Category: Budget

Budget “down-payment” will be heard today

OLYMPIA – A bipartisan plan to take a big bite out of the projected $2 billion state budget shortfall will be heard Monday by the House Ways and Means Committee.

The bill, sponsored by Chair Ross Hunter, D-Medina, makes $479.7 million in cuts to the 2011-13 budget, which was initially adopted last spring. Since then, continuing economic stagnation at the national level has resulted in a forecast that revenue will fall nearly $2 billion short of what’s needed to fulfill the budget and provide necessary reserves.

“This bill is a down payment on the overall solution we’ve been working on since September, when it became clear we would have to make major modifications to the budget,” Hunter said.

“It includes administrative cuts across broad areas of the budget, but other areas are left intact for now while we continue to work on solutions to more complex areas.”

Gov. Gregoire called the Legislature into a special session Nov. 28 to address the budget situation. She has released her proposals for $2 billion in reductions, including deep cuts in health, social services, higher education and public schools. The Legislature has been holding hearings on her proposals, taking testimony from people from across the state.

Reaching agreement among Democrats and Republicans in the House and the Senate on all $2 billion in cuts – including possible restructuring of programs and policies – will require action in the regular legislative session, which starts Jan 9. Hunter’s plan represents a major step toward that goal.

“We’re pleased to have worked out a way to tackle this problem that makes sense for right now,” Hunter said.

The hearing on the measure, PSHB 2058, is scheduled for 3:30 pm. For more details you can read the summary here. (PDF)

Slow-Motion Default in Wenatchee

I’m disappointed that the Legislature failed to address the slow-motion financial default in progress in Wenatchee.

7 cities and 2 counties got together and agreed to build an arena in Wenatchee. They used a stream of money from the state plus the expected “operating profits” from the arena to get a construction loan in 2008, and expected to refinance before December 1, 2011 when the balloon payment on the loan came due. Unsurprisingly, the arena isn’t generating enough cash flow to pay the operating costs, let alone any potential debt service.

The relationships between the 7 cities and the counties are complex beyond belief, but the long and short of it is that they failed to refinance and defaulted on the loan last week. I am concerned that this default will result in increased borrowing costs for other local governments and worked with the treasurer’s office to propose legislation that would have paid off the loan and forced the local governments to pay for it.

There’s been lots of news coverage of the issue, most concurring with my concerns about the impacts on other local governments. The proposal would not have impacted the state budget issue, would not have “bailed anyone out”, and would have made money for the treasurer.

The House passed the legislation but it got stuck in the Senate. This felt to me like the triumph of the edges of the political world over the center. We failed to make a practical decision that had bad politics. I hope this does not continue to be the case as we work through the budget situation.

K-12 Funding Proposal – Additional Data

I am posting CSV versions of the two data tables as several people have requested the data in searchable formats. We are typically careful about doing this as people can manipulate the data in ways that say different things than the original presentation did, and I’m hoping people are careful with it. The proposal will change over time, and the need to have current data with which to do analysis will be important.

Levy Options by school district Nov4 Table 1 (csv)

Levy Options by school district Nov4 Table 2 (csv)

 

K-12 Funding Proposal – Local Levy Swap

I’m stepping outside my role as Ways and Means chairman to put out a personal proposal for comment. The idea described below is a big one, moving around about a billion dollars in property taxes that are used for the support of public schools.

I’m giving a speech on this topic Saturday morning at the Washington State School Directors Association (WSSDA) conference, and the support files for the proposal are linked at the bottom of this post.

Making changes this significant in how schools are funded is a big deal, and the proposal will require a 2/3 vote in the legislature if it’s to be adopted. It’s revenue-neutral in the beginning, but grows more quickly than the current system does. That will let us step up our funding of schools as we recover from the economic troubles we have today. If enough members are interested in the idea it’ll move through the system. If not, we will be stuck with some very ugly budget choices.

