Gregoire orders austerity budget

OLYMPIA — Gov. Chris Gregoire, nervously eying a possible national recession, urged state lawmakers Monday to “batten down the hatches” and keep a fat budget reserve.

For the first time, she indicated she might accept a savings account smaller than $1 billion, but said she’s still demanding a frugal state budget this winter.

Even before the national and international slowdown and the swoon on Wall Street, Gregoire proposed saving most of the state’s projected reserve of $1.4 billion. The governor proposed a $1.2 billion savings account and legislative leaders were talking about a $1 billion level.

The state Revenue Forecast Council is expected to punch a big hole in that surplus when it meets on Friday. Senate Majority Leader Lisa Brown, D-Spokane, an economist, is predicting a hit of between $150 million and $200 million. The council chairman, Rep. Jim McIntire, D-Seattle, has the same guess. Senate budget Chairwoman Margarita Prentice, D-Renton, said it could be even worse.

Gregoire told a news conference she is making no prediction, but said it’s time to consider trimming the $33.3 billion, two-year budget that was written last year, and to be cautious with any new spending.

Approving any new priorities, such as flood relief and housing-related spending, may require postponing some of the previously approved appropriations for other things, she said.

She did not give examples of possible budget cuts.

Gregoire indicated she’s willing to back off her request for $1.2 billion, and possibly even below the $1 billion mark, depending on how bad the new forecast is. That was the first time she has said $1 billion isn’t an absolute bare minimum reserve she would accept.

But Gregoire said she still wants a frugal approach, given these uncertain times.

“Our (state) economy is strong, but the national economy is weak and weakening,” she said. “I want us to batten down the hatches. I want us to leave a good reserve.

“Now is the time to be fiscally frugal because I can’t tell when the nation is going to pull out of this economic downturn, to be perfectly honest with you.”

Prentice said lawmakers are prepared for bad news from the forecast council and spending will be restrained.

“It doesn’t look good,” Prentice said. “It’s a tough time and in tough times, you tighten up.”

The House releases its draft of the budget next week, probably on Wednesday.

In a report released by the forecast council on Monday, ChangMook Sohn, the state’s chief economist, said actual revenue collections are up about $20 million above the level forecast in November.

Consumer spending weakened considerably in December, but strong tax receipts from October and November more than offset that, he said. Year-over-year growth for the fourth quarter of 2007 was 6.3 percent, better than the national 4.8 percent growth.

Retailers reported a falloff in five of 12 sectors, including car dealers, electronic and appliance stores, building materials and garden supply stores.

Some sectors were bright spots, Sohn wrote, including construction, up 8 percent, information, up 11.4 percent, and wholesale trade, up 10.7 percent.

Overall, sales, business and utility taxes were down $32 million in December from the last forecast. But the three-month total is still up nearly $33 million because of the robust October and November activity.

The real estate sector, which helped ignite the state economy in recent years, is weak. January 2008 taxable activities were nearly 36 percent below a year earlier, dropping about 18 percent last month.

National economic news is mostly negative, Sohn noted, with weak growth in the gross domestic product, falloff of jobs, and lower consumer confidence. But he also noted that both the state and national unemployment rates remain low.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Local News

Customers enter and exit the Costco on Dec. 2, 2022, in Lake Stevens. (Olivia Vanni / The Herald)
Costco stores could be impacted by looming truck driver strike threat

Truck drivers who deliver groceries and produce to Costco warehouses… Continue reading

Two Washington State ferries pass along the route between Mukilteo and Clinton as scuba divers swim near the shore Sunday, Oct. 22, 2023, in Mukilteo, Washington. (Ryan Berry / The Herald)
Ferry system increases ridership by a half million in 2024

Edmonds-Kingston route remains second-busiest route in the system.

Firefighters respond to a 911 call on July 16, 2024, in Mill Creek. Firefighters from South County Fire, Tulalip Bay Fire Department and Camano Island Fire and Rescue left Wednesday to help fight the LA fires. (Photo provided by South County Fire)
Help is on the way: Snohomish County firefighters en route to LA fires

The Los Angeles wildfires have caused at least 180,000 evacuations. The crews expect to arrive Friday.

x
Edmonds police shooting investigation includes possibility of gang violence

The 18-year-old victim remains in critical condition as of Friday morning.

The Everett Wastewater Treatment Plant along the Snohomish River. Thursday, June 16, 2022 in Everett. (Olivia Vanni / The Herald)
Everett council approves water, sewer rate increases

The 43% rise in combined water and sewer rates will pay for large infrastructure projects.

Robin Cain with 50 of her marathon medals hanging on a display board she made with her father on Thursday, Jan. 2, 2025 in Lake Stevens, Washington. (Olivia Vanni / The Herald)
Running a marathon is hard. She ran one in every state.

Robin Cain, of Lake Stevens, is one of only a few thousand people to ever achieve the feat.

People line up to grab food at the Everett Recovery Cafe on Wednesday, Dec. 4, 2024 in Everett, Washington. (Olivia Vanni / The Herald)
Coffee, meals and compassion are free at the Everett Recovery Cafe

The free, membership-based day center offers free coffee and meals and more importantly, camaraderie and recovery support.

Devani Padron, left, Daisy Ramos perform during dance class at Mari's Place Monday afternoon in Everett on July 13, 2016. (Kevin Clark / The Herald)
Mari’s Place helps children build confidence and design a better future

The Everett-based nonprofit offers free and low-cost classes in art, music, theater and dance for children ages 5 to 14.

The Everett Wastewater Treatment Plant along the Snohomish River on Thursday, June 16, 2022 in Everett, Washington. (Olivia Vanni / The Herald)
Everett water, sewer rates could jump 43% by 2028

The rate hikes would pay for improvements to the city’s sewer infrastructure.

The bond funded new track and field at Northshore Middle School on Thursday, Oct. 24, 2024 in Bothell, Washington. (Courtesy of Northshore School District)
Northshore School District bond improvements underway

The $425 million bond is funding new track and field complexes, playgrounds and phase one of two school replacements.

Pharmacist Nisha Mathew prepares a Pfizer COVID booster shot for a patient at Bartell Drugs on Broadway on Saturday, Oct. 1, 2022, in Everett, Washington. (Ryan Berry / The Herald)
Everett lawmakers back universal health care bill, introduced in Olympia

Proponents say providing health care for all is a “fundamental human right.” Opponents worry about the cost of implementing it.

Outside of the updated section of Lake Stevens High School on Thursday, Feb. 27, 2020 in Lake Stevens, Wa. (Olivia Vanni / The Herald)
Lake Stevens, Arlington school measures on Feb. 11 ballot

A bond in Lake Stevens and a levy in Arlington would be used to build new schools.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.