Washington State's Response to Reaganomics and the New Federalism

Abstract

In December 1981, Washington State found itself in one of its most serious recessions. Unemployment statewide was 11.1 percent, the highest since the state's Department of Employment Security began keeping records in 1947. Employment in the timber industry and forest products was hardest hit, but unemployment was also high in the construction and lumber industries as well as general services, trade, and government. Requests for unemployment compensation nearly doubled. Earlier in the year, the state budget crisis was very serious, with some estimates pointing to a $1 billion deficit. Even with cutbacks of $600 million and tax increases of $250 million in April, plus a 1 percent increase in the general sales tax in a November-December special session, Washington still faced a year-end deficit of some $300 million. Newspapers featured stories of privation and family sufferings caused by reduced or terminated federal and state programs, and the Salvation Army said it planned to revive its soup kitchens. The severity of 1981 economic conditions in Washington State was due in part to variables found elsewhere in the nation: inflation, high interest rates, a public mood calling for reductions in