Approach uses tax revenues to reduce cuts
Saying that many of the cuts she proposed last month are “unwise and unjust,” Gov. Chris Gregoire proposed a combination of program cuts, tax increases and federal aid to close the state’s projected $2.6 billion budget shortfall.
Gregoire told a joint session of the Legislature they face “an incredibly challenging year” and called for swift and decisive action.
“We cannot just cut or just tax our way out of this immediate budget shortfall,” she said. “We must have a responsible, balanced approach of painful cuts and new revenue.”
Majority Democrats praised her for a compassionate approach to an unbalanced budget. Minority Republicans said her proposals so far are short on specifics and would wait to see whether the nonpartisan approach she espoused would actually come to pass.
“This possibly could be the worst year I’ve ever seen,” said Rep. Larry Crouse, R-Spokane Valley, who has been in office since 1995. “I like the fact that she says she’s going to listen to everybody. But that generally doesn’t happen on the budget.”
Gregoire described the state as undergoing the worst economic collapse in 80 years. Last year saw 475,000 people sign up for unemployment benefits, one in 13 residents receiving food assistance, 26,000 homes put into foreclosure and 86,000 people go on the Basic Health Plan.
State revenue projections have been dropping ever since the Legislature adjourned last spring. Although the revenue may level out by February, the requests for unemployment benefits and welfare may continue to grow for months, she said.
Gregoire said she wanted to close or reduce 10 state institutions, including the Pine Lodge Correctional Facility in Medical Lake. She wants to eliminate 78 boards and commissions, and reduce or eliminate about a third of the state’s 64 small agencies. The state currently has three regional growth management boards; she wants to consolidate them into one. It has five environmental appeals boards; she’d drop that to two.
She wants to create a clean energy business development program to attract environmental jobs and streamline the state’s permit process. The state should give a tax credit for every new employee a small business hires, she said.
Not far enough, legislative Republicans argued. The state should require all permits be issued within 90 days, allow residents to buy health insurance on their own rather than getting it through an employer, contract out some jobs, and get completely out of the liquor business, they said. And don’t raise taxes at all.
In a later appearance before the Senate Ways and Means Committee, Gregoire and Office of Financial Management Director Victor Moore put some details on the budget. She listed some $779 million in spending that she wants to put back into the “all-cuts” budget she proposed in December. The state would still cut about $1 billion in spending, but eliminating some programs will cost the state more in the long term.
She said the state could collect an extra $105 million by rewriting some tax laws. It can expect some money from the federal government as a continuation of economic recovery programs and through health care reform, but those amounts won’t be known for several weeks, she said.
Gregoire seemed to underplay the call for tax increases and may be relying too heavily on federal spending, said Sen. Mark Schoesler, R-Ritzville, after her committee presentation. There’s a gap of nearly $675 million between the programs she wants to add back into the budget and the taxes she proposed raising.
“Every governor’s State of the State speech in memory is long on good things and short on specifics,” Schoesler said.
But the speech is merely an early step in the budget process that will occupy much of the session, several legislators agreed. Both parties in both houses will have budget proposals, although as Sen. Joe Zarelli, the ranking Republican on the Ways and Means Committee, noted, Democrats have substantial majorities, “so at the end of the day, we’re passengers on the Titanic.”
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