Washington state budget
From Sunshine Review
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The State of Washington budget is facing an approximately $8 billion shortfall in the 2009-2010 two-year budget [1] and ranks among the top 10 states in the country in terms of the size of its budget shortfall. State officials anticipated a $6 billion shortfall but recent data revealed that the gap widened by an additional $721 million in the current two-year budget and $1.6 billion more in the next biennium that starts in July.[2]
In response, Gov. Christine Gregoire's office is considering what the Seattle Times describes as "vast cuts in state spending that Democratic leaders once would have considered unthinkable, including more than $1 billion in funding for public schools."[3] However, in light of decreasing revenues and the increased budget shortfall the Governor has warned that there could be even more budget cuts.
"Everything we feared could go wrong, did," said Arun Raha, the state's chief revenue forecaster. "We are witnessing an unprecedented economic crisis, the likes of which arguably we have not seen since the Great Depression," said Raha. [2]
[edit] Impact of budget woes
- Main article: State budget crisis, 2009-2010
- State park closures could rise to 40 after a recommendation by the state House of Representatives for a 13 percent reduction of the State Parks and Recreation Commission's 2009-2011 budget. In December Gov. Gregoire's proposed budget recommended State Parks' general fund be cut 10 percent, from about $98.5 million to $88.5 million. Officials estimated the closing of about 15 state parks.[4] Washington has a total of 121 state parks. [5]
- Gov. Gregoire proposed a two-year budget that includes $990 million in cuts on state health-care spending. The state will receive approximately $2.06 billion in federal stimulus funds for the state's Medicaid program. However, some said that they believe that the large budget cut will only destroy health-care in the state. It “will shred the health care safety net, create 60,000 uninsured people virtually overnight, erode the mental health system, and make damaging cuts to providers such as hospitals and community clinics,” said Randy Revelle, senior vice president at Washington State Hospital Association. [6]
- The seasonally adjusted unemployment rate in Washington state jumped to 7.8 percent in January from 7.1 percent in December and 4.5 percent in January 2008.[7]
- On February 18, 2009, all state agencies of the legislative, executive, and judicial branches are subject to an immediate freeze on hiring, personal services contracts, equipment purchases, out-of-state travel, and training. Additionally Washington Management Service employees are not to receive salary or wage increases until February 18, 2010. There are no exemptions to the salary freeze.[8]
[edit] Budget background
Washington currently operates on a biennium budget. The biennium includes a 24-month period from July 1st of odd-numbered years to June 30th of odd-numbered years, such as the 2007-09 biennium, which runs from July 1, 2007 to June 30, 2009. According to state law the Governor is required to submit a budget recommendation by December. Although the biennium includes two fiscal years, an approved budget the legislature can modify the budget through changes to the original appropriations. This can be done in any legislative session. Since 1979 the House and the Senate enact revisions annually to the state’s biennial budget.[9]
[edit] Budget figures
The state's budget shortfall has increased to $8 billion. In March the state Revenue Forecast Council said tax collections in January 2009 were $63 million short of the amount expected. [1] As of the November 2008 revenue forecast, revenues were projected to increase by five percent, $1.4 billion, in the next biennium, but the planned increases built into the existing budget result in a projected $5.7 billion shortfall. At the time there was concern the fiscal problem could approach more than $7 billion in planned spending over expected revenue when the March revenue forecast is released. The Governor's set price tag for the 2009-2011 budget is $69,592,333,000.[10][11]
| Fiscal Year | General Funds Expenditures | % Change from Previous Year |
|---|---|---|
| 1997-1999 | $39,397,275,000[12] | --%[12] |
| 1999-2001 | $44,535,542,000[12] | 13.0%[12] |
| 2001-2003 | $49,527,904,000[12] | 10.1%[12] |
| 2003-2005 | $53,463,296,000[12] | 7.9%[12] |
| 2005-2007 | $60,517,243,000[12] | 13.2%[12] |
| 2007-2009 | $69,176,280,000[12] | 14.3%[12] |
[edit] Ideas about why the crisis exists
Gov. Chris Gregoire 2009-2011 biennial budget proposal |
