A June 17 Washington State revenue forecast projected an $8.8 billion drop in tax collections over the next three years. Gov. Jay Inslee canceled pay raises the same day for some state employees and ordered repeating one day furloughs for 40,000 others, or about 80% of general government employees.
Inslee said he would call a special session of the Legislature to revise the budget before the end of the year.
He also put the brakes on reopening Washington and mandated that face masks be worn in public even with social distancing starting June 26 to curtail the resurgence of the coronavirus.
“COVID-19 has hit our state hard and our economy has taken a severe hit as a result,” Inslee said in a statement.
The forecast estimated a $4.5 billion drop in revenues for the current two-year budget cycle ending in 2021 and an additional $4.3 billion drop for the next biennium.
The current budget is about $53 billion with $3 billion in reserves.
“The impact of lost economic activity from the COVID crisis will extend for many years,” according to the budget forecast.
More than 1.2 million people in Washington have applied for unemployment benefits since the start of the pandemic, according to the Employment Security Department. The unemployment rate rose from 7.6% in 2019 to a record 15.4% in April, then dropped to 14.8% in May (the most recent figure available at press time).
The $2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act signed into law by President Trump on March 27 — the largest stimulus bill in U.S. history — allowed states to extend unemployment benefits to workers who are usually ineligible, including an additional $600 a week, together with aid and loans to mitigate the impact of business closures.
The $600 payments are supposed to end July 31, but Washington state will pay only through the week ending July 25, according to the ESD. Weekly benefits range from $201 to $844, depending on the recipient’s base year earnings.
The Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act passed by the U.S. House of Representatives May 15 would deliver an additional $3 trillion in aid to the country.
Senate Majority Leader Mitch McConnell said the act was “dead on arrival” in the Senate, calling it a “liberal wish list.” Congress was due to return from recess to take up the measure July 20.
The HEROES Act includes a second stimulus check, debt relief, student loan forgiveness, hazard pay, six more months of COVID-19 unemployment benefits, housing and food assistance, $1 trillion in aid earmarked for first responders, health workers, teachers and others at risk of losing jobs due to state budget cuts, and bailouts for states and the U.S. Postal Service.
The Act also updates the federal government’s new Paycheck Protection Program, eliminating the requirement that small businesses use 75% of the aid for payroll or pay it back as a loan. Many business owners couldn’t use the money for payroll since employees didn’t want to return to work because they were making more from the enhanced unemployment benefits.
Steve Lerch, the Washington State revenue forecaster, said it is unlikely the economy will recover fully until there’s a COVID-19 vaccine or therapy, which would allow people to return to their pre-pandemic work and spending habits.
New COVID-19 cases peaked in April when social distancing “flattened the curve” in Washington, but new cases are now appearing at a higher rate across the region and in Pierce County, according to the Washington Department of Health and the Tacoma-Pierce County Health Department.
“It is very disheartening to see these numbers go up,” said John Wiesman, the Secretary of Health. “People are working so hard in the public health and health care setting to try and avoid this.”
The spread of the virus in Washington now exceeds what it was when schools were closed March 11. Less than six months into the pandemic, there have been 41,090 cases of COVID-19 in the state and 1,426 deaths, a mortality rate of 3.47% (at press time).
The DOH released a statement in May saying its count of COVID-19 related deaths is not exact. It released a revised report July 14, saying “Approximately 89% of the deaths among lab- confirmed COVID-19 cases also reference COVID-19 on the death certificate. An additional 4% have been determined not to be COVID-19 related and have been removed from the dashboard count. The remaining 7% are pending or the death certificate is unclear and requires further examination and review. Our data dashboard represents approximately 96% (89% plus 7%) of all deaths to lab-confirmed COVID-19 cases.”
According to the DOH, the rate of new COVID-19 cases in Washington was 102.1 per 100,000 in the first two weeks of July, well over the state goal of 25. The number of individuals tested per each new case was 19.1, below the goal of 50. The percent testing positive was 5.2; the state goal is 2%.
At the same time, just 3.1% of hospital beds across the state were occupied by COVID-19 patients, well under the critical ceiling of 10%.
“We have seen an uptick in cases over the last several days and so far, we are not seeing any specific source,” the DOH said at the end of June. “Very few attended a demonstration. This tells us people are going out and about and are not taking precautions.”
COVID-19 is hitting people of color harder than whites in Washington: the infection rate is three times higher for Black people, five times higher for Latinos, and six times higher for Native Americans, Hawaiians and Pacific Islanders, according to the DOH.
The new surge of cases has also struck younger people. Perhaps as a result of that, national daily fatalities from COVID-19 decreased from a high in May of 2,700 to a low of 212 on July 5. The daily average for the first week of July was 512.
But according to the U.S. Centers for Disease Control and Prevention, the lower rate could be a result of a lag time of up to three weeks between increased infection and fatality rates.