This Washington

State Budget Even More Dire with Latest Revenue Forecast

By Josh Feit November 18, 2010

In September, Gov. Chris Gregoire announced 6.3 percent across-the-board cuts to state agencies to address a $520 million shortfall for the current '09-11 biennium. Today, the state got the latest revenue forecast and projections are worse than expected—falling an additional $385 million. (Fifty-five million of the shortfall comes from I-1107, which repealed taxes on soda, bottled water, and candy.)

In a statement, Gov. Gregoire said the new shortfall would require another round of 4.6 percent across-the-board cuts, which she called "not feasible." She said:
As Governor I have limited tools in how to deal with these shortfalls. With the 6.3 percent across the board cuts currently being implemented, I have already pushed that option to the limit. The Legislature will need to act quickly – delay will only deepen the problem and limit the options.

Gregoire is required to propose a balanced budget, but she is not allowed to do a budget root canal (cutting specific budget line items) and so at this point, she needs to get into program specifics with legislators.

Her statement continues:
I have been working with legislative leadership in both parties to collect ideas on how to address our current shortfall. This forecast has added even more urgency to those discussions and I’ve asked them to provide their options to me by November 29. Quite frankly we can’t cut any deeper without ending significant programs. Extremely difficult choices must be made and given this sharp revenue decline, they must be made now.

State Sen. Joseph Zarrelli (R-18, Ridgefield), the GOP's lead budget negotiator, said in a statement of his own:
The governor has said she's open to calling a special session if the legislative leadership comes to her with an agreement. But she has the authority to order the Legislature to meet, agreement or not. We're all going to be at the Capitol week after next for pre-session committee meetings, and if the governor was to go ahead and call a special session for sometime that week, she will have done her part. It would then fall to the legislative leadership to make that time productive.

The legislature has already dealt with $12 billion in revenue shortfalls over the last three sessions, culminating earlier this year with a $2.8 billion shortfall. The state has made $5 billion in cuts and tapped billions in federal dollars, fund transfers, and rainy day funds. They also raised $370 million (about 8.5 percent of the fix) in new revenue, including the soda tax and cutting corporate loopholes like tax shelters on out-of-state operations.

Oh, meanwhile, the projected shortfall for the next biennium—'11-13 (which begins next July)—took another $809 million hit, bumping the shortfall from $4.8 billion to "at least" $5.5 billion on the $33 billion budget, the governor's office says.

UPDATE:

State senate majority leader Sen. Lisa Brown (D-3) and new senate ways & means chair, Sen. Ed Murray (D-43), released a joint statement on the budget news.
“Today’s forecast showing an additional $385 million loss in revenue in this biennium is extremely serious.

“We need to remember that public services paid for by this budget have already been cut by over $5 billion through the usual budgeting process, in addition to a further reduction of $520 million in across-the-board service cuts enacted just last month.

“We are working with our members on a list of proposals to help close this gap. It’s our understanding that the other caucuses and Gov. Gregoire are doing the same.

“When we reach agreement on a way forward, we believe the Legislature should – and will – act immediately.”
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