Continue reading “K-12 Funding Proposal – Local Levy Swap”

WA Budget – Proposed Agency Cuts Explanations

I used this document in a caucus discussion of the proposed agency cuts and thought it might be interesting to people. It’s a long PDF with a duplicate copy of the spreadsheet referenced in my last budget post. To understand the spreadsheet you need to read the earlier post first.

There are 6 pages here and it’s a little wonky, but you begin to get a sense of what some of the rather bland descriptions of the impact of proposed cuts actually mean.Click the document icon to the left for the actual PDF file.

This is the document I referenced in the League of Education Voters conference call this morning.

 

Good Washington Post Op-Ed on Federal Budget

Rep. Alan Simpson (former GOP senator from Wyoming) and Erskine Bowles (former Clinton budget director) produced a difficult but rational plan for dealing with the pernicious federal budget/debt/economy problem. It’s difficult because it asks people to leave their sacred cows at the door and discuss real problems like adults. An op-ed in the Washington Post on Sept. 30th lays out their thinking. It’s worth reading.

http://www.washingtonpost.com/opinions/our-advice-to-the-debt-supercommittee-go-big-be-bold-be-smart/2011/09/30/gIQAPzjBBL_story.html#

Cows (sacred or not) are messy indoors and it is difficult to get them through doors. It’s better to leave them outside. This simple concept seems to be lost on the other Washington.

While it’s hard to quantify exactly what will happen, reports we’ve heard suggest strongly that if the supercommittee doesn’t deliver a solution that can be adopted, the default cuts to the military alone could increase national unemployment by a full percentage point. Our Washington has a higher percentage of military workers than the average state, so we might bear more of the brunt of this single cut.

What are they thinking? Times are bad, let’s not make them worse.

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.

Continue reading “WA State Budget Update – Special Session”

Washington State Revenue Forecast

I don’t comment much on the “other Washington” but I have to say that I’m a little frustrated at the game of “chicken” we’re seeing played, and the impact we expect it to have here in “our Washington.” The foodfight they had about the debt limit had drastic impacts on consumer and investor confidence, and that will have impacts on the economy here at home.

The Economic and Revenue Forecast Council (ERFC) will release its quarterly forecast of expected revenue for the state next week on the the 15th. I don’t expect it to be pretty, with a decline in the $1 to $2 billion range. Since our last forecast in June the national economy has significantly worsened and we are expecting a large decline in our revenue forecast. The ERFC has a series of meetings and presentations leading up to the official release of the forecast. Last week’s was the initial economic review, where the forecaster (Dr. Raha) sets out his assumptions about the economy and the council approves them. We had a spirited discussion of the accuracy of our normal data streams about construction activity and national GDP estimates, but in the end decided to stay with the current methodology, even though it has been wrong in the same direction 13 quarters in a row, and soon to be 14.

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Continuing Economic Distress

This is a fascinating chart that shows the difference between the current recession and everything after the Great Depression. As you go further back in time the data become less and less comparable to today’s situation, so we can’t really look at the craziness in the 19th century. I’m reading a lot of economics these days, trying to make sense of where we should go as a state. I’ll let you know if any of the people in the blogosphere have great answers. 🙂 This one comes from www.calculatedriskblog.com.

Continue reading “Continuing Economic Distress”

Healthcare cost reduction: non-obvious solutions

In Camden, New Jersey, one per cent of patients account for a third of the city’s medical costs. Photograph by Phillip Toledano.

If you’re interested in how to reduce healthcare costs you might want to watch this Frontline video from PBS. http://video.pbs.org/video/2070853636/

It’s about an article Dr. Atul Gowande wrote in the New Yorker in January that is an amazing look into non-obvious cost generation. It’s a long read, and a solution that tries to deal with this view of the problem is hard to implement at scale. Here’s the original New Yorker article: http://www.newyorker.com/reporting/2011/01/24/110124fa_fact_gawande

I don’t write about healthcare all the time, but trying to figure out how to deal with the real world in complex ways is how we’ll have a healthcare system that actually works, and save an amazing amount of money for all of us, as the costs for uninsured patients wind up being paid for by all of us, either through Medicaid or by shifting unpaid costs onto the insurance of private-pay patients.