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Gregoire: Toss budget plan

Fri., June 25, 2010

Governor wants ‘zero-based’ system

OLYMPIA – Washington state faces a shortfall of $3 billion in the next biennium and has to come up with a new way of writing budgets, Gov. Chris Gregoire said Thursday.

It will have to review every program, demand better performance and consider getting out of some services the state currently provides, she said. That could include turning some ferry routes over to private management, or finding a private operator to run the state data center.

“We must challenge all standing assumptions,” she said.

While governors routinely promise to scrub the budget of nonessential services and inefficient programs, Gregoire insisted that the recession has made this a new game. The state will start with a system called Priorities of Government and a “zero-based” budget, meaning each department starts from scratch to prove it should get the money it says it needs. State agencies then must answer a series of questions that involve fiscal responsibility, efficiency and performance.

The top questions will be: Is the activity an essential service? If it is, does state government have to perform the service or can it be provided by others?

Gregoire announced a plan for a new way to write a budget that includes public hearings around the state, a 32-member panel of advisers, and the prospect of privatizing major state services like the ferry system. She insisted no state agency will get a free pass in the new system.

It will also consider if the services have to come out of the general tax fund, or if people who use it should pay for some of the costs, or if federal money is available.

While state tax revenue is expected to grow, state expenses are expected to grow faster. The state is projected to collect some $33.6 billion in taxes in the 2011-’13 biennium; if it keeps all the programs it currently pays for, keeps the programs it pays for with federal recovery money, and pays for everything voters have demanded through initiatives, it would need $36.9 billion.

Gregoire said she can’t fill that gap with new taxes. “I’ve got to look at restructuring.”

The Office of Financial Management will hold at least four hearings around the state to get ideas from the public on budget priorities. The first one is scheduled for July 19 in Tacoma; the others aren’t scheduled yet.

To generate and test new ideas, she announced a panel of 32 she’s calling the Governor’s Committee on Transforming Washington’s Budget. It has leaders from business and labor, large employers, legislators and community leaders. It includes some of the biggest critics of the way the most recent budget was written and passed, including state Sen. Joe Zarelli of Ridgeview, the Republican’s chief budget expert in the Senate, and Jason Mercier of the Washington Policy Center, a fiscally conservative watchdog group.

Mercier, who was at the governor’s news conference, said he thought the state may be forced into restructuring its budget because it has run out of options. The federal government can’t keep sending stimulus money and the Legislature has run out of accounting maneuvers.

Mercier said the state must reconsider how it provides state services, and whether it needs state employees to provide them.

“For this to be successful, we’re going to have to change the mindset,” Mercier said.

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