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Special session adjourns after trimming budget $480m ?>

Special session adjourns after trimming budget $480m

Washington lawmakers have adjourned their unprecedented 17-day November-December emergency session designed to start trimming the state budget to size.

But they won’t be gone for long.  The regular 2012 session, supposedly limited to 60 days, is just around the corner — Jan. 9.

The Democratic-controlled Legislature didn’t do the complete $2 billion budget-and-tax deal that Democratic Gov. Chris Gregoire had strongly recommended when she called the session.  They gave strong bipartisan agreement to a plan, House Bill 2058, that begins the task by shaving $480 million from the budget — a combination of cuts, fund shifts and revenue-generating ideas. The latter does not include taxes, such as the voter-approved half-cent sales tax hike the governor has in mind.

Legislators called it a down-payment, although unhappy minority Republicans called it only a partial down-payment with all the tough decisions yet to come.

The Office of Secretary of State, which includes the Elections Division, Corporations and Charities Division, State Archives, State Library, Address Confidentiality Program, and other programs assigned by the Legislature, was included in this first new wave of budget cuts — $2.6 million in all.

Cuts include $498,000 from the State Library, which has sustained heavy cuts in recent sessions; $1.6 million from administration of the agency; $203,000 from Elections; $300,000 in pass-through support for TVW, the state’s version of C-SPAN; and $30,000 from the Legacy Project, which produces oral histories and other projects.  The State Archives also are sustaining cuts due to declining contracts from public agencies for preservation and digitization of public documents.  The Corporations Division does not receive General Fund support and generates money from fees to sustain their operations and to help pay for schools and other General Fund programs.

The gathering storm ?>

The gathering storm

During the holiday season, the Capitol Campus usually is as quiet as a college library during finals.

Not this year, and especially not this week.

At least 3,000 protesters were expected to assemble on campus to hold rallies as the Legislature convened Monday for a special session to try to fix a $2 billion state budget gap.

Most of the protesters are worried about proposed cuts to state programs and services, including social and health services, public schools and higher education.

By 9 a.m. (photo above), about 100 demonstrators had gathered on the sandstone steps to the north entrance of the “Lege” Building.  By 11 o’clock (photo below), several hundred people were holding forth. Others circled the Capitol waving signs. Everyone tried out their lungs, shouting chants – hoping legislators inside could hear their message.

More protesters were expected as the day wore on. The special session, called by Gov. Chris Gregoire to deal with the budget emergency, can last up to 30 days.

Gregoire proposes sales tax hike, budget cuts ?>

Gregoire proposes sales tax hike, budget cuts

Gov. Chris Gregoire has proposed a $2 billion all-cuts rewrite of the ailing state budget, along with a plan to ask the voters to OK a three-year state sales tax hike of a half-cent to head off some of the cuts.

The Democratic governor said the Legislature already has slashed the state budget by $10 billion in the past three years, “shredding” the state safety net and whacking K-12, higher education and other areas.  She said her latest list of budget cuts would be too damaging to school kids, public safety and the most vulnerable — and thus her decision to seek a temporary sales tax increase.

The increase, from 6.5 percent to 7 percent, would raise about $500 million per fiscal year, and would head off her plan for reducing the school year by four days and cutting levy equalization for property-poor districts, deep cuts in higher education and prisons, and her proposals to cut social and health services to the poor, including the Disability Lifeline and the Basic Health Program.

Gregoire insisted that she and lawmakers have  “reset” state government at a “leaner and, sadly, meaner” level and that “This is not about scare tactics.”  She said the sales tax, last adjusted by the state in the recession of 1983, would sunset after three years.  She repeatedly urged Washington residents to “Please stand with me,” and said she will stump the state to campaign for the tax plan if  legislators put it on the ballot.

Democratic leaders praised her willingness to lead on the tax issue, and Republicans pushed back.

A referendum bill takes only a simple majority in both chambers and voter approval.  Democrats control the House 56-42 and the Senate 27-22, although both chambers have some conservatives called “road kill Democrats” who have voted with Republicans on fiscal matters.  It takes 50 votes in the House and 25 in the Senate to pass a bill, so there is little room for maneuvering.

Gregoire is aiming for the March 13 special election date, which would require a decision by the Legislature by Dec. 30.   The governor has called lawmakers into emergency session beginning next Monday. That session can last up to 30 days.  The Legislature already has a regular session scheduled for January.