- State revenues are expected to fall by $721 million through the two-year budget cycle ending June 30,2009 and by another $1.6 billion for 2009-2011. [13] More than 70 percent of the money the state collects comes from sales and business-and-occupation taxes.[2]
- The state Revenue Forecast Council says tax collections in January 2009 were $63 million short of the amount expected. [10] According to state officials weaker consumer spending, particularly on cars and homes, and weaker business-and-occupation tax collections account for the drop in state revenues. [13] Taxes from retail firms were down 13 percent, furniture 30 percent, vehicle dealers 27 percent, gas stations and convenience stores 20 percent, clothing 19 percent and building materials 18 percent. Tax payments from car dealers have been declining for 13 straight months.[10]
- According to officials the state has seen an increase for state services. Enrollment in public education has increased. There has also been an increase in applications for state-funded health programs and cash assistance. The estimated impact is an additional $175 million toward Washington's $8 billion shortfall. [14]
[edit] Proposed actions
[edit] Governor Christine Gregoire
In February 2009 Gov. Gregoire signed an "early action" savings bill that gained final passage in the House by a vote of 80-14. The bill cuts state spending by about $290 million. The bill focuses more on short-term solutions: about $91 million in transfers from other accounts, and about $340 million in federal assistance, some of which is assumed to be coming from the stimulus package.[15][16]
Gov. Gregoire proposed a $33.5 billion two-year budget in December 2008. At the time, the governor proposed more than $3 billion in cuts to help close the gap, including reducing health-care coverage for the poor and suspending pay increases for teachers and state workers. Gregoire has not issued a proposal to increase taxes and has opposed tax increases in the past.[17] According to Gregoire the state cannot touch nearly 60 percent of the budget devoted to items the state is required to provide, such as basic education, federally mandated Medicaid, pensions and debt service. Budget cuts therefore apply to only the remaining 40 percent of the budget.[11]
[edit] Republicans
State leaders throughout Washington are looking for sources of revenue however, Sen. Joe Zarelli,the Senate's Republican budget leader, said "sin taxes" although an easy choice are not going to solve the problem. Zarelli added that "sin taxes" such as cigarette or liquor tax increases have often been used in the past and don't have much more revenue to offer the state. Republicans throughout the state also noted that they do not believe that now is a good time to raise taxes. The most effective way to approach the shortfall they said is cutting spending. "The only way to get through this is like businesses and consumers are doing it: Choosing not to spend where they don't have to," said Zarelli. [18] Some state Republicans said that they fear that the legislature is focusing too much on federal stimulus funds to solve the budget shortfall. "My fear is that we're waiting around, hoping that the federal government bails the state government out," said Rep. Mike Armstrong. "And I'm here to tell you, this is our problem."[15]
[edit] Democrats
Democrats said dismal state revenue and low revenue forecasts may lead lawmakers to propose a tax package. Lawmakers said that anything from a new tax, increase of current taxes or eliminating tax breaks are all possible solutions to finding new revenue. Democrats said the continued deterioration of the economy has them worried about balancing the budget through cuts alone. Senate Majority Leader Lisa Brown said that the approved federal stimulus funds may not be enough to pull Washington out of the shortfall. "We're starting to get the impression that even with the federal stimulus, the budget shortfall will be much greater than what the governor was facing when she wrote her budget," she said. House Ways and Means Committee Chairwoman Kelli Linville said that she is concerned that cuts that are too deep will harm the state. "The standard for me about something going on the ballot is we've attempted to do this through cuts. But some of the cuts that are being recommended are the kinds of cuts that irreparably damage our service delivery or individuals," said Linville. [17]
[edit] Newspapers
