Inslee vetoes parts of state budget as COVID-19 threatens sharp decline in state revenue

Bracing for a potential massive decline in revenue because of COVID-19, Gov. Jay Inslee on Friday vetoed dozens of items in the state budget to reduce spending by about $445 million through mid-2023.

The biggest spending reductions triggered by the Governor’s veto pen are $115 million to hire 370 more guidance counselors at public schools, $50 million for projects to enhance mitigation and resiliency in response to climate change, and $35 million for paraeducator training.

The need to put the brakes on new spending comes as the state prepares for revenue “for the next few years to fall by billions of dollars,” said David Schumacher, director of the state Office of Financial Management.

The state hopes to use $3 billion in reserves to deal with that potential sharp revenue decline in the budget that ends June 30, 2021. However, deep cuts may be needed to balance the next operating budget, officials warn.

“We cannot sleepwalk through this fiscal crisis that the state of Washington will be in, in the months and perhaps years to come. We must look ahead to the fiscal pain as well as the health pain that is a reality,” Inslee said at a bill-signing ceremony Friday afternoon.

Inslee has issued an order for people to stay home and for non-essential business to close to slow the spread of the new coronavirus. The order is in effect through May 4 and could be extended.

The massive spike in new unemployment claims filed by Washington workers has state officials worried that damage to the budget that pays for the day-to-day operations of state government could be worse than during the Great Recession from late 2007 to mid-2009.

Inslee vetoed 147 items that would have been new spending or expansion of programs.

The items vetoed included $200,000 to study the incorporation of Spanaway and seven other communities into one city. The state Department of Commerce would have hired a consultant to study incorporating Fredrickson, Midland, North Clover Creek, Collins, Parkland, Spanaway, Summit-Waller, and Summit View into a single city.

In odd-numbered years, the Legislature adopts the two-year operating budget. In even-numbered years, lawmakers reopen that budget — referred to as a “supplemental” — to make changes.

Inslee did not veto spending items in the supplemental operating budget that would affect the state’s COVID-19 response, including child care, programs that receive federal matching dollars, and the $170 million more for services that the Legislature approved to address the state’s homelessness crisis.

Washington officials stressed that federal funds are flowing in to address the COVID-19 outbreak.

The $2 trillion stimulus bill that President Donald Trump recently signed into law includes $1.6 billion for the state and $1.3 billion for local governments to pay COVID-19-related costs.

House Speaker Laurie Jinkins, D-Tacoma, said she is hopeful that the next bill that Congress tackles will include funding to help maintain state government services such as higher education, behavioral health services, and child care, as well as help for local government operating budgets.

She anticipates the Legislature will need to manage a mix of federal funding and state budget cuts.

“This was a really hard day. There are going to be harder days even, but I think if we keep our focus on making sure that people come out of this healthy and resilient — both in terms of their physical health and economic health — that’s what our goal is,” Jinkins said.

State Sen. John Braun, R-Centralia, said a case could have been made for Inslee to veto “every bit of new spending that doesn’t support” the state’s COVID-19 response.

“That would save more than $700 million in the current budget – money that could be redeployed toward public-health or economic-recovery measures down the way, or saved to lessen the budget deficit we will likely face in 2021,” said Braun, the highest-ranking Republican on the Senate’s budget-writing committee.

Jason Mercier, director of the Center for Government Reform with the Washington Policy Center, a nonprofit free-market group, applauded the veto of $250,000 to study creating a publicly owned state bank.

“Overall, we are encouraged to see the Governor take these steps to reduce state spending. This will provide more flexibility with the expected reduction in revenue from the reduced economic activity under the social distancing orders,” he said.

This story was originally published April 3, 2020 at 3:20 PM.