Three months ago, the state reserves seemed to be abundant and healthy, and Governor Gregoire approved a $32 billion government spending plan over a course of two years. However, the most recent forecast for expected state revenues predicts that the revenues for this time frame will not only be depleted, they will be short of what was expected by $1.4 billion.
In June, when the governor signed this spending plan, it was presumed to be a safe investment as the tax revenue between June 2011 and June 2013 would be enough to cover it. But due to the unsteady state economy, taxes will bring in $1.4 billion less than previously thought. That large of a gap would completely wipe out the state reserve.
Governor Gregoire says that she views this as a $2 billion gap in expected revenue, due to the necessity of leaving some money in the reserve. She says that a special session of the legislature towards the end of the year to fix this budget crisis seems unavoidable, but that the meeting would wait until the end of the year so the results of the November forecast can be considered.
If a deficit reduction plan is not approved soon, there will be automatic budget cuts across the board; most concerning to the governor is the cut to defense. “We’re a highly defense dependent state,” she says. “The impact would be greater for us than for many other states.” Gregoire is worried that the gridlock problem in Congress will stop a plan from being approved in time.
The governor told an interviewer that she wouldn’t make across-the-board cuts – “That is a meat-ax approach and will not work now,” she said. “They [the lawmakers] are going to have to step up, work again together like they did last season, and we’re going to have to take some action.”
The House of Representatives is also planning to avoid across-the-board cuts. Chairman of the House Committee for Ways and Means says, “If you were to do across the board cuts, you’d wind up taking about 30 percent out of higher-ed investments. I just don’t think we’re going to do that.”
However, while across-the-board cuts may be avoided, that does not mean that the funding cuts won’t be severe. BC has just received a 23 percent budget – not as high as it would have been with the “meat-ax approach”, it is still substantial and will be the cause of many changes to the college in this coming year.
State colleges have already responded to this shortcoming in revenue – The Board of Community and Technical Colleges has declared a financial emergency, giving them the power to expedite layoffs of tenured professors, and the University of Washington has said that it has a plan to cut corners and save money – it has not released what that plan is yet.
Some Democrats in the capitol suggest putting a new tax package on next year’s ballot to make up the difference. Senate Ways and Means chairman Ed Murray says, “Given what the cuts look like… we… should give voters an option about whether they want to look at funding some of the things we would have to cut or significantly reduce.”
Republicans, however, oppose this viewpoint. Representative Ed Orcutt, chairman of the Economic and Revenue Forecast Council, says, “How do you get revenue out of people who still aren’t back to work? How do you get revenue out of employees who are struggling to put people back to work?”
In the shadow of the Great Recession, similar shortcomings are happening all over the country. It remains to be seen how Washington will deal with this latest financial crisis.