School Levies

For the past two years we’ve had a group of technical experts working on proposals on how to fix school levies. They just released their report, available here. The report is amazingly detailed and is a great introduction into how levies work and some possible approaches to fixing the problems.

I read the immediately previous draft of the report (about 150 pages) and haven’t walked through the differences yet, but the draft did a good job of laying out alternatives, but not such a good job of picking a solution. The basic problems:

  1. We depend MUCH too heavily on local property taxes to fund education. We are very close to the levels of dependence we had in the late 70s that created legal cases against the state for violating Article IXof the WA State Constitution.
  2. Continue reading “School Levies”

Budget Handout

I wrote a small handout on the Washington budget we adopted last month that I’ve used at a number of meetings. I’ve attached a copy here in printable form. It’s similar to a post I did  at the end of April about the original House budget proposal, but updated with final changes and numbers.

2011 Budget Handout (PDF 609 KB)

Education Funding

I’ve received hundreds of email messages this session urging me to not cut education funding. I agree. I tried very hard this year to have the least impact on K-12 as possible in the budget process. The House budget proposal was better for K-12 than either the Senate’s or the Governor’s proposals. In the final negotiations with the Senate we had to come closer to their proposal, particularly on educator compensation, though the 1.9% reduction we finally agreed to was less than the 3% the Senate had proposed.

Our K-12 investment is between 40 and 45% of the state’s general fund expenditures, so making any significant cuts without affecting K-12 is almost impossible. Specifically, the email messages urge me to “Do not cut education. Create a tax that provides stable, secure, and sustainable funding specifically for education.”

We have work to do as a state to provide an education system that’s adequate to prepare our children to succeed in the 21st century. Until this downturn I had hoped that a strategy of taking a larger share of the normal growth of the state budget would get us to the place we needed to be. I’m no longer sure this is true given the depths of the cuts that we’ve had to sustain over the last few years.

It’s hard to imagine a single tax that would adequately provide for public education, let alone our entire education system, including early learning and higher education. K-12 alone is 43% of the general fund budget. Our forebears thought they had provided for education by dedicating the property tax to K12, but this hasn’t worked out as well as they thought for a variety of reasons.

Had we not adopted the series of property tax limitation initiatives and acts of the legislature we would be generating about $1.5 billion a year more for K-12, and it would be constitutionally dedicated to public education, and not available to be spent on other things.

In addition to the inadequacy of funding at the state level there are a number of other pernicious problems in the K-12 funding system that need to be fixed. In particular,

  1. Grandfathered salaries in a handful of districts. About a dozen districts have salaries for teachers that are up to 5% higher than those for the rest of the state. As you might imagine, districts near the grandfathered districts have a huge uphill fight in bargaining compensation.
  2. There are similar differences in how school levies are figured out, with some districts able to raise significantly more money than others.

I intend to spend a large fraction of my time, and the time and attention of the Ways and Means committee in the House, addressing these problems and proposing a solution. There are a number of ideas to consider, including an intriguing idea called “The Iseminger Education Finance Plan.” David’s plan is worth reading, though there are parts of it I’m not sure will work all that well.

We have more work to do here, including ensuring that the money will be well spent. There are many policy considerations that we can do to make sure we are getting our money’s worth, and to ensure that all the children in Washington have access to an education that prepares them for a productive life. Stay tuned.

Public Safety Pensions

This year we faced a daunting problem: balancing a budget with a precipitous decline in revenue due to the ongoing recession. We made cuts to everything, including healthcare for children, public education, mental health care, and compensation for employees.

As a new budget chairman, I entered the job with a handful of principles:

  1. Nobody was getting a raise. It’s hard to argue that we should pay anyone more at the same time we are eliminating the kinds of programs we are.
  2. We were going to fund all of our obligations completely. We can no longer pretend that the economy is going to come roaring back next week, next month, or whenever and we’ll be able to make it up. This includes debt service, pension contributions, and all the other long-term commitments we are responsible for as a state.
  3. We would be thoughtful about the cuts, trying not to make reductions in places where it would cost us more money in the near future or cause irreparable damage.

Many people have written in about the level of contributions to the LEOFF (Law Enforcement and Fire Fighter) pension plans and the decisions we’re making here, and I wanted to take a moment to clarify our decision path. As they do every two years, the LEOFF board recommended contribution rates into the various plans they cover. The Legislature makes the final decision, as we do on all plans. The end result of this long email is that we funded the pensions at the rate the LEOFF board recommended. For those interested in detail, here’s the sequence of decisions:

  1. Continue reading “Public Safety Pensions”

Slowing the Growth of Medicaid

New York state has a process for meeting an attractive goal: slowing the growth of Medicaid spending to the level of medical inflation. The New York Times opined positively on it in March. The article is worth reading and it sounds really great, but you have to understand what it means.

