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Senate Ds’ budget: No education cuts or sales tax hike ?>

Senate Ds’ budget: No education cuts or sales tax hike

Majority Senate Democrats have unveiled a proposed budget that deals with a billion-dollar budget gap without cutting K-12 or higher education, or relying on a voter-approved sales tax hike.

Their plan involves deferring a school support payment into the next biennium, saving $330 million; cutting spending by $356 million; adopting $31 million in new revenue; shifting $71 million in solid waste tax revenue to the General Fund from the construction budget; and capturing about $150 million in agency savings and reserves.

The proposal leaves the two-year state budget at $30.8 million, with a projected reserves of $369 million.  The House plan cuts higher education $65 million and has modest K-12 cuts.  It shifted more education payments into the next biennium, pushing forward over $400 million in costs for the next budget cycle.

The plan is without public support from minority Republicans, who helped draft and pass the last two budgets.   Republicans in both chambers have decried the education shift as a “gimmick” that kicks the problem forward, and want both larger cuts and a larger reserve.

After both houses pass their budget proposals, negotiators will hammer out the differences.

Adjournment deadline for the regular 60-day session is Thursday of next week, March 8.

Lawmakers kick off election-year session ?>

Lawmakers kick off election-year session

Washington lawmakers are back at work, confronting a $1.5 billion budget gap, the possibility of a tax referendum, and a number of touchy social issues, including gay marriage, marijuana, and abortion — all within the context of 2012 being the first election since redistricting.

The session got off to a very quiet start at noon Monday, with few speeches and few protesters outside.  That was in marked contrast to the noisy reception lawmakers got when Occupy Olympia and thousands of protesters swarmed the Capitol during the early days of their most recent gathering, a 17-day emergency session called by Gov. Chris Gregoire to begin the tough job of re-balancing the $30 billion, two-year state budget.  Lawmakers trimmed about $470 million from the problem, but adjourned once they had exhausted their list of consensus cuts.

(The Office of Secretary of State took a 10 percent budget cut, which compounds cuts made in previous budgets. Elections, the State Library, State Archives, heritage activities, and the administration will all take cuts, as will TVW, the popular public-access television service that receives pass-through funding via the Secretary of State.)

Legislators are considering a combination of further spending cuts and a tax referendum that would go to the voters. The governor has proposed a three-year half-cent increase in the state’s 6.5 percent sales tax. That would raise about $500 million per year. Other taxes, fees and closure of some tax preferences also are under consideration.

As if the budget mess weren’t enough, lawmakers also will face an unusually large assortment of politically sensitive issues, including gay marriage, mandated abortion coverage by private insurers, and measures dealing with medical marijuana and legalizing pot.

The session is limited to 60 days, although many are predicting that overtime will be needed. The Legislature and governor will be awaiting the Feb. 16 revenue forecast update, hoping for some good news.

Gregoire proposes massive cuts for November session ?>

Gregoire proposes massive cuts for November session

Washington Gov. Chris Gregoire, responding to the state’s continuing economic woes and a huge state budget deficit, is proposing a laundry list of deep spending cuts across all areas of state government.

At a televised news conference at the Capitol, she laid out ideas totaling over $3.8 billion and endorsed nearly $1.7 billion of those for the budget rewrite she’ll release in November.

The governor officially issued a call for an unusual November-December emergency session of the Legislature to adopt new budget cuts, and potentially a revenue package for the spring statewide ballot.  The session, which can last for up to 30 days, begins at high noon on the Monday after Thanksgiving, Nov. 28.

A grim Gregoire outlined broad cutbacks aimed at closing a $2 billion gap that has developed since lawmakers left town in May after writing an all-cuts budget for the two-year fiscal period that began July 1. Gregoire, a Democrat who is leaving office after two terms, called the cuts “truly devastating.”  She blamed the state’s fiscal dilemma on Wall Street, Congress, and sagging consumer confidence.

Gregoire confirmed that she will be willing to negotiate on a fee package and a revenue package that would be placed on the statewide ballot.  She said she wasn’t prepared to talk specifics, or to say her preferred division of cuts and new revenue to fix the $2 billion problem.

The governor’s cutback options include a 1 percent additional pay cut for state employees and teachers, 10 furlough days and higher health care contributions by workers. She proposes eliminating the Basic Health Program, Disability Lifeline, and other social and health programs. She lists K-12 cuts in levy equalization, class size, bus transportation and even length of the school year, reducing it one week, from 180 to 175 days.

Higher education is targeted for budget cuts of 15 percent and state need grants could be trimmed.

State agencies of more than 25 people, including the Office of Secretary of State, would be cut by an additional 10 percent. The Governor’s Office and Legislature also are cut 10 percent.

Governor calls emergency budget session for Nov. 28 ?>

Governor calls emergency budget session for Nov. 28

Washington Gov. Chris Gregoire has called the Legislature into emergency special session, beginning the Monday after Thanksgiving, to deal with a gaping $2 billion hole in the two-year state operating budget.

