When Gov. Chris Gregoire signs the last and largest of three state budget bills today, Washington will have a spending plan that’s just under $70 billion for the next two years.
That’s almost the same amount of money the state spent over the past two years, although the gyrations of legislative budget-writers over the past five months suggest a more dramatic change in the state’s financial circumstances.
The differences lie under the surface of the overall figure.
The 2009-11 state budget has been cobbled together from declining state tax collections, a one-time $3 billion shot in the arm from Congress and dozens of fee hikes that overall will raise $500 million from college students, restaurant lounges and couples filing for divorce.
Budget writers also collected a big chunk of money from state agencies in a manner something akin to holding them up by their ankles and shaking all the money out of their pockets.
Ask Auditor Brian Sonntag about the $29 million they took from his performance audit account. Or the Liquor Board about the $80 million the Legislature took from its revolving fund. Or the money that lawmakers took from the Washington State Lottery because they assume there will be $11 million lying around in unclaimed prizes in the next two years.
It’s not uncommon for the Legislature to raid dozens of other smaller funds throughout state government to balance the state’s main budget. But when faced with a $9 billion shortfall this year budget-writers took raiding to another, higher level.
Even so, it may not be enough. And they might have to do it again in 2011-13 – assuming they can.
Only about half of the $9 billion gap between spending and revenue is being closed by spending cuts. The other half is being plugged by one-time-only money – the $3 billion in federal stimulus funding, the $777 million from money that ordinarily would be used to build water and sewer systems and public school buildings and $700 million from savings.
What happens if the economy does not recover in two to three years?
“We know that 2011-13 will present some significant challenges,” Victor Moore, the governor’s budget director said Monday. “It’s a matter of degrees, of how fast and how well the economy rebounds. I’m gonna need $4 billion in real revenue growth.”
States can’t assume President Barack Obama and Congress will step up with another stimulus package, as they did earlier this year, he said.
The two-year operating budget that Gregoire will sign today amounts to $58.7 billion. That includes $31.4 billion in state funds. Most of the rest is federal funding. Combined with the $7.5 billion transportation budget and $3.3 billion capital budget the governor signed last week makes total state spending $69.5 billion for 2009-11.
To get to that level, cost-of-living raises for some 250,000 state workers and teachers will be frozen for two years. Some 5,000 to 6,000 state and public school workers will be laid off or vacant jobs will be eliminated. The state is cutting medical coverage for 40,000 families on the state-subsidized Basic Health Plan.
Moore said overall the Legislature cut spending by $4.4 billion, including the foregone pay raises and skipped payments into employee pension plans.
On the revenue side, the budget includes 14 percent tuition hikes at four-year universities and 7 percent increases at two-year community and technical colleges for each of the next two years. Including building and student fee increases and colleges can collect an additional $234 million from students or their parents. Tuition is the largest of the fee increases approved by lawmakers.
But there are many others. By taking $80 million from the state Liquor Control Board, the Legislature is forcing the agency to raise its prices to replenish the loss. Recording fees for documents filed with county auditors will raise $52 million, with $20 million going to the state for homeless programs.
Liquor licenses are rising across the board for a total of $2 million. Fishing and hunting licenses will be subject to a 10 percent surcharge, raising another $8 million.
Finally, the state expects to collect $37 million in tolls on the Highway 520 bridge during the last several months of the 2009-11 biennium.
Rep. Gary Alexander of Olympia, the top Republican on the House budget committee, said he doesn’t see how the economy and tax collections can rebound fast enough or strong enough to put the state back on an even budget keel, one that doesn’t rely on another round of one-time funding from Congress or fees.
“It’s going to have to be pretty significant,” he said. “Even at 5 percent, you’re still looking at a $5-6 billion deficit in 2011-13. I’m not sure how you’re going to get to a rosy picture. I don’t think it rebounds until the middle part of 2010.
“All those job reductions that have been set in motion haven’t even occurred yet,” he said, referring both to the state layoffs and the cutback by auto dealerships by Chrysler and General Motors. And the state should not count on another round of bailout money from Congress, he said.
“From what I see of Obama and the other Washington, that stimulus package is a one-time deal,” Alexander said. “They’re not assuming this will continue and neither am I.”
Arun Raha, the state’s chief economist, said his Economic and Revenue Forecast office isn’t looking yet at the 2011-13 biennium. His staff is still trying to figure out what’s going to happen to the economy in the near term, the upcoming two-year budget cycle starts on July 1.
“We’ll be losing jobs through (the end of this year) and sometime early next year the unemployment rate will peak,” he said.
He said federal stimulus funds will account for 75,000 jobs – either saved or created – but most of the impact won’t be felt until July-September of 2010.
“It takes time for the money to get out,” he said. “Basically, this year is pretty much over. Next year will be a year of recovery. The question is, what is the pace of the recovery. We may be adding some jobs in the second half of the year.
“Then, in calender 2011, we’ll get back to some kind of normal growth,” Raha said.
joe.turner@thenewstribune.com
Joseph Turner: 253-597-8436
blogs.thenewstribune.com/politics
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