Site Logo

Budget proposal dips into tobacco money

Published 9:00 pm Monday, March 4, 2002

By Susanna Ray / Herald Writer

By Susanna Ray

Herald Writer

OLYMPIA — Washington led a group of states to victory in the 1998 national tobacco lawsuit settlement.

Now Senate Democrats want to follow other states in borrowing against that money to alleviate the ailing economy.

Ways and Means Chairwoman Sen. Lisa Brown, D-Spokane, gave reporters a preview Monday of the "highlights, or lowlights," of the state budget she wrote, with plans to release the full version today.

To fill a $1.6 billion budget hole, the state will need to take a number of drastic measures, she said.

Those include:

  • Cutting spending by about $650 million. Some state workers would lose their jobs through a reduction of 1,500 employees, some state parks would be closed temporarily, the state library would be cut but not closed, teachers wouldn’t get as many state-funded planning days, supervision of low-risk offenders would be scaled back, counties and cities wouldn’t get state funding for law enforcement, and other measures.

    "There is no way to address a $1.6 billion problem without making decisions that are going to affect the lives of the people of Washington state, in some cases dramatically," Brown said.

  • Adding about $100 million in new revenues, in part by participating in the multi-state Big Game lottery and adding auditors to catch tax evaders. There would be no general tax increases.

  • Saving $85 million through government efficiencies, such as cutting travel, freezing equipment purchases and a possible reduction in mileage reimbursement.

  • Using $300 million of the state’s rainy day fund, since this is "the rainiest day we’ve had since 1972," Brown said. That would still leave about $120 million in the bank in case the economy gets even worse than it’s expected to.

  • Borrowing $525 million from the tobacco fund, the most controversial measure proposed Monday.

    It’s called "securitizing," and it’s quickly gaining popularity among cash-strapped states. Brown said six others have already done it, and 11 are considering it.

    The plan would be to sell private investors about a quarter of the $4.5 billion Washington state is expected to get in annual installments from tobacco companies over the next 20 years, converting part of the funding stream into a lump-sum payment that could be used now.

    Rep. Barry Sehlin, R-Oak Harbor, the House Republicans’ chief budget writer, said the move would sacrifice the future to get a short-term benefit.

    "I’ve heard it referred to as ‘Enron budgeting,’ and I wouldn’t disagree with that," Sehlin said.

    Other states "securitizing" their tobacco money are being penalized by at least 70 percent, he said, and most are only getting about a quarter for every dollar sold.

    Brown acknowledged that her budget is a short-term solution to the crisis the state is facing. But it’s a solid plan in comparison to the alternatives, she said, which include cutting another half a billion dollars from state programs.

    "This is a budget everybody hates," said Majority Leader Sen. Sid Snyder, D-Long Beach. "But there’s no other way out."

    You can call Herald Writer Susanna Ray at 1-360-586-3803 or send e-mail to ray@heraldnet.com.

    • You Might Like