The sales tax increase would take effect in July.

The governor also released a list of $59 million in various fees that legislators could pass with a simple majority, and a more controversial list of tax items that total $282 million and would require a two-thirds vote in both chambers or public approval.  The latter includes a business tax increase on Big Oil and banks, repealing out-of-state sales tax exemptions, imposing a 5 percent tax on luxury cars, a 1.5 percent tax on gambling and lottery winnings, and a 25-cent-a-pack increase in the state’s cigarette tax, now about $3 a pack.


WA lawmakers button down hard-times session ?>

WA lawmakers button down hard-times session

Washington lawmakers are heading back to their home districts after completing a brutal recession-era 135-day session.  Budget cutbacks, including salaries of state employees and teachers and budgets of virtually every area of government, were the rule of the day as lawmakers grappled with a budget gap of billions.

Cuts and freezes totaling $4.6 billion will affect K-12, higher education, “safety  net” programs, and a variety of state services, from parks to prisons.  The $32 billion two-year budget takes effect July 1, and will include hundreds of layoffs and a pay cut of 3 percent and higher health care costs for state workers.

The operating and construction budgets passed in the waning hours of the session and enjoyed bipartisanship support, particularly in the Senate, where the two parties crafted the spending plans, pension reform and workers’ compensation overhaul. Governor Gregoire called the session the toughest in recent memory, but hailed reforms and “a new spirit of bipartisanship” in Olympia.

The budget leaves over $700 million in reserves in case there are further revenue problems as the state and nation slowly pull out of the worst recession in decades.

The budget sweeps away the Heritage Center savings account that had been authorized previously as seed money for a new facility on the Capitol Campus to consolidate the State Archives, State Library, education center and history exhibits.  The $13 million was redistributed to the state history museums in Tacoma and Spokane, the state Arts Commission and other programs that were stripped of their General Fund support.  The fund source will not be available in two years. (more…)

Gov signs emergency budget cuts ?>

Gov signs emergency budget cuts

Washington Gov. Chris Gregoire has signed the Legislature’s $360 million plan for emergency budget cuts to help the state weather the next four months.  She vetoed the plan for a 3 percent pay cut for non-union state employees and a $1 million reduction in executive branch communications staff.

The compromise budget proposal sped through both houses on Friday and the bill was rushed to the waited governor for action.  She hailed the “collaborative and bipartisan” approach to dealing with the huge tide of red ink as the state’s economic recovery continues to lag.

The budget measure largely focuses on cuts in the biggest sectors of the budget, K-12, higher education and various social and health services.

Lawmakers still have not entirely balanced the current Fiscal Year budget, and are already at work on the new two-year budget that must be ready in time for the July 1 start of the new fiscal year.  The 3 percent salary cut, for all groups of state workers, remains a part of the governor’s proposal.

A modest uptick for WA treasury ?>

A modest uptick for WA treasury

Amid continuing state budget angst, the state’s chief economist reported a tiny ray of sunshine Monday.  The new tax collection report for the past month is up about $24 million.

That’s peanuts compared with the $5 billion budget gap that faces lawmakers, of course, and swamps the $700 million worth of spending cuts the governor and the Legislature just approved as they try to get the state’s budget back in balance.  But it’s the right direction.

Arun Raha, director of the state Economic and Revenue Forecast Council, chopped about $1.2 billion from expected revenue last month, stunning Olympia.  On Monday, his monthly update spoke to a state and national economy that have stabilized. Of the national picture, he said:

“The economy continues to muddle along. Output is growing again, but not fast enough yet to lower the unemployment rate. So we are in a recovery, but it still feels like a recession.”

He said the state’s economic expansion also continues to be slow-walking.  After a burst of hiring in the spring, the state’s private sector added just 6,000 jobs between June and October, while state and local governments were giving pink slips to 4,700 people.  Personal income, though, has “rebounded and increased at an estimated 4.8 percent annualized rate in the second quarter” and year-over-year growth in sales and business taxes is 8.6 percent. General tax receipts are up $24.1 percent above the November forecast, mostly due to  one-time business tax collections.

Tightening the belt: Gregoire orders spending cuts ?>

Tightening the belt: Gregoire orders spending cuts

Governor Gregoire has just inked an executive order requiring most agencies and programs of Washington state government to trim their sails some more.  The actual percentage — in the 4-to-7-percent range — will be filled in by the state budget office after the new revenue forecast is released on Thursday morning.

The cuts, which take effect Oct. 1, will apply to all programs without a constitutional protection, such as basic aid-to-education, bond debt service and pensions, or federal entitlements.  A shortfall of, say, $500 million, would require a 6 percent cut, says budget Director Marty Brown.

Gregoire, who was leaving Monday on a trade mission to China and Vietnam, says she expects more bad economic news when the new forecast is released later this week.  That would throw the state’s $31 billion budget into the red, since the state’s reserves are just about depleted.

That triggers either across-the-board cuts by the governor or a special legislative session to adopt more surgical cuts.  Democratic leaders of the House and Senate have rejected Republicans’ call for a special session, saying it would be nigh onto impossible to agree on budget revisions, particularly in the heat of the campaigns.

Lawmakers also face a $3 billion-plus shortfall in writing the 2011-13 state budget in the session that convenes in January.

Elway survey: Local governments feel the pinch ?>

Elway survey: Local governments feel the pinch

Independent pollster Stu Elway surveys local election officials every five years or so to see what’s on their mind as the most important “issues or opportunities” facing their area for the next five or 10 years.  This year, with the state and nation still mired in recession, it was no surprise to see that budget concerns were the top thing mentioned by six out of 10 officials. In 2005, budget pressures were mentioned by only 35 percent and in 1999, just 15 percent — third or fourth on their list.

Elway says the only issue that comes close to budget as concerns/opportunities is economic development — attracting business and jobs.  Improving infrastructure, growth management, environmental protection and transportation also were mentioned by a number of elected officials.  Public safety, one of the top budget demands, was mentioned by only 9 percent, as were replies about governance (unfunded mandates, need for strong leadership, and public distrust of government).

The survey, co-sponsored by the Association of Washington Cities, Washington State Association of Counties and the Washington Association of County Officials, reflected what Elway called a “chewing gum and bailing wire” approaching to coping to the financial squeeze.  He said many jurisdictions have reduced employee hours and drawn down reserves.

Elway added:

“The most common next things to look at are new revenue sources, securing additional flexibility within existing programs, eliminating services and trying to negotiate labor concessions.”

WA economy slowly recovering ?>

WA economy slowly recovering

washington1It’s a slow, hard uphill climb, but Washington’s battered economy is slowly recovering.

A new report out from the state Economic and Revenue Forecast Council on Thursday, a preview of the June forecast, paints a somber, yet sort-of-optimistic, picture of recovery.  The economy has grown in each of the last three quarters, consumer sales have been stronger than forecast, and jobs are being created again, writes chief economist Arun Raha.  He adds:

“Consumers appear to be willing to spend in spite of the uncertain outlook.”

The economic woes of Greece and other European countries should have minimal impact on Washington, presuming “contagion” is prevented, the report says.  Job growth should pick up steam by late this year and throughout 2011 and beyond, Raha says.

Construction and manufacturing are posting slow growth, Boeing is “increasingly optimistic” and software layoffs “are now behind us,” the report says.

The next revenue update comes June 4.  Lawmakers filled a $9 billion budget gap last year and addressed another $2.8 billion shortfall this year. More revenue problems are expected in the upcoming January session of the Legislature.

State employee furloughs still in the mix ?>

State employee furloughs still in the mix

peopleFurloughs – or “temporary layoffs” – are still being considered as one way to help close a big state government budget gap.  It’s still not clear whether the final budget plans will actually lead to agencies shutting for a day a month, as some states have done.

The Senate voted 30-11 on Tuesday to keep the money-saving idea alive.  The revised legislation, Senate Bill 6503, envisions saving roughly $50 million by imposing 10 days-off-without-pay during the upcoming fiscal year – or saving an equivalent sum by other means, such as layoffs, retirements, reduced hours and so forth. At least $10 million of the savings would come from on management positions exempt from civil service and union membership. A number of jobs are exempt from the furloughs, including prisons, ferries, highways, money-making operations like the Lottery and liquor stores, and higher education instructional staff.  K-12 also is exempt. Employees making less than $30k could use sick leave or vacation days for their furloughs.

The measure went over to the House, which has favored a general plan to save a similar amount of money, but without all of the exemptions and without emphasizing furloughs.  So stay tuned.