It’s said that misery loves company, as long as it doesn’t stay too long in the guest room.
If so, then Washington state can take comfort because when it convenes a 60-day legislative session Jan. 11, it will be one of 36 states facing another round of budget cuts. Added together, these states face $28.2 billion in budget gaps, according to the National Conference of State Legislatures.
That total is on top of $146 billion in budget cuts made by the states when they first adopted their current budgets.
Washington’s share is to blame for $2.6 billion of that $28.2 billion total. California, which is six times more populous, added $6 billion. New York, which has three times the population of Washington, has a $3.2 billion deficit,
The cause is the same – a deep recession that is technically over but lives on in the hearts and wallets of consumers. Add that to a continuing inability of state economists to forecast how bad it will get and you have repeated budget gaps to fill.
It doesn’t seem to matter if the state is sales tax-dependent like Washington or income tax-dependent like most other states. This recession has hit all state taxes drastically with the fall of 2009 being the fourth consecutive quarter of declines, according to the Rockefeller Institute at the University of Albany. It adds that corporate and personal income tax collections have declined more steeply than sales taxes.
Most recessions bring midbudget gaps. But Scott Pattison, executive director of the National Association of State Budget Officers, told Stateline.org that “this is really close to unprecedented.” Confirming the rhetoric of the past 18 months, researchers now say they have to look back seven decades to the Great Depression to find similar problems – both in depth and in longevity.
And the difficult cuts – and more-difficult tax votes – that might come in Olympia and other state capitals this year will be just another stop-gap. The same analysis by Stateline.org projects that 35 states – including Washington – expect budget deficits totalling $55.5 billion in 2011. Then in 2012, 23 states – again including Washington – expect a total of $68.8 billion in deficits.
What that all means is that no amount of freezing and cutting will be sufficient to close these gaps. Even with tax hikes and another distribution of bailout cash from the feds, states will have to make significant changes in what they pay for.
The types of deep cuts to education, colleges and social programs proposed by Gov. Chris Gregoire as a warning of what would happen without a yet-to-be-unveiled tax increase might well come to pass anyway.
If not this session then next session or the one after that.
The same phenomena will hit other states – producing governments that are smaller and do fewer things than they did at the height of the latest boom in 2006-07.
Is there any benefit to being in the same leaky boat as other states?
Perhaps.
Current state budgets would look worse had Congress not sent tons of cash to the states to maintain programs and prevent layoffs. Cynically, this rewarded traditional Democratic constituencies – public employee unions and teachers unions. But it also reduced the numbers of unemployed, keeping already high jobless rates a bit lower.
So if it made sense last year, why doesn’t it makes sense this year? Having 36 states in trouble brings into play 36 states’ members of Congress. President Barack Obama has said he would consider another round of state bailouts. And a bill passed by the U.S. House on Dec. 16 contained $27 billion to the states. Washington’s share, at least by population, would be about $600 million.
The U.S. Senate is less interested in more state stimulus, however. And if Washington says it would use it to lessen the need for tax increases – as Gregoire’s budget director Victor Moore suggested last month – rather than to reduce further layoffs, the House and the president might be less interested as well.
Peter Callaghan: 253-597-8657
peter.callaghan@thenewstribune.com
blog.thenewstribune.com/politics
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