Revenue up, but so are the state’s challenges

K-12 FUNDING, WORKER PAY: The latest quarterly revenue forecast for state government had good news for state budget writers and legislators next year. Collections of revenue since June have exceeded expectations by $336 million for the budget cycle ending in June 2017.

Another $125 million or more is expected above the previous forecast for the 2017-19 biennium. That brings the total of newly expected funds to the neighborhood of a half-billion dollars for both budget periods. Taxes from real estate sales are a part of the increase.

All that is good, and better than the opposite — a decrease. But the growing economy isn’t a silver bullet for the state’s pending budget problem for the 2017-2019 biennium. That is the one that candidates for the House and Senate this year will be tackling in January.

First, the new money isn’t nearly enough to solve the state’s K-12 funding problem. In what is known as the McCleary decision, the state Supreme Court found the state’s funding of K-12 public schools is unconstitutional, because it relies too much on local school property tax levies that vary widely community to community.

Solving that problem could require another $3.5 billion in new school spending in the 2017-19 budget cycle. Other state needs compete for those dollars.

Already, we’ve gotten the first glimpse of higher costs for state payrolls. A tentative contract recently negotiated with the Washington Federation of State Employees could cost $170 million for general government agencies alone.

The contract calls for a 6 percent increase that would be granted in three steps of 2 percent starting next July 1 and ending in January 2019. The agreement reached with Gov. Jay Inslee’s labor office still needs to be ratified by state workers. It also must pass muster at the state Office of Financial Management as financially feasible and win the Legislature’s approval.

Republican Sen. John Braun of Centralia is already estimating that all state-government contracts could exceed $500 million in new labor costs for the next budget cycle. If true, that would more than eat up this week’s increase.

Braun said it is possible that lawmakers reject the contracts next year. There are not yet enough facts on the table to fairly judge the merit of the contracts, but paying state employees competitive wages should be considered a cost of doing business for government.

WTO RULING IS GOOD FOR WASHINGTON: A panel for the World Trade Organization found the European Union had not sufficiently limited the illegal subsidies given to Airbus, a major competitor to Boeing for global aircraft sales.

In total, some $22 billion in subsidies were identified over many years. The finding could let the U.S. seek countermeasures. This comes after the EU sued the U.S. over some $2.7 billion in subsidies to Boeing that the WTO ruled were illegal about five years ago. The assistance given to Boeing included 20-year tax breaks that Washington lawmakers granted in 2003 for the Dreamliner jet.

The worst outcome here would be a trade war with each side putting up barriers to trade. But the ruling does show that these trade organizations — and agreements — can work both ways. U.S. workers should gain from this ruling, even if it has taken a decade or more to get justice.

U.S. Rep. Denny Heck, an Olympia Democrat, said the ruling levels the playing field between Airbus and Boeing. He predicted that with the same rules in play for the U.S. and other countries, “Boeing and American manufacturing will come out on top.’’ One would hope so.