Wash. revenue drops; deficit nears $9 billion

OLYMPIA – With a final piece of bad news Thursday – $552 million less than expected for the upcoming budget – state lawmakers are scrambling to put the finishing touches on a “devastating” two-year budget plan to be unveiled next week. The state’s budget shortfall, which in December was pegged at about $6 billion, now stands at nearly $9 billion. Bridging that gap, key lawmakers say, will likely mean major layoffs, cuts to teacher pay and schools, and deep cuts to health care, social services and higher education. “We’re going to have to look at a situation I never dreamed I’d be seeing,” said Sen. Margarita Prentice, D-Renton, who chairs the Senate’s budget committee. In December, Gov. Chris Gregoire stunned supporters and lawmakers with a no-new-taxes budget plan that proposed eliminating stipends for homeless people, spending less on health care for the working poor, and cutting deeply into higher education and parts of the social safety net. Advocates labeled the plan “the nightmare before Christmas.” Even Gregoire said she hated the proposal. Then things got worse. In February and again Thursday, lawmakers were told to expect hundreds of millions of dollars less than they were counting on. Even after factoring in billions of dollars in federal help, hundreds of millions more in early “belt-tightening” by lawmakers, and draining some of the state’s savings, Senate budget writers say they still have to find a way to save $4.2 billion. “It’s a lot of money to cut,” said Rep. Ross Hunter, D-Medina. Senate Majority Leader Lisa Brown and other lawmakers have said that the budget will likely include: •No cost-of-living increases for state workers or teachers. •A pay freeze for state administrators. •Increased premiums and co-pays for state employees. The state Basic Health Plan – subsidized coverage for the working poor – may see a freeze on new enrollments or changes in what it covers. And Prentice said she now “doesn’t see a way out of” cuts to General Assistance for the Unemployable, which provides health care and $339-a-month stipends to thousands of disabled people. Among them: 2,200 in Spokane. “The thing we keep coming back to is that the problems don’t go away,” said Sen. Rodney Tom, D-Medina. Homeless people getting less state help don’t just disappear, he said. And people without state health coverage turn up in hospital emergency rooms. Hospitals, the state teachers’ union, state workers, advocates for the poor and a handful of lawmakers are calling for tax increases to offset some of the cuts. Tom said he thinks that lawmakers will ask voters to approve some sort of tax hike. But during recent town-hall meetings, he said, he heard no widespread call for tax increases. “Obviously you have advocates that will be, but as far as the general public, I won’t bet on that,” he said. “If the voters do say no, we’re going to have to live with that result.” Republicans say that the Democratic majority should have moved faster with early budget cuts. “I believe that we didn’t go near far enough,” said Sen. Joe Zarelli, R-Ridgefield. He called Democrats’ decision to not approve deeper cuts earlier “a big missed opportunity to resolve a lot of our problem early on.” Democrats can either trim government to its core functions, he said, or “try frightening the voters into approving a bailout.” Even after Thursday’s forcecast, Zarelli noted, the state is expected to collect as much money over the next two years as it did in the previous two. “Think of all the families and job creators in our state who would be happy to be in that position,” he said. Republicans have been saying for months that tax increases would hurt more than help. “We are in the midst of a consumer-led recession,” said Rep. Ed Orcutt, R-Kalama. “Consumers will be the ones to lead us out, not more government spending. We need to put all talk of tax increases to rest.” Brown and other Democrats argue that some tax increases would be better than cutting critical programs. Next week’s budget plan will likely have profound ramifications for Spokane hospitals, nursing homes, schools and nonprofit groups, most of which count on state money. Under the governor’s budget proposal, for example, Spokane Public Schools was bracing for a $9.4 million budget gap. Given billions of dollars less the state treasury now expects, that figure is almost certain to get worse. In 2007, the district had to cut $10.8 million from its $300 million annual operating budget, and that meant closing a school. Superintendent Nancy Stowell met with Gov. Gregoire Tuesday at an economic roundtable in Spokane. She said the governor said to brace for the worst. “The message was ‘hang on,’ ” said Stowell.