Medicaid cost growth has two components: medical inflation and caseload growth. Medical inflation is growth in the cost of covering a single patient, and caseload growth is the increase in the number of patients. Caseload growth is inversely correlated with the economy. When we’re doing well there are fewer people eligible, and when we have high unemployment more people are eligible. As you might expect, we’re swimming in patients right now.

Continue reading “Slowing the Growth of Medicaid”

House Budget Proposal

Earlier this month I released the House budget proposal for 2011-13. Just before the end of the regular session, the Senate released their proposal. I asked for the job of chairman of the budget committee, but it’s clear my timing with the economy might have been better.

This budget is responsible, thoughtful, and sustainable. I’ve also tried to make it consistent with my values and the reason I ran for this job in the first place. I care about children – their education, their health, and their future – and I’ve tried to protect those as much as possible given the situation.

We were well-received critically:

Editorials | House budget passes key test: It balances | Seattle Times Newspaper

HeraldNet.com – Editorials: Serious response to crisis
Apr 05, 2011 · THE HERALD EVERETT, WASHINGTON … Worries that House Democrats were dragging their feet on a state budget … Generally, the House majority’s plan is serious …
www.heraldnet.com/article/20110405/OPINION01/704059973/-1/OPINION03

Continue reading “House Budget Proposal”

Revenue Forecast Due This Week

On Thursday the Economic and Revenue Forecast Council will issue our forecast for future revenue. This will cover both the current fiscal year (from now until June 30th) and the 2011-13 biennium. As has been widely reported we’re expecting bad news. My personal guess is that revenues will be down somewhere between $500 million and $1.5 billion, but probably closer to the former than the latter.

Gas prices are up and this impacts economic growth in significant ways. uncertainty about Middle East stability is probably more of a factor here. The Japan disaster is hard to figure – will there be fewer Toyota Prius’ available in Washington for people to buy, slowing car sales, or will we sell a lot of rebuilding supplies?

It’s been hard over the past couple of years to do accurate predictions, and ours have been overly optimistic. This has been painful, but it’s been worse in other states. The Pew center on the States recently released a comparison of state forecasts for 2009 (it takes a while for the data to get analyzed) and it turns out that we did OK.

The study by the Nelson A. Rockefeller Institute of Government and the Pew Center on the States, found that the median state over-forecast of revenues in 2009 was 10.2%. 70% of the states had more than a 5% over-forecast.  

In contrast, ERFC records indicate that WA revenue forecasts in 2009 were an average 2.8% over-forecast.

So, we were over-optimistic, but not as much as a lot of other states. The study referenced above points to having a consensus forecast as a best practice, which we do – the Democrats and Republicans, or the Senators and Representatives can argue with each other about what we ought to do, but at least we all agree on the facts first.

March 12 Town Hall

The 2011 legislative session is now halfway through. State Sen. Rodney Tom (D-Bellevue) and Reps. Ross Hunter (D-Medina) and Deb Eddy (D-Kirkland) invite Eastside residents to a Town Hall on Saturday, March 12 for an update and discussion on the budget and other legislation of interest.

When: Saturday, March 12 at 10:30 a.m.
Where: Redmond City Hall (15670 NE 85th Street)

For more information, contact Hunter’s Legislative Assistant Marilyn Pedersen at (360)786-7936.

Supplemental Budget Action

Today the House and Senate passed a bipartisan supplemental budget bill that sets us up to finish the 2010 fiscal year (ending in June 2011) in the black. In December we faced a $1.2 billion shortfall between expected revenue and expected expenses and solved $588 million of the problem. We solved another $367 million today, and have a solid (and agreed-upon) plan to address the rest in March when the last revenue forecast is released.

 I’m not excited about this budget, but voted for it because we have few other options. We are legally required to balance our budget every two years and the decisions we made are required to do so. We don’t have a lot of choices at this point and I find the cut exercise somewhat unsatisfying because there is no way to use strategy in the short run. We basically made all the cuts we could live with. The choices we will have to make to balance the upcoming 2-year budget will in many ways be more painful.

Continue reading “Supplemental Budget Action”

Best new news service: Undead Olympia

At last someone is analyzing Olympia news with a sense of humor. I only get gashed a little in their article on the budget we put out last week.

http://www.undeadolympia.com/2011/01/18/ross-hunters-budget-proposal-you-win-some-you-ooze-some/

A good quote: Though vampires, zombies, and werewolves are glad to see his budget proposal eliminate the Basic Health program, reduce care for the elderly, and make other undead-friendly moves, there is much frustration in the undead community over the fact that many services for children were preserved.