Ongoing budget woes still must be addressed

Major investments in education, ones that couldn’t be ignored, are the centerpiece of Gov. Christine Gregoire’s 2005-07 budget proposal, unveiled Monday. That’s good news, indeed.

The bad news? The state budget remains fundamentally out of balance, with creative money shifts and accounting tactics paying for most of the increase in spending.

The governor’s plan wisely avoids hikes in sales, property and business taxes, moves that would undermine the state’s fragile economic recovery. It uses a partial reinstitution of the estate tax and a hefty hike in the cigarette tax to pay for two suspended education initiatives voters approved in 2000, taxes that should have a minimal effect on the economy.

Gregoire has put off, however, serious discussion of fixing structural budget problems that have kept state spending out of step with revenues for the past several years. It’s a discussion she says she wants to have with lawmakers.

She had better hurry. The state’s current way of doing business, one that Gregoire continues with this budget, isn’t sustainable.

The chief problem is the cost of health care, which continues to rise faster than revenues. It’s an urgent dilemma that Gregoire’s budget does little to address. Generous health benefits for state employees aren’t in line with sacrifices made in recent years by workers in the private sector, many of whom are paying larger shares of rising premiums, higher co-pays or both. Doing so has made them more cost-conscious of the services they use, a reality check that should apply to state workers, too.

The state-subsidized Basic Health Plan, offered to more than 100,000 low-income residents, is on increasingly shaky ground. Costs per enrollee must be brought under control or the program may not survive.

Shifting money from one fund to another can prove short-sighted and unwise. Gregoire, for example, would move $10 million from the Local Toxics Control Account, established by voters in a 1988 initiative, into the general fund. Voters dedicated a 0.7 percent sales tax in petroleum products to fund the cleanup of hazardous-waste sites, critically important work that isn’t nearly finished.

Also, Gregoire’s budget would delay contributions to the pension system, a form of borrowing that puts the state on the hook for higher payments later.

An extended economic downturn hasn’t helped the budget picture. Major investments in education, to help students reach higher mandated standards and meet growing college enrollment demands, are welcome. And Gregoire’s budget does no short-term harm to the economic recovery.

The long-term picture, however, remains grim. We look forward to a bold effort on the governor’s part in the coming months to put the state on a sustainable fiscal footing.