Some newspapers are claiming that the root of Washington's budget dilemma is the lack of a state income tax. The Seattle Post-Intelligencer editorial board suggests the implementation of a progressive income tax. "An economic crisis is, in fact, the best time to make structural changes." Property, sales and business and occupation taxes, they said, are at their limits and the lack of an income tax, they added, "largely accounts for why Washington has a tax system that is much harder on lower-income residents and businesses than most states." The Seattle Post-Intelligencer added that with an income tax the state would not have to undergo such large budget cuts and could implement spending cuts with tax increases like in the 1980s under then-Gov. John Spellman.[19]
[edit] Economic Stimulus Package
Washington is set to receive around $4 billion from the federal stimulus bill. Governor Gregoire and legislative leaders said that between $2.1 billion and $2.2 billion will be allocated towards the state's $5.7 billion budget shortfall. All told, the federal stimulus plan would create or save 75,000 jobs in Washington, based on White House estimates.[20] On February 26,2009 the Governor launched Recovery.wa.gov. The site contains information about how the federal economic recovery plan is being implemented in Washington state. [21]
According to preliminary reports Washington is expected to receive:
- $2.06 billion for the state's Medicaid program [6]
- $168.6 million for housing and urban development [22]
- $341 million to fix state roads and highways [23]
[edit] Budget transparency
The State of Washington now has an official spending database online, thanks to the passage of Washington Senate Bill 6818, Promoting Transparency in State Expenditures, a bill that had mandated the creation of such a database by January 1, 2009.[24] The Washington State Fiscal Information site is available here.
[edit] News
- 12/03/08:Taxpayers in Washington can now see how state officials and legislators allocate taxpayer dollars. Today witnessed the launch of the Washington State Fiscal Information site. The site stems from the partial adoption of Washington Senate Bill 6818, which “indicated the legislative intent that state revenue and expenditure data be made as open, transparent, and publicly accessible as is feasible with the goal of making government more accountable.” This searchable site contains financial data on budgets, expenditures, revenues, and more. In some cases the site lacks specificity, showing aggregates instead of details. That said, the launch of this database makes Washington one of the most transparent states. This site has already received significant attention from various media sources.[25][26]
- In April 2008 Washington's Governor Christine Gregoire signed Senate Bill 6818.[27] This bill mandated the creation of a searchable, publicly available website listing state expenditures no later than January 1, 2009.[28]
[edit] Legislation
- Washington Senate Bill 6818, Promoting Transparency in State Expenditures, was signed into law.
[edit] Government tools
The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:
| State Database | Searchability | Grants | Contracts | Line Item Expenditures | Dept/Agency Budgets | Public Employee Salary | |
|---|---|---|---|---|---|---|---|
| Washington State Fiscal Information |  |  | | | | |
[edit] Economic Stimulus Transparency
- The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it is estimated that 69%, or over $541 billion, will be administered by state governments.[29]
- Washington will receive an estimated $2,898,100,490.[30]
- The economic recovery website to show how legislators and government officials in Washington are spending Federal funds is available here.
[edit] Limitations and Suggestions
[edit] Support for creation of the databases
The bill was promoted by the Washington Policy Center, and was based upon legislation developed by Jason Mercier, the Center's Director for Government Reform.[31] Senator Eric Oemig was its lead sponsor, along with senators Brandland, Tom, Zarelli, Kastama, Weinstein, Kilmer, Keiser, and Kohl-Welles.
The National Taxpayers Union issued a press release detailing the passage of Washington Senate Bill 6818.[32] NTU also wrote a letter in support of creating a grant and contract database.[33]
[edit] Public employee salary information
One man by the name of Louis Bloom has assembled (via FOIA) a very thorough listing of 2007 Washington State Employees, Job Title and Salaries.
[edit] See Also
Washington taxpayer-funded lobbying
[edit] External links
- www.fiscal.wa.gov
- Evergreen Freedom Foundation
- Washington Policy Center
- Washington Office of Financial Management
- Washington Office of Financial Management, "Washington Trends"
- Washington State Budget and Policy Center
- Senate Bill 6818, Promoting Transparency in State Expenditures
- Evergreen Freedom Foundation home page
- Model transparency legislation from the American Legislative Exchange Council is available at this link.
