Last week Kelli Linville, the chair of the House Ways and Means Committee, and I sent a letter to Gov Gregoire outlining our recommendation that she use the authority she has to make across the board cuts in the budget. We did this because changes in the economy and lack of action at the federal level have changed some of the underlying assumptions we made in drafting the budget last Spring. In particular,
- Congress has changed their mind about providing states with an extension to improved matching rates for the federal Medicaid program. This leaves about a $480 million hole in our budget.
- The state Revenue Forecast Council (www.erfc.wa.gov) lowered estimates of revenues in the 2009-2011 biennium by $200 million.
- Initial collections reports based on activity in May came in about $85 million below the revised estimates.
A budget is based on assumptions, and if changes on the ground affect the assumptions, it’s prudent to react as early as possible. The text of the letter is included below if you’re interested.