State budget writers are awaiting revenue forecaster Arun Raha’s next bombshell, expecting it to be worse than most of his previous reports laden with bad news.
Even before the quarterly prediction of state revenue lands Thursday, it’s already causing talk of a special legislative session as lawmakers of both parties say they need to get to work on cuts – and jobs creation – as soon as possible.
The drop in revenue could be as bad as $1.5 billion, says Gov. Chris Gregoire, who asked agencies last month to identify how they would cut 10 percent of their budgets, equal to $1.7 billion. Those cuts could include earlier releases of state prisoners or an end to state payments for prescription drugs for Medicaid patients no longer in a hospital or nursing home.
“I haven’t felt this discouraged in the entire time I’ve been in the Legislature,” said Rep. Tami Green, a fourth-term Democrat from Lakewood. “It seems like we solve one problem and 10 more problems come along.”
In fact, the emerging budget problem looks so nasty that majority Democrats who voted for $4.5 billion in cuts just four months ago are saying it’s time to look at taxes and other new revenues in addition to cuts. And a spring ballot measure to raise taxes is on the table.
Republicans are not completely ruling out new revenues – but with a big if. As Republican Rep. Gary Alexander of Thurston County put it, lawmakers first should exhaust other options such as eliminating programs like the Basic Health Plan and Disability Lifeline and also reforming agencies’ operations to make them more efficient.
“I don’t think (new revenue) needs to be off the table, but we certainly need to explore all the efficiencies, the reforms, the ways to reform and reprioritize the budget within existing means,” Alexander said. “I don’t think we are there yet.’’
It will likely be up to lawmakers to make those cuts. For Gregoire to make them herself without their help, she would have to take an equal bite out of every state agency – and she said Wednesday that such across-the-board cuts aren’t possible any more.
“I can’t do across-the-boards. I’ve made that clear to legislative leadership,” she said. “That’s a dry well right now.”
The Democratic governor said her prisons agency can’t afford to make any more cuts without making the public less safe.
In previous rounds of legislative budget-cutting – and in Gregoire’s 6 percent across-the-board cuts last year – the Department of Corrections closed three prisons, cut more than 1,200 jobs and ended supervision of more than 10,000 offenders released from confinement.
Those offenders were deemed to be at low or moderate risk to reoffend. Corrections spokesman Chad Lewis said further cuts can’t be made unless the Legislature either cuts supervision for high-risk offenders, or releases inmates early, an idea lawmakers rejected this winter.
Gregoire stopped short of saying she would call lawmakers back for a special session this fall. That decision depends on just when the drop in revenue is predicted to hit. If the worst of it is coming in the 2013 fiscal year, she said, lawmakers might be able to wait until their scheduled return next January to bridge the gap.
Even counting its rainy day fund, the state has just $163 million in reserves to last through June 2013. House Ways and Means chairman Ross Hunter is estimating the revenue downturn at between $1 billion and $2 billion.
Hunter, a Medina Democrat, said the situation is much different than a year ago when a broad agreement was reached on early cuts – and lawmakers had a one-day special session in December.
Hunter said the scale of the problem is daunting, noting that $2 billion in cuts are equivalent to removing all state support from the community and university systems (an outcome, he emphasized, that won’t happen). Alexander, the House GOP budget lead, favors a special session and said more than $200 million can be saved by eliminating the Basic Health Plan’s subsidized insurance for low-income workers, eliminating the Disability Lifeline for chronically unemployed people, and eliminating health coverage for children who can’t document their legal residency.
House Democrats’ leaders bounced around ideas for taxes at a meeting Wednesday, with potential targets ranging from increases in the sales tax to closure of tax exemptions like the ones banks receive for mortgage interest, Green said.
In a special session, Democrats would also seek some kind of job-creating legislation such as bonds for school renovations, she said.
It’s unlikely the Legislature could summon the supermajorities required to pass a tax increase unilaterally, so it would have to turn to voters. But even the simple majority it takes to include taxes in the equation is far from politically simple.
The votes weren’t there last winter. Green said a big drop in revenue might change the equation so that House Democrats don’t have the votes to reach a deal without new taxes.
The Senate’s majority Democrats met Thursday to talk about their options. Murray said a deal might come together in time for a special session in November or December, but others think it should begin in October. But Senate Republican leaders say more time is needed to figure out a plan that can pass bipartisan muster.
They are lining up behind Sen. Joseph Zarelli’s plan for a budget committee similar to the one in Congress tasked with attacking the deficit.
Zarelli, R-Ridgefield, says his plan would allow each of the four party caucuses to appoint a member to the committee – then pick a member from the opposite party’s caucus, ensuring moderates are brought into the equation.
Jordan Schrader: 360-786-1826
jordan.schrader@thenewstribune.com
blog.thenewstribune.com/politics
Brad Shannon: 360-753-1688
bshannon@theolympian.com
theolympian.com/politicsblog
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