Marijuana money boosts Washington’s budget

OLYMPIA – Washington tax coffers could get a $25 million boost by next July and nearly $200 million by mid-2017 from legal marijuana, state economists estimate. But much of that money is spoken for and won’t help the general fund.

The estimates for taxes and fees the state can expect from recreational marijuana, the first such available, are contained in overall economic and revenue forecasts released Thursday afternoon. In general, the state’s budget outlook is changed slightly for the better from the June forecast, economist Steve Lerch said. 

The marijuana money won’t be much help to the state’s general fund budget, which pays for most salaries and programs outside of roads and construction. More than half the taxes and fees collected from pot are required to go to specific programs spelled out in Initiative 502, the ballot measure that made recreational use of the drug legal for adults.

The state Liquor Control Board, which regulates legal marijuana sales, said some $14 million worth of marijuana had been sold between July 8, when the first stores opened, and last Monday, the last day for which sales are available. Lerch said the state expects sales to increase as more stores open, but “whether those (projection) numbers are high or low, we don’t have any way to know.”

David Schumacher, the director of the Office of Financial Management, said marijuana revenue isn’t the path out of any budget problems.

“In the face of a budget problem approaching $2 billion or $3 billion, it’s not very much money.”

The state’s overall economic trends are for slow, modest growth in jobs, personal income and construction, leading to slow increases in some tax sources. Washington should finish its two-year budget cycle June 30 having collected about $33.3 billion in revenue for general fund expenses and have about $36 billion for those items in 2015-17.

The Legislature and Gov. Jay Inslee may spend much of next year’s budget session debating whether that extra $2.7 billion is enough to preclude tax increases as the state faces court mandates on issues such as public schools and mental health care. A brief preview of that debate surfaced at the Forecast Council meeting, as Sen. Andy Hill, Republican chairman of the Senate Ways and Means Committee, said he didn’t think the Legislature should raise taxes to meet a court mandate to improve schools by 2018.

“We prioritize education and we see what we do about the rest,” said Hill, of Redmond. “Basic education is the first responsibility, and that’s where we’ll be starting first.”

Schumacher said most of the $2.7 billion will be eaten up by the increased costs of salaries and existing programs, with little left over for new education programs. Those “will likely require more revenue,” he said.

Other legislators jumped in by email, with Sen. Mark Schoesler of Ritzville, the Senate Republican leader, writing he hoped the extra money meant “House and Senate Democrats will join the Senate majority and prioritize education first while protecting Washington’s hard-working taxpayers.”

Rep. Ross Hunter, D-Medina, the chairman of the House Appropriations Committee, countered that all extra expected tax revenue has been factored into budgets for the next four years. And that’s before considering increases for court orders to improve schools, foster care systems and mental health facilities, or for colleges “and the crazy fire year we had.”