Buoyed by good economic news — unemployment is down, the stock market is up, Boeing is staying — Gov. Gary Locke is ready to open the state’s wallet again.
With the pain of last year’s $2.7 billion budget hole still fresh in everyone’s minds, though, it seems premature to launch new discretionary spending initiatives without making offsetting cuts elsewhere. That’s part of what the governor is proposing in the supplemental budget he unveiled Thursday.
Much of the proposed spending is mandatory. School enrollment, medical caseloads and prison populations exceeded forecasts, and bills from this year’s wildfires and floods need to be paid. That money will come out of the state’s $544 million reserve, appropriately.
But Locke also is proposing new spending for higher education, health care and other core services, and an extension of key business tax incentives, much of which would also come out of reserves. Locke’s plan would leave a reserve fund balance of $172 million, which sounds like a lot but isn’t. It’s less than 1 percent of the total general fund, far below what could be needed if the economic recovery stalls.
Not only that, adding to total expenses now puts future budgets in worse shape than already predicted. The latest state projections show a shortfall of some $750 million by the end of the next biennium, rising to almost $3 billion by 2009. Sticking our fiscal neck out now will only make those numbers worse, setting the stage for even more painful cuts.
It’s not that the governor’s priorities are off — many colleges are overflowing, and Locke’s plan would add about 5,000 new enrollment slots. Improving access to higher education is a key part of improving the state’s business climate and attracting good-paying jobs. The governor also would spend more to lower the premiums paid for families with children on Medicaid, getting federal matching funds in the process. Who could be against that?
The problem is, there’s no shortage of worthy programs, but until the economy is back at full strength, funding new ones is dangerous. Reserve funds shouldn’t be used for new, discretionary spending.
Locke’s Priorities of Government process, which won wide acclaim last year, begins to fall apart if spending limits aren’t observed. If you can just increase the size of the pie, you don’t have to worry about the size of its pieces. Everything can be a "priority."
If Locke’s priorities are shared by the Legislature, lawmakers should fund them. But until revenues rise substantially, total spending should be held in check. Otherwise, we’re just asking for more pain down the road.
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