In a budget forecast released Monday, the Office of Financial Management projects the state budget could be nearly $1.5 billion in the red by 2015, if the Legislature spends the state's rainy day fund.
That figure includes inflation, increased debt payments and pay increases for teachers as well as dollars to meet K-12 spending mandated by the state Supreme Court, The Seattle Times reported in Tuesday's newspaper.
Both Republican Rob McKenna and Democrat Jay Inslee promise to increase education spending without tax increases.
Gov. Chris Gregoire has said she doesn't believe that's possible. The Office of Financial Management seems to agree.
"I'm thinking of political realities and budget realities and the uncertainties of the economy, and I can't see it today," Marty Brown, the governor's budget director, said of the candidates' promises.
The Washington Supreme Court ruled earlier this year that the state is not meeting its constitutional obligation to amply pay for basic public education.
OFM projects that just meeting the court requirements would cost about $1 billion more than the state has available for the next two-year budget. That amount would grow to almost $2.6 billion in the following budget cycle. Cost-of-living increases for teachers and restoring pay cuts in previous budgets would cost even more.
McKenna said last week that if he is the governor, he would cap the growth of all non-education state spending at no more than 6 percent per biennium, while he expected state revenue would grow by about 9 percent at the same time. His projection for revenue growth roughly matches OFM estimates.
He said the difference between revenue growth and non-education spending increases would fully fund the court mandates for K-12, and more, over time. Plus it would provide additional money for higher education, he said.
Inslee also has promised to increase funding for schools without increasing taxes, but he has not gone into as much budget detail as McKenna. Inslee says his administration would boost economic growth, and corresponding tax collections, enough to cover the costs.
Based on previous actions of the Legislature, there may be some room for debate in the revenue forecast. For example, the initiative that calls for cost-of-living raises for teachers has been ignored since the 2008-09 school year, so $300 million of expected spending may not happen in the next biennium.
The budget office also found some budget items like payments on state debt are expected to grow faster than McKenna's proposed 6 percent spending cap. Debt payments are projected to grow 12 percent a biennium, costing the state an extra $180 million in the next two-year budget cycle. Medical costs also are expected to increase more than 8 percent every two years, adding dollars to the next budget.
Holding non-education increases to 6 percent a biennium would mean reducing state services, such as medical assistance, Brown said.
McKenna called that old thinking.
"The old way of doing things just assumes that everything in the budget today deserves to be there next year," he said in a statement. "My approach will be to make real reforms in state government, instead of the halfhearted measures we saw out of the Legislature last session."
McKenna would push the poor to move to health-maintenance organizations and other types of managed care to save money on health care. He would also increase efforts to encourage state workers to switch to less-expensive health care plans that offer lower premiums with higher deductibles.
Inslee has talked about freeing up money for education in part by making state government more efficient, closing corporate tax breaks that don't create jobs, and reducing the overall cost of health care by emphasizing preventive care.
His campaign released a statement Monday saying OFM's outlook "should serve as a wake-up call to anyone relying on overly rosy revenue projections to fund education. Long-term economic development is the only way to guarantee long-term, stable funding for education and the other priorities of our state."
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