WA State Budget Update – Special Session

The papers today are reporting that Governor Gregoire is calling us (the legislature) into a special session, most likely in late November after the next revenue forecast. This is a good idea, as doing so will give us about 3 more months of traction on whatever changes we make.

As you may have heard, the revenue outlook for Washington State has declined by about $2 billion dollars since we left Olympia in the Spring. Our budget for 2011-13 was lower than the 2009-11 budget, which was lower than the 2007-09 budget. The 2011-13 budget was my first budget as chair of the Ways and Means committee and we tried hard to have a transparent, rational, and responsible budget.

The budget we did was recognized by most people as a pretty serious effort to achieve this balance. We:

  • Spent less than we expected to collect in revenue, for the first time in several cycles.
  • Used no accounting gimmicks to delay the decisions that needed to be made.
  • Preserved our basic education investment and the core elements of our social safety net.
  • Cut the bejeebers out of everything else.

We made some significant changes in how some services are handled, with higher ed being funded much more by tuition than it has been in the past, with some significant reductions as well. Interestingly, as we increased tuition substantially, we also increased the amount of money we put into the state “basic need grant” funding to help low-income students maintain the same affordability index.

To resolve the new $2 billion hole in the budget we will have to make significant changes, either additional cuts, revenue increases, or (more likely) some combination of the two. I’ve been focused on trying to really understand the cuts we would have to make if we did do an all-cuts budget, as that seems like the first step. It’s harder than you’d think.

We start with about a $32 billion 2-year budget that runs from July 1 2011 to June 30 2013. There is no practical way we can make significant cuts before January 1, and even that will be difficult for a variety of reasons mostly having to do with antiquated computer systems and legal notification requirements, so you only get to cut from the last 18 months of the biennium, or about $24 billion.

Next, you look at the items you can’t cut. The simplest of these is payments on our bonds. We borrowed money in the past to build schools, buy parkland, remodel university buildings, etc., and we have to pay these off. Next there are some things that are constitutionally required, like our “basic education” commitment. This locks up 93% of the K-12 budget. Federal legal requirements (mostly Medicaid) make further exclusions.

We’re left with about $7 billion that is discretionary, that we can legally cut. We’d have to take $2 billion of that.

The spreadsheet below illustrated this in a bit more detail. You’ll want to click on it to zoom in unless you have much better eyes than I do.

The columns over on the right show what would happen if we did across-the-board cuts and distributed them proportionally to the amount of the budget that can be cut. We’d take about 29% of our remaining higher education investment, with similar cuts in health and human services.

This is an illustration, not an actual proposal. I don’t think the higher ed reduction is a good idea. This is why we are not doing across-the-board reductions, and will spend an immense amount of time trying to craft a budget that is a better representation of our values but that also balances.

In the interest of not writing forever posts I’m going to cut this one off, but intend to write a regular series of updates on different parts of the budget this fall as we work through them. I’m open to suggestions on what you’d like to hear about. I will most certainly address:

  • K-12, both key policy initiatives and funding.
  • Higher Education. We have some large challenges here outside the financial issues, including how we ensure that we are developing the talent we need for economic growth.
  • Heathcare, including how we migrate our system towards the 2014 changeover in the national healthcare bill. Obamacare will result in significant changes in Washington.
  • Human services, including how we address child welfare issues in abusive situations. This is closely related to our early learning investment, and I’ll try to address them both at once.
  • Corrections.
  • Human Resources issues, including employee healthcare and compensation.

As we get closer to having a solution I’ll try to talk about options here. As I get more leverage in the Legislature I have less and less ability to write about everything before it happens, or sometimes it doesn’t happen. It’s like the Heisenberg uncertainty principle – writing about it changes the nature of the “it.”


Author: Ross

I am the Director of the Department of Early Learning for Washington State. I formerly represented the 48th Legislative District in the State House of Representatives, chairing the Appropriations committee and spent many a year at Microsoft.