Oregon Public Broadcasting

The national economic crisis is pounding state budgets here at home. Wednesday Oregon and Washington got bad news about tax revenues.

They’re down -- dramatically -- and that means budget cuts will be necessary. Olympia correspondent Austin Jenkins reports.

Oregon and Washington join 31 other states whose previously balanced budgets now have big holes blown in them. That means immediate cuts are necessary.

In Oregon, Democratic Governor Ted Kulongoski has ordered state agencies to trim their budgets by five percent.

In Washington, Governor Chris Gregoire must find another three to four hundred million in savings.

What’s driving this? Washington State Chief Economist Arun Raha says consumers have stopped spending.

Arun Raha: “Faced with an uncertain job environment, declining value of equity in their homes, a falling stock market that is wiping out huge chunks of retirement savings – consumer confidence has plummeted to it’s lowest level ever recorded.”

In addition to the short-term impact, Washington State is now facing a potential $4.5 billion budget shortfall in the next two year budget cycle.

Democrat Gregoire has vowed not to raise taxes. But already advocates for the poor are saying draconian budget cuts are not acceptable.