July 2, 2009 in City

Recession increases demand for state help

Curt Woodward Associated Press
 

OLYMPIA – Higher demand for government services is pushing Washington’s state budget deeper into the red amid the lingering recession.

Wednesday’s update of state caseloads will increase government costs about $250 million more than previously expected through the next two-year state budget cycle.

Combined with a roughly $200 million shortfall recently pegged to a drop in tax collections, the state is now facing a nearly half-billion-dollar hole in the budget.

The state’s Rainy Day Fund still has a projected balance of about $250 million through the upcoming budget cycle. Tapping the fund requires legislative approval.

Gov. Chris Gregoire was ordering another round of cost-cutting steps Wednesday to deal with the portion of the shortfall tied to lower tax revenue. Solutions for the rest of the shortfall may have to wait until January, when the Legislature returns to work, Office of Financial Management Director Victor Moore said.

In Wednesday’s report, forecasters said the recession was driving more people to seek assistance.

The state’s high unemployment rate, presently 9.4 percent, drove growth in state medical coverage for families on welfare. The number of people on that program is expected to rise to nearly 52,000 by mid-2011, about 19 percent higher than forecast.

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