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"STATE BUDGET NEWS
The Legislature has been concerned about the growing shortfall in state revenues for quite some time, which is why we requested that the Department of Revenue prepare a revenue forecast to be delivered ahead of the normal date in mid-March.
Last week they told us that their projections indicate that Washington’s revenue shortfall is the largest in modern state history, both in terms of total dollars ($8.3 billion) and in percentage of the overall budget (nearly a quarter of the state budget).
This puts our state in worse fiscal shape than when the initial all-cuts budget was proposed by the Governor in November, and we’re not alone — the recession has wreaked havoc on 46 state budgets all across the country to the tune over $350 billion over the next two-year cycle.
The global economic meltdown has made lawmakers’ task for writing a budget harder, and there are no easy solutions. Although a federal economic recovery bill was signed by President Obama this week, it is not a bailout — the vast majority of those funds are dedicated to specific programs and projects that will help create jobs. This funding will not be able to fill the gap in state revenues that are the result of a national recession that began more than a year ago.
We are in the midst of an economic crisis that hasn’t been seen since the Great Depression, but we can’t let that become an excuse for sacrificing things like education for our children, access to health care, and protections for those who can’t take care of themselves.
The Legislature has already sent a first round of budget cuts to the Governor — the earliest in state history that’s ever been done — as an indication of just how urgent this situation is, but we’ve got more to do.
Unfortunately, using a “cuts only” approach to close the gap between state revenues and state spending isn’t as easy as it may sound. We wouldn’t be able to save enough through cuts even if we eliminated our entire state’s correctional system, our entire higher education system, all care for our seniors, and all care for those with developmental disabilities!
We also need to recognize that spending reductions alone can actually harm our economy.
Economics professor Dick Startz of the University of Washington estimates that every $1 billion reduction in annual state government spending during the recession will cost Washington about 15,000 public and private sector jobs.
Balancing the desire to fund worthy programs against our limited fiscal resources is a challenging task that will require everyone — Democrats and Republicans, advocates and citizens, all levels of government — to help find solutions.
This is a difficult challenge for all of us, and we will rise to meet this challenge as one community.
BUDGET MYTHS AND FACTS
The budget is a complicated issue that takes far more time than is appropriate in a single issue of E-news, so I’ll be providing some detailed information each week on state revenue and expenditures, the budget process, and what the Legislature is doing to help ease the impact of the nationwide recession.
This week, I’d like to address some budget myths that my staff and I have heard:
Budget myth # 1: The Governor and the Legislature are to blame for Washington’s budget shortfall.
Budget reality: The Governor and the Legislature have doubled the state average of total annual reserves in each of the last three years. 46 states currently face budget shortfalls, totaling $350 billion over the next two years.
Budget myth #2: Washington’s budget shortfall is the result of overspending.
Budget reality: State spending as a share of personal income has been declining for over a decade.
Budget myth #3: State spending in 2005 is the appropriate level for state spending today.
Budget reality: With an increase in population, inflation, service costs – and despite disappearing federal dollars — Washington has made record investments in education, health care, public safety and the environment over with past four years. But no one believes our kids are too educated, our families are too healthy, our communities are too safe, or our air and water are too clean.
Budget myth #4: We can simply cut waste and inefficiency in government and do more with less.
Budget reality: Washington ranks as the best-managed state in the nation, according to the Pew Center on the States in 2008. In 2003-05, the last time we used a cuts-only approach to address a serious shortfall, the state cut health care for 20,000 people, eliminated dental care for low-income adults, and froze funding for better teachers and smaller classrooms. We face similar choices now. A cuts-only budget means we do less with less.
Budget myth #5: Cutting human services creates costs savings.
Budget reality: Cutting needed human services such as health care and mental health treatment doesn’t eliminate the need. In most cases, it exacerbates the need, and increases the costs — both financial and human — down the road.
Budget myth #6: The federal stimulus plan will bail out our state budget.
Budget reality: The federal stimulus funds will optimistically help with about a quarter of Washington’s budget shortfall."
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Sen. Haugen lays out the issues nicely. Of course, the real issue is how the Legislature will respond. Time will tell. -- Dennis
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