[edit] Additional reading
[edit] References
- ↑ 1.0 1.1 Associated Press,"Washington Legislature starts Week 9," March 9,2009
- ↑ 2.0 2.1 2.2 The Seattle Times,"$8 billion shortfall forecast for Washington state budget," February 20,2009
- ↑ Seattle Times, "Gregoire looking at massive state budget cuts", December 2, 2008
- ↑ Whidbey Examiner,"Parks fans worry as state budget tightens," March 4,2009
- ↑ Associated Press,"Washington could close up to 40 state parks," March 6,2009
- ↑ 6.0 6.1 Puget Sound Business Journal,"Groups fear Washington state legislators will divert feds’ health-care cash," March 6,2009
- ↑ Wall Street Journal,"Sleepless in Seattle: Data Point to More Home Price Declines," March 9,2009
- ↑ State of Washington,"Implementation instructions related to engrossed substitute Senate Bill 5460 for executive branch agencies," February 20,2009
- ↑ Office of Financial Management,"Washington State budget process," June 2008
- ↑ 10.0 10.1 10.2 Associated Press,"Washington monthly tax revenue less than expected," February 11,2009
- ↑ 11.0 11.1 Governor Chris Gregoire,"Proposed 2009-2011 budget and policy highlights," December 2008
- ↑ 12.00 12.01 12.02 12.03 12.04 12.05 12.06 12.07 12.08 12.09 12.10 12.11 Washington Government, Expenditure History - Operating & Capital
- ↑ 13.0 13.1 Puget Sound Business Journal,"Washington state's projected budget shortfall balloons to $8B," February 19,2009
- ↑ Oregon Public Broadcasting,"WA budget gap grows as demand for state services rise," March 6, 2009
- ↑ 15.0 15.1 Associated Press,"Wash. Legislature cuts spending," February 18,2009
- ↑ The News Tribune,"Critics say $292M cut from Washington budget won't be enough," February 14,2009
- ↑ 17.0 17.1 The Seattle Times,"House Dems say they may put tax increase on ballot," February 19,2009
- ↑ TradingMarkets.com,"Dems Getting Ready to Ask Voters for Higher Taxes," March 9,2009
- ↑ The Seattle Post-Intelligencer,"Washington Century: Flawed tax system," March 2,2009
- ↑ American Recovery and Reinvestment Act,"Estimated job effect," retrieved March 9,2009
- ↑ Governor Chris Gregoire,"Gov. Gregoire launches updated economic recovery website," February 26,2009
- ↑ Bellingham Herald,"Feds give $3 million to Whatcom County housing and homeless programs," March 9,2009
- ↑ Seattle Post-Intelligencer,"State stimulus aimed at roads," March 5,2009
- ↑ Washington Senate Bill 6818, Promoting Transparency in State Expenditures
- ↑ Evergreen Freedom Foundation Liberty Live Blog, "LEAP to Launch Searchable Budget Website," December 2, 2008
- ↑ King5 News.com
- ↑ Washington Policy Center, "Governor Signs Washington Policy Center Proposal for Searchable Budget Website," April 1, 2008
- ↑ Digest as Enacted, Senate Bill 6818
- ↑ National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online," March 10, 2009
- ↑ Wall Street Journal,"Stimulus Spending by State," March 12,2009
- ↑ Washington Policy Center, "Governor Signs Washington Policy Center Proposal for Searchable Budget Website," April 1, 2008
- ↑ National Taxpayers Union, "Taxpayer Group Applauds Washington State for Passing Spending Transparency Legislation," April 4, 2008
- ↑ National Taxpayers Union, "Taxpayers Support Creating Grant and Contract Database in Washington," April 10, 2007
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