The decision, which will trigger a session that can last for up to 30 days, was expected, following a dire new revenue projection that knocked another $1.4 billion hole in the budget.   If the Legislature doesn’t raid the “rainy day” fund and provide additional reserves, the problem becomes about $2 billion.

Gov. Gregoire, in a news conference at the Capitol on Thursday, said “Our work will be brutal.”

She didn’t talk about new taxes, and said cuts could amount to 23 percent of the $8.7 billion portion of the budget that is not constitutionally protected or an entitlement.  She said the bulk of the cuts will have to come out of the four areas with the largest unprotected budgets: social programs, health care, K-12 and higher education, and prisons and community protection.

The governor said the timing of the session will allow lawmakers to get the Nov. 17 revenue forecast update. She said the guess is that the problem will only grow worse.

Gregoire said lawmakers can’t wait until their regularly scheduled session in January.

“We’ve got to get going.  You delay a day and the hole gets bigger.”

Gregoire said she will soon send lawmakers agencies’ own budget-cut ideas. Her budget office recently directed agencies to submit 5 and 10 percent budget reduction plans.  Gregoire said even the 10 percent plans alone won’t fix the problem, since some areas, such as corrections, can’t absorb that level of cut and not affect public safety.

The governor said she will have her own plan next month, and that both houses and both parties need to begin their own work so that the special session will get off to a fast start.

WA revenue forecast plunges another $1.4 billion ?>

WA revenue forecast plunges another $1.4 billion

Economic recovery seems “like a mirage in the desert” and Washington’s economic forecast has been chopped by another $1.4 billion. Will there be a special session of the Legislature?

The grim news came at a meeting at the Capitol of the bipartisan Economic and Revenue Forecast Council.  House budget chief Ross Hunter said lawmakers now face the the prospect of slicing perhaps $2 billion out of a $30 billion budget that has been repeatedly “scrubbed” during the Great Recession. State budget Director Marty Brown said Gov. Chris Gregoire and the budget office will work closely with all four legislative caucuses to come up with yet another round of cuts.  The governor has ruled out across-the-board cuts, but has asked all agencies to come up with 5 percent and 10 percent cutback ideas.

Some lawmakers expect a special session before the regularly scheduled January session, and Sen. Joe Zarelli, the Senate Republicans’ budget leader, has suggested putting together a bipartisan House-Senate panel to devise a cutback plan.

In his report, chief economist Arun Raha said that in normal times, it would be hard to explain all the red ink in a state that has booming aerospace, manufacturing, agribusiness,  export and software sectors. Raha used the image of a mirage, with economic recovery always seeming close at hand, only to fade away as one gets near.

“Fear and uncertainty have overwhelmed consumer and business behavior. Political gridlock in the nation’s capital gives little hope that the full toolkit of policy options will be acted on….

“Every time our state has looked like it would break out of the malaise, it has been sucked right back in.”

Housing continues of “bump along the bottom,” and the job market is very weak, he noted.

The forecast for the rest of the biennium, ending in summer of 2013, is for $30.3 billion in revenue, down $1.4 billion from the June forecast.  The ending fund balance is down $1.275 billion in the red.


More red ink: WA revenue forecast drops $778m ?>

More red ink: WA revenue forecast drops $778m

Washington’s glacial economic recovery is still bleeding red ink.  The state Revenue Forecast Council has just cut more than $778 million from the estimate of expected tax revenue, driving the state’s projected deficit to about $5.1 billion.

That compares with the current $30 billion two-year state budget.  Lawmakers have been cutting spending for the past several years and recently adopted cuts for the current fiscal year.  Budget Director Marty Brown said there is still a gap of about $200 million to deal with in the next few months.

The House is expected to unveil its 2013-15 budget proposal next week.

Both chambers are controlled by Democrats. Democratic Gov. Chris Gregoire has continued to insist that lawmakers find a no-new-taxes solution, but some lawmakers are looking at fee increases and other forms of new revenue. An actual tax hike would take a two-thirds vote in both chambers or a vote of the people.

The new forecast was unanimously adopted by the bipartisan Forecast Council, which has a member from each of the legislative caucuses, plus Gregoire’s budget and revenue directors. It shows continued gloomy forecasts as the economy continues to sputter. The red ink includes about $80 million less in the current fiscal year that ends in June, and nearly $700 million less than forecast in November for the upcoming two-year budget cycle.

The council’s director and chief economist, Arun Raha, said there remains “a great deal of uncertainty” around the globe, with soaring oil prices, the situation in Japan, and so forth.

He put it this way:

“Headwinds anticipated in the November forecast continue — slow job growth, a sluggish housing market, tight credit for small businesses, consumer retrenchment after the holidays, and fiscal drag from the federal stimulus winding down as well as state and local government expenditures.”

Until the recent uncertainties hit, the state economy was actually starting to recover, and Boeing landing the $35 billion tanker contract looms as great news for coming years, Raha said.

House Ways and Means Chairman Ross Hunter said, “The problem has become more daunting. … This is a very difficult situation. We’ll try to do the least bad solutions.”  His Senate counterpart, Ed Murray, said he was prepared for the new downturn and will work with GOP colleagues in the Senate to draft an acceptable budget. “Bracing for it (the big downturn) doesn’t mean I have the votes for it,” he said.

Gregoire calls emergency budget session ?>

Gregoire calls emergency budget session

Gov. Chris Gregoire has called Washington lawmakers into an emergency special session at 9 a.m. Saturday to deal with the state’s billion-dollar budget gap. This is apparently the first “lame duck” session the Legislature has ever had.

Leaders said they have agreement on cutting $784 million, including about $200 million of across-the-board cuts previously ordered by the governor and about $200 million in federal aid-to-education.

The session is permitted to last 30 days, but leaders said they’re planning on a one-day mini-session.

Report: WA recession over, recovery `tepid at best’ ?>

Report: WA recession over, recovery `tepid at best’

Washington’s economy is officially out of recession  — and state revenue is even growing a tiny bit.

But the recovery, mirroring the national scene, is “painfully slow” and “tepid at best,” said a new Columbus Day report released by the state Economic and Revenue Foecast Council.

The state’s chief economist, Arun Raha, announced that tax collections for the past month have grown $2.5 million above the September forecast.  In a two-year budget of $30 billion, that’s peanuts, of course, but at least the number is heading the right direction for once.  Governor Gregoire and the Legislature have dealt with a $12 billion shortfall in recent sessions, Gregoire recently ordered across-the-board cuts, and more cutbacks are coming in the new year.

Raha noted that the Great Recession has been declared over at the national level, and added this:

“After analyzing a number of Washington economic indicators, we believe that the recession in Washington’s economy has also ended. … The fact that the recession in Washington is over does not mean the economy has returned to health; it only means that the economy has stopped shrinking and returned to growth, however modest.”

That’s what passes for good news these days.

Bleak times: WA revenue projections plummet $1.4b ?>

Bleak times: WA revenue projections plummet $1.4b

Washington’s expected revenues have plummeted more than $1.4 billion.

Governor Gregoire will order across-the-board emergency cuts in state government spending, reportedly in the 6 percent range.  The state now has a projected deficit of about $520 million. Lawmakers and the governor already were girding for a $3 billion shortfall as they write the new two-year state budget this winter.

The stunning economic news was presented by the state’s chief economist, Arun Raha, to the bipartisan legislative-administration panel called the Economic and Revenue Forecast Council.  During the remaining 15 months of this budget period, the council expects the revenue to be $770 million below what was predicted just a few months ago.  And for the 2011-13 biennium that begins next July, Raha expects $669 million less.

Raha said actual tax collections are $192 million below the June forecast and that the sharp slowdown in the national and state recovery will tamp down future revenue as well.  He said:

“Job growth remains anemic; housing is looking for a new bottom; and, despite some easing in credit conditions, small businesses continue to face a challenging credit environment. There is considerable drag in the economy, little indication of any impending acceleration, and increased uncertainty.”

Raha said he has cut his 2011 employment growth forecast in half, from 2.7 percent to 1.3 percent and isn’t expecting employment to get back to pre-recession levels until 2013.  Housing starts and home sales have collapsed, he said. Two bright spots: aerospace and software.  Also, Washington’s personal income is now growing moderately, he said.

The governor, now leading a trade mission to China, left behind a fill-in-the-blank executive order for spending cuts, expecting today’s bad news. The AP reported that she’s expected to order roughly 6.3 percent across-the-board cuts, effective Oct. 1.

Gregoire: Prepare for budget cuts and more cuts ?>

Gregoire: Prepare for budget cuts and more cuts

Governor Gregoire is directing state agencies to make plans for possible spending cuts in the 4-to-7 percent range, beginning Oct. 1.

Gregoire, sounding very sober despite a recent infusion of over a half-billion dollars in federal aid, told a Capitol news conference Thursday the cupboard is nearly bare, with this fiscal year’s projected ending fund balance now down to just $72 million (out of a $31 billion two-year budget).  As noted a day earlier, state tax receipts are lagging below expected levels. Gregoire says if the September revenue forecast comes in with more bad news, agencies need to be ready for across-the-board cuts.

Gregoire said there will be further cuts in January, when lawmakers arrive in Olympia and take up a supplemental budget, and again next July, when the new 2011-13 budget kicks in.  Gregoire said she’s preparing for a $500 million budget reduction for the last six months of the fiscal year (January through June, 2011), and will draft a 2011-13 budget that requires a 10 percent cut in many areas.