Locke sharpens budget ax

Associated Press

The Locke administration is girding for budget cuts of as much as $1 billion, including probable state government layoffs, as the state responds to the damage done by terrorists to the aerospace industry and the rest of Washington’s once-sizzling economy.

"We need to really pare back government spending as quickly and as deliberately as possible," Gov. Gary Locke said in an interview with The Associated Press.

Locke said he’s working with his cabinet and budget directors to come up with ways to trim spending. The proposals will go to the Legislature. He ordered agencies to leave as many job vacancies unfilled as possible and to save on travel, equipment, furniture and any discretionary areas of their budgets.

Cities and counties were put on notice that their state aid may be cut. The state is providing local governments, including transit districts, about $100 million a year to offset the loss of car-tab money after voters and the Legislature eliminated the tax.

Locke froze spending on about $400 million worth of construction projects, mostly on college campuses and to reimburse local school districts for building new schools. A number of the projects will get the green light again in a few months, depending on new revenue projections next month, he said.

"Clearly, we’re in for some rough economic times. … Obviously, we’re going to have to look at spending cuts and we’re going to have to focus on core services," the governor said.

The state will manage its way out of the budget crunch, Locke said.

"None of the scenarios we are looking at right now calls for a tax increase," the governor said.

He said he wants to see the November revenue forecast before making decisions about the depth of cuts to propose to the upcoming legislative session. His budget rewrite is due in December.

The Legislature left town this summer with a balanced budget of $22.8 billion in place.

Marty Brown, Locke’s budget director, told reporters Tuesday that revenue could be down anywhere from $200 million to $800 million, depending on how severe the state’s economic downturn turns out to be. He said the recession apparently will be deeper than the 1993-94 downturn.

Locke dropped the news on his cabinet directors on Monday. "They were pretty bleak," Brown said.

The Legislature also has about $300 million in various expenses it must cover, including higher K-12 enrollment and a growing prison population, he said.

Brown declined to speculate on the size of the cuts Locke will propose, but conceded it could be as much as $1 billion. He said at least some layoffs appear inevitable.

The state has a reserve fund of about $450 million, but Brown said Locke isn’t willing to spend much of that.

Earlier this month, forecasters chopped $100 million from the expected revenue, and that didn’t fully account for the impact of the terrorist attacks.

Just a few hours after that forecast was approved, Boeing announced it will lay off as many as 30,000 workers, largely due to the severe setback in the air travel industry caused by the attacks.

Locke said the loss of good-paying Boeing jobs also will trigger a loss of spinoff jobs and a general drop-off in consumer spending.

"There will be tremendous ripple effects all across our state, to all sectors, to all businesses. That’s all going to compound the tough economic times we’re facing."

Locke said the government cutbacks need to start soon.

"I believe that whatever we do, we need to do as quickly as possible," he said. "That means now. … If we wait until the second year of the budget cycle, the cuts will be more draconian, because there would be a shorter time frame for saving money."

The governor said he wants to shield public schools and colleges — effectively taking about 60 percent of the budget off the table.

"Education is the key to our prosperity, because when the economy does rebound, we want to make sure our kids, our citizens, have the training and the skills to take advantage of the new jobs."

On the Net:

Legislature: www.leg.wa.gov

Governor: www.governor.wa.gov