September 17, 2010 in City

Final decision on state cuts, layoffs to come by Oct. 1

By The Spokesman-Review
 

State health care programs could shrink or disappear in the coming months, at least one state prison could close and college classes could be more crowded next semester as state agencies strive to cut $520 million to keep the general fund from falling into a deficit.

“Our communities will feel it, our services will be reduced throughout the state,” Gov. Chris Gregoire said Thursday after ordering state agencies to cut 6.287 percent from most budgets outside of basic education.

In an afternoon press conference from Shanghai, China, where she was on a trade mission to increase exports and tourism, Gregoire said certain health care programs not required by federal law, including the state’s Basic Health coverage for low-income people, might have to be eliminated. The Department of Corrections could close another facility, although that process takes months and might not save the amount needed by the end of the fiscal year. Some DSHS programs require 90-day notice to recipients and can’t be cut immediately, either.

Final determination on where cuts will be made or how many state workers will be laid off will come by Oct. 1.

Cuts are being ordered because economists believe the state can expect to take in $770 million less through the rest of the fiscal year, which would wipe out a previously projected surplus and leave the state with a $520 million hole in its proposed spending plan.

The state can’t run a deficit, so it has two choices: The governor can order all spending that isn’t protected by a constitutional mandate – which includes basic education, pensions and debt the state has already incurred – to take the same percentage level of cuts without eliminating programs the Legislature has approved; or she can call a special session to rewrite the budget to find at least $520 million in savings.

Gregoire said she opted for the former, even though it meant “I can’t prioritize.” She would only call a special session if legislators had an agreement on how to rearrange the budget, and that has yet to happen.

In fact, during the meeting to approve the economic forecast, Democrats and Republicans disagreed on whether to call a special session.

Sen. Joe Zarelli, R-Ridgefield, said it’s wrong to wait until the next legislative session starts in January, when there are only six months left in