State predicts more revenue, but it might not be enough

OLYMPIA — Money Washington collects as taxes and fees is increasing, but perhaps not fast enough to stave off spending cuts for state agencies next year.

A new forecast issued Tuesday predicts the state will take in $157 million more in revenue in the next fiscal year than had been assumed three months ago.

And it predicts the slowly growing economy will generate $238 million more for the next two-year budget than had been previously estimated.

But even with those millions of additional dollars, Gov. Jay Inslee’s budget director said it won’t enable the state to cover the cost of existing public services and comply with a state Supreme Court order to meet the state’s constitutional obligation to fund public schools.

“It’s a helpful step but it’s a pretty small step when you are looking at maybe a $2 billion budget problem to solve,” budget director David Schumacher said after a meeting of the Revenue and Forecast Council, at which the latest forecast was presented.

Last week Schumacher directed leaders of state agencies to identify ways to pare 15 percent from their budgets. Some of those ideas might find their way into the 2015-17 budget proposal Inslee is to deliver to lawmakers in December.

“This is not a drill to impose across-the-board cuts,” Schumacher said. “This is a drill to give the governor options. We’re not expecting to do 15 percent in each and every agency.”

Washington is midway through the 2013-15 budget cycle, and in January the governor and lawmakers will focus on approving a 2015-17 budget.

State economist Steve Lerch said Tuesday that the state expects to take in $33.8 billion in this budget, up $157 million from his last report in February. And he said the state will collect $36.6 billion during the 2015-17 biennium. Those figures represent what the state collects and spends through a general fund and associated accounts, not federal dollars that pass through.

If September and November forecasts for revenue continue to rise, cuts might not be needed in the governor’s proposal.

But that’s a tall order given that the state needs to spend $1 billion to $2 billion to make a dent in education funding obligations per the so-called McCleary decision by the Supreme Court, Schumacher said.

And, he said, there are obligations for such things as employee pensions and health care for low-income residents, as well as pressure to provide teachers and state workers with a cost-of-living increase.

The June 13 directive stirred concern in some quarters of state government.

Corrections Secretary Bernie Warner shared the news with employees that it amounts to shaving $250 million in agency spending. It drew a sharp response from the largest union representing correctional employees.

“Cuts of this magnitude would likely mean more prison closures and the early release of prisoners into our community,” Tracey A. Thompson, secretary-treasurer of Teamsters Local 117, said in a statement “Public safety and the safety of correctional staff would be put at risk. We ought to allocate more resources to protect and retain prison staff, not make their jobs more difficult.”

Rep. Ross Hunter, D-Medina, the chief House budget writer and chairman of the Revenue Forecast Council, said that where prisons are concerned, such a deep cut can’t be done without shuttering facilities and releasing inmates.

“You can’t cut 15 percent out of (the) corrections budget and maintain anything close to a safe workplace, either safe for the inmates or safe for the staff,” he said. “To achieve that level of savings in corrections, you have to let a lot of people out. You have to shut down probably an entire facility, a large facility, to save that kind of money.”

Stephen Gehrke, a spokesman for the agency, said options will be prepared, though it’s too soon to know exactly what they might look like.

“Any cuts are inherently difficult, particularly given that the agency just went through a difficult round,” he wrote in an email. “Right now it’s important to keep in mind this is a contingency exercise and is just getting under way.”

Marty Brown, executive director of the state Board of Community and Technical Colleges, said it would be “catastrophic” to the system of two-year higher education institutions.

A 15 percent reduction is about $92 million and would require a 24 percent tuition increase as an offset, he said.

But Brown, a former state budget director, said Schumacher is taking the right approach given the pressure to come up with money for the McCleary decision.

“I thought it was a prudent thing for them to do,” he said. “It’s a planning tool. It’s not a budget.”

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