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Eye On Olympia

Thu., Nov. 20, 2008, 7:07 a.m.

State budget: deep cuts, layoffs likely, as state faces “unprecedented” budget shortfall…

Excerpts from this morning's paper:

Facing an unprecedented budget shortfall, Washington state officials are scrambling to shave billions of dollars in state spending.

That likely means layoffs and deep cuts in state programs.

“We are not immune to these immense headwinds that are buffeting the economic landscape,” said Arun Raha, the state’s new chief revenue forecaster.

Raha on Wednesday predicted that state revenues will be $5.1 billion less than expected over the next 2 ½ years. That’s $1.9 billion worse than expected just two months ago.


Lawmakers and state officials are also increasingly saying that layoffs look likely, although they’re not sure how many.

“I don’t think you can cut state government without cutting jobs,” said Senate Majority Leader Lisa Brown, D-Spokane. “It’s not like we purchase a lot of things. We mostly purchase services.”


“Lawmakers made promises that they are finding that they can’t keep,” said Paul Guppy, research director with the conservative Washington Policy Center. “The bright spot is that this will give Olympia something it hasn’t had in a number of years: a seriousness about how it spends people’s money.”

Guppy also noted that the state is still expected to collect more money over the next two years than in the current two-year budget. It just won’t be as much as originally expected. Republicans on Wednesday argued that overspending, not the economy, is the problem.

“No one can say they didn’t know a huge deficit was coming, because the warning signs have been up for at least the past year, when revenues began to drop,” said Sen. Joe Zarelli, R-Ridgefield.


“There will be folks out there saying ‘I told you so,’” said Brown, “But I don’t think they can say with a straight face that they would have had the pre-existing budget reduced by $4-$5 billion.”

Sen. Craig Pridemore, D-Vancouver, said lawmakers are also hoping for a national stimulus plan, hopefully by the end of the year, to give the state’s economy a boost.

Much of the decrease in expected revenue, Raha said, comes from sales and use taxes. With jobs uncertain, home values declining and a plummeting stock market, he said, consumers have clearly decided “to just sit on their wallets.”

“The problem is not employment or personal income,” Raha said in an interview. “The real problem is consumer confidence and access to credit. People have been able to spend, using their homes as ATMs.”

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