Locke, lawmakers ready to cut deep

By David Ammons

The Associated Press

OLYMPIA — The budget knives are out.

After a fat-and-sassy decade of tax cuts, generous budgets and sizable surpluses, Washington state government suddenly faces the grim reality of mounting financial woes that could easily top the billion-dollar mark.

Gov. Gary Locke and lawmakers, skittish after a steady drumbeat of successful anti-tax initiatives, are looking at big spending cuts to fill the gap.

Everything from health care and parks to education programs and services to the poor will be on the line. Layoffs are inevitable, and a salary freeze for public employees may be coming.

"We’ll patch something together that is horrible and unacceptable and will cause grief to future legislatures … and then get out of town," says Senate Majority Leader Sid Snyder, D-Long Beach.

This week, the largest state agencies must submit plans for 15 percent spending cuts. Led by the Department of Social and Health Services, the six departments must show ways to slash $577 million.

"It’ll be quite a shock to a lot of legislators," says Dennis Braddock, a former House leader who now heads DSHS.

"The cupboard is pretty bare," says Maureen Morris, a former Locke budget deputy who now is trying to help counties devise bare-bones survival plans to follow if worst-case scenarios come true.

"We need to really pare back government spending as quickly and as deliberately as possible," Locke said in a recent interview.

How could a prosperous state with a billion-dollar surplus just a year ago plunge into the tank like this?

The short answer: It’s the economy.

The longer answer:

  • Washington lawmakers have been overspending. As of the latest revenue forecast, the state budget now is $761 million more than the state expects to receive in taxes. As long as the economy kept perking along, the state’s reserve funds were steadily replenished and the budget stayed in balance. That’s no longer the case.

  • The state economy has been cooling for months, a slide that began before the Sept. 11 terrorist attacks. Economists had been predicting a near-recession this year, with a recovery in the next two years. Now they’re talking about a recession, hoping that it will be brief and shallow.

  • After Sept. 11, the slump accelerated. Boeing, the state’s largest private employer, already was facing cyclical slowdowns in the airline industry. When air travel slammed to a halt after the suicide hijackings, airlines retrenched. Boeing announced layoffs of up to 30,000 workers, many in Washington state.

    Counting the loss of spinoff jobs in other companies, the state budget office estimates a total job loss of 45,000, for a loss of $3.5 billion in personal income in this budget period. That translates into a tax loss of $600 million or more.

  • Washington’s tax structure depends heavily on consumer purchases, and the war has hammered consumer confidence and discretionary spending. Tax receipts are expected to drop — the only question is how much. The state Revenue Forecast Council trimmed the tax forecast by $101 million even before the Sept. 11 impacts were gauged. A new update is due Nov. 20.

    Added to this are more than $300 million in unpaid bills due to more kids in school and more convicts in prison, the impact of citizen initiatives, the House’s decision not to tap pension reserves, forest fire costs and huge legal judgments against the state.

    Locke and others peg the total problem at $1 billion. The Senate uses $1.1 billion as its estimate; House Budget Committee co-chairman Barry Sehlin, R-Oak Harbor, says it could hit $1.5 billion.

    "It’s not saber rattling or scare tactics at all," Sehlin says. "It’s obviously alarming."

    Since the Legislature is not in session, the initial response is up to Locke. He has directed agencies to freeze most new hires and cut back on travel, equipment purchases and so on.

    More significantly, the budget office is preparing budget cuts to submit to the Legislature. This week, six large agencies turn in their plans for 15 percent spending cuts.

    Most of those cuts would come from DSHS, which provides a wide array of social programs and health benefits to the poor, elderly, children, and the disabled — 1.3 million clients in all.

    "It’s the Willie Sutton school of bank robbing — that’s where the money is. We have to go there," says state budget director Marty Brown.

    The agency is expected to propose service cuts, such as adult dental and vision care, and to make Medicaid available to fewer people. The state has one of the country’s most generous programs, and cuts will be necessary both to get through the near-term financial crunch and to survive in the 2003-05 budget cycle, Braddock says.

    The education budget is largely protected, although some of Locke’s pet programs could be on the chopping block. Locke also wants to largely shield higher education, which has been ramping up enrollment to meet soaring demand over the next decade.

    That means social services, the largest unprotected chunk of the budget, will take the brunt of cuts.

    The governor will use the November revenue update in drafting a budget to send to the Legislature, which convenes Jan. 14. The cuts take effect July 1.

    "It’s going to be extremely tough; we all have our pet programs," Snyder says.

    Locke is asking his cabinet to use a little ingenuity. Some sample ideas:

  • Cut whole programs rather than "thinning the soup," as Brown calls it. Locke says as government downsizes it should concentrate on doing fewer things well.

  • Flatten agency organizations so there are fewer managers.

  • Consider privatizing some services, or farming them out to the private sector.

  • The prison budget could be slashed if drug offender sentences were greatly reduced in favor of community treatment.

  • Revenue-generating plans could include higher tuition increases, day-use fees in the parks and a variety of fees to cover costs. Some lawmakers are talking about video poker and Powerball.

    So far, though, the governor isn’t talking about tax increases.

    That doesn’t mean it won’t be on the table, at least for discussion, before it’s over. State Sen. Jim Hargrove, D-Hoquiam, is floating the idea of a temporary sales tax surcharge of three-tenths of a percent as a way to compensate for the terrorism-related damage to the economy.

    No bandwagon, so far.

    "The last thing families need is to have government increase their tax burden," says House Co-Speaker Clyde Ballard, R-East Wenatchee. "We need government to live within its means, just as families must do during these difficult times."

    Sen. Don Carlson, R-Vancouver, and others say it will be part of the conversation, but only as a remote possibility. "You have three choices: tax increases, programs cuts, or some combination. There are no other choices," Carlson says.

    Employee unions, anti-poverty advocates and others hope the tax idea gains traction.

    "We simply need something to get us over the hump" rather than slashing the state payroll and freezing salaries, says Greg Devereux of the Washington Federation of State Employees.

    Deep spending cuts are premature, he says.

    "It behooves us to look at temporary solutions to what we all know is a temporary problem," says poverty activist Tony Lee. "We all know the economy of the Northwest is basically very sound and will rebound.

    "When we go into a downturn, the need for services increases, not decreases. This is not the time to cut back, but to step up to our responsibility to the elderly, the disabled and the children of this state.

    "When you talk about cutting a billion, that is very, very scary."

    Copyright ©2001 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

    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.

    Hundreds rally against Trump on Presidents Day in Everett

    People lined Broadway with signs and flags, similar to other protests across the country

    Alina Langbehn, 6, center, and Vera A., 6, right, sit on a swing together at Drew Nielsen Neighborhood Park after school on Tuesday, Jan. 28, 2025 in Everett, Washington. (Olivia Vanni / The Herald)
    Everett council votes to renovate Drew Nielsen Park

    Construction on the $345,000 upgrade could start as early as this fall.

    Northshore School District bus driver Stewart O’Leary pictured next to his buses shattered drivers side windshield on Friday, Feb. 14, 2025 in Bothell, Washington. (Olivia Vanni / The Herald)
    ‘Put me in, coach’: Bus driver back at work after struck by metal bar

    Stewart O’Leary, a Northshore employee, has received national attention for his composure during a frightening bus trip.

    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.

    Lynnwood councilor Joshua Binda speaks during a Lynnwood City Council meeting on Wednesday, Nov. 20, 2024. (Olivia Vanni / The Herald)
    Does the Lynnwood Council VP live in Lynnwood? It’s hard to say.

    Josh Binda’s residency has been called into question following an eviction and FEC filings listing an Everett address. He insists he lives in Lynnwood.

    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.

    An American Robin picks a berry from a holly tree on Thursday, Feb. 13, 2025 in Edmonds, Washington. (Olivia Vanni / The Herald)
    Calling all birders for the annual Great Backyard Bird Count

    The Audubon Society will hold its 28th annual Great Backyard… Continue reading

    A view of one of the potential locations of the new Aquasox stadium on Monday, Feb. 26, 2024 in Everett, Washington. The site sits between Hewitt Avenue, Broadway, Pacific Avenue and the railroad. (Olivia Vanni / The Herald)
    Initial prep work for AquaSox stadium to start, with $200k price tag

    The temporary agreement allows some surveying and design work as the city negotiates contracts with designers and builders.

    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.