Gregoire’s budget: Freeze, cut

Gov. Chris Gregoire presented a two-year state budget Thursday that would close a $5.7 billion budget gap by freezing pay for some 250,000 state and school workers, eliminating programs and laying off workers.

She also assumes an infusion of nearly $1 billion from the federal government. But true to Gregoire’s campaign pledge, there are no tax increases in the 2009-11 budget she is sending to the Legislature.

“Our state is facing significant economic turmoil,” said Gregoire, who was elected to a second term last month. “I have lived within our means.”

Teachers and state workers who would go without pay raises for two years criticized the governor’s proposal. So did advocates for the poor who will lose part of all of their state assistance and medical coverage.

But Republican legislative leaders, who are in the minority, embraced the plan’s overall size and philosophy.

Senate Minority Leader Mike Hewitt, R-Walla Walla, compared the budget to 2003’s no-new-taxes budget offered by then-Gov. Gary Locke. “We like the size of the box. She’s given the Legislature some good direction,” he said. “She showed the political courage she should have showed two years ago.”

The projected budget shortfall faced by Gregoire and the Democrat-controlled House and Senate over the next 30 months is more than twice the size of the 2003-05 shortfall. Republicans blamed extravagant spending by Gregoire and her fellow Democrats. Gregoire blamed “the reckless decisions on Wall Street,” that led to an unprecedented slide in the national and state economies and steep decline in tax collections.

The focus now shifts to the Legislature, which convenes Jan. 12 for a 105-day session. Unlike Gregoire, Democratic leaders in the House and the Senate have made no election-year promise to hold the line on taxes. Labor unions for 110,000 state and college workers, as well as the 81,000-strong Washington Education Association, will try to persuade lawmakers to free the wages that Gregoire proposes to freeze. Teachers were in line for a 4.1 percent raise in the 2009-10 school year.

Greg Devereux, director of the 40,000-member Washington Federation of State Employees, said the governor reneged on recently negotiated two-year contracts that would have given most state workers 2 percent raises each of the next two years. “She has to come back to the bargaining table with us,” Devereux said. Meanwhile, union officials will work with legislators to devise a plan to close tax loopholes and raise money so final budget cuts won’t be as deep as those proposed by Gregoire.

Gregoire said her proposal’s overall cuts for the 30 months between January 2009 and July 1, 2011 are about $3 billion. She closes the rest of the gap by counting on nearly $1 billion more in federal funds, spending most of the “Rainy Day” savings account, foregoing pension fund payments and grabbing money from other accounts.

Workers took the single largest hit. Those foregone pay raises amount to almost $700 million over two years.

Colleges also took a large cut, about $350 million. They will be able to make up part of that with tuition increases of 7 percent at the University of Washington and other four-year colleges, and 5 percent at community colleges. The governor gave colleges the flexibility to decide where to cut their own budgets, as long as they hit the targets given to them.

That’s where most of the 2,600 layoffs will be, she said.

Gregoire said 13 state parks and seven fish hatcheries would have to close. The Parks Department’s list of closures includes Joemma Beach on the Key Peninsula, Kopachuck near Gig Harbor and Tolmie near Lacey.

An additional 2,600 state agency workers will be laid off, making the total 4,000 fewer state jobs since the beginning of the year.

A program that now provides $339 a month and medical coverage to 21,000 poor and disabled people, those who are unemployable and can’t get on federal assistance, would be eliminated.

“I worry about the impact a cut of this magnitude could have on food banks, hospital emergency rooms, homeless shelters and other social service agencies,” said Robin Zukoski, an attorney for Columbia Legal Services, which advocates for the poor.

Gregoire’s budget proposes to spend $33.5 billion from the state’s general fund, the largest of the state’s accounts. The overall budget for 2009-11, including federal funds, transportation and capital budgets, would be $66 billion. She would use $600 million of the $700 million in the emergency savings account, and the state would finish the budget cycle with about $500 million left in the bank in mid-2011.

Senate Majority Leader Lisa Brown, D-Spokane, said the governor’s budget is flawed by the assumption that Washington will get almost $1 billion from President-elect Barack Obama and the Democratic Congress. With that assumption, Gregoire is making the process look easier that it actually will be, Brown said.

Brown said she also hopes for federal help, “but the President-elect Obama has not been sworn in and has gotten nothing through Congress yet.”

Gregoire said she thinks it’s safe to assume Obama will pass on $780 million in additional money for Medicaid.

Brown said by the time Senate Democrats write their version of a budget, after the March revenue forecast, the economic landscape could be even worse. The governor said that, too.

“I am not convinced the March revenue forecast will be better,” Gregoire said. “It’s absolutely possible it could be worse.”

On the positive side, Gregoire noted the state is still providing medical coverage for 650,000 children and education to more than 1 million public school students. She also said her transportation budget calls for the most spending ever – $3 billion next year, up from $2.5 billion this year. And that doesn’t include any hoped-for economic stimulus money from Congress, she said.

“We have 1,244 projects that will be in construction across the state next year,” said Paula Hammond, secretary of the state Department of Transportation.

The governor said she doesn’t expect her Democratic colleagues in the Legislature to propose a tax increase. But if they do, it won’t come to her, she said.

Initiative 960, although under legal challenge, means any proposed tax increase most likely would go directly to a vote of the people.

“There is no way to tax your way out of this problem,” she said. “The options for raising taxes just don’t seem to be there right now.”

The Basic Health Plan, which is on its way to insuring only 80,000 people, will be further reduced. Gregoire said she’s ordering a 42 percent cut, which is likely to result in a state-subsidized plan with less coverage than the current level.

“I can’t (just) say ‘I don’t love it,’ ” Gregoire said of her budget proposal. “I hate it.”

Joseph Turner: 253-597-8436

blogs.thenewstribune.com/politics

TAKING THE HIT

State employees, teachers: Wage freeze amounting to nearly $700 million.

Health and Human services: Cuts welfare to 21,000, saving $160 million; $252 million cut from state basic health plan.

Higher education: $350 million in cuts, higher tuition.

Others: 13 state parks closed; less supervision for low-level offenders; lays off 2,600 state and college employees.