater onus on businesses during the upcoming Legislative session. 

Already, the cost of doing business in Washington state is increasing, in some cases greater than the rate of inflation, due to government mandated increases. The private sector shouldn't have to carry a heavier burden, and Legislators new and old should go into the session with that mindset. 

Outgoing Washington Gov. Jay Inslee is ringing the alarm bells about projected revenue shortfalls, issuing a directive to state agencies freezing most nondiscretionary and nonessential hiring, service contracts, purchasing, and travel. The directive follows updated figures from the Washington state Office of Financial Management that project a $400 million drop in revenue for the state in the next five years. For the current biennium, the state is expecting $89 million less than it had forecast would come in previously. 

To put those numbers in greater context, the budget for the current biennium is $66.39 billion, and the anticipated shortfall is a 0.13% decrease from the previous projection. 

And while revenue isn't expected to be as high as previously thought in the 2025-27 and 2027-29 biennia, revenue is still expected to increase. Current state projections call for $71.43 billion in revenue in 2025-27 and $76.85 billion in the following biennium. Those are increases of 7.6% each biennium, or roughly 3.8% a year. The latest U.S. Bureau of Labor Statistics data places the current inflation rate at 2.6%. That means that if that rate of economic growth held steady and the state's revenue forecast didn't change, the state's budget would expand annually at more than a percentage point greater than inflation as a whole. 

While it's smart for Inslee to spend his final days in office shoring up spending in an effort to stave off any short-term budget woes, the state is far from dire straits from a budgetary standpoint. The problem, as the Washington Policy Center spells out in a recent article, is the billions of dollars in expected new spending requests. In short, the state has a spending problem, not a revenue issue. 

Meantime, the costs for business continue to increase. The Washington state Department of Labor & Industries announced late last month a 3.8% average increase in workers' compensation insurance rates. The L&I press release announcing the rate hike describes the increase as modest, yet it outpaces inflation by over a percentage point. "Modest" is in the eye of the beholder, especially for a struggling business. 

At the same time, the state's minimum wage, which IS tied to inflation, is set to increase to $16.66 an hour, the highest rate among states, though the District of Columbia is higher. 

The increase in costs follow creation of a number of new taxes over the past decade, ranging from the Family Medical Leave Act premiums to Washington Cares Act premiums to the capital-gains tax, which applies to individuals but is relevant with certain business entities. Throw cap-and-trade tax-related price increases on top of all that, and it's clear that it's getting harder and harder to do business in Washington state. 

State leaders need to address spending in the upcoming session, rather than looking for more ways to squeeze money out of employers. The private sector already is carrying more than its share of the  burden.