State budget cuts may not go deep enough

OLYMPIA — One question nags at Gov. Chris Gregoire after signing a new state budget Tuesday paring $4 billion in spending from schools, health care, social services and public safety.

Will it be enough savings to keep government operating in the black until the Legislature returns in January?

She’s hoping it is. But if revenues continue to freefall in the recession, reserves could disappear rapidly and legislators could be called back into special session.

“It’s premature at this point, absolutely not out of the question, because I am fearful we have not yet hit bottom,” Gregoire said Tuesday minutes after signing what will be the blueprint for state spending through mid-2011.

It contains $491 million in reserves the governor can tap plus another $250 million in a rainy day fund that lawmakers’ help is required to open.

Those available surplus dollars are already dwindling because the state has nearly $100 million less in revenue than assumed from when the Legislature passed the budget last month to when the governor signed it Tuesday.

More declines in receipts are expected in the coming months if the lagging economy has not bottomed out. How much of a loss will be tracked when revenue forecasts are issued in June, September and November.

Gregoire wanted lawmakers to leave her a “back-up plan” with priorities for where to cut if it becomes necessary. They didn’t.

“The real question is, ‘Can I make enough cuts at my own discretion to get us through to January?’ I don’t know that,” she said in a separate interview. “There’s no desire to come back into special session. I don’t want to call them back and they don’t want to come back.”

Rep. Kelli Linville, D-Bellingham, the chief budget writer in the House, said she’s confident they won’t be returning prematurely.

“I am going to predict we don’t,” she said, noting the governor can, on her own, impose a 1 percent reduction in state agencies’ spending.

“I would encourage her to do that,” Linville said. “We did leave some programs basically intact so that she has some leeway.”

Sen. Rodney Tom, D-Medina, vice-chairman of the Senate budget committee, agreed with Linville there should be enough cushion. If not, he said, legislators would want a say in where additional reductions are made.

None of them relishes returning especially Democrats, who as the majority party, had to slash money from many cherished programs serving children, the poor and the elderly.

They didn’t expect this two years ago when they approved a $33.6 billion budget with $2.1 billion in reserves.

Then the economy turned upside down, revenues tumbled and it became clear state government would be tightening its belt.

A predicted shortfall grew, ballooning from $6 billion to $9 billion between December, when the governor proposed her budget, and April when the Legislature adopted its version.

That sum is the difference between the amount of anticipated tax revenues and the costs of maintaining existing services, providing for negotiated pay raises, carrying out new desired programs and paying for higher enrollment in schools and on state-subsidized medical services.

So while the $9 billion is not a deficit — the state has money to pay its bills — it was the sum to be overcome to avoid red ink.

The Legislature did so with spending cuts and infusion of dollars from other sources including $3 billion of federal stimulus, reserves and transfers from the capital budget and lottery.

In the end, the budget signed by Gregoire spends about $34.5 billion — including the one-time federal aid.

The cuts are the cause of nearly 3,000 teachers statewide receiving layoff notices, up to 40,000 people not allowed to enroll in state-subsidized health insurance, a college tuition increase of 14 percent annually at four-year schools and 7 percent at community colleges, and hundreds of state employees losing jobs.

“When I introduced my budget in December, I said I hated it. I’ve not grown any fonder of this one. It’s a necessary evil,” Gregoire said Tuesday.

“In the weeks and months and years to come, we will continue, and so will all the people in the state of Washington, feel the impact of these very difficult choices that were required to be made,” she said.

Reporter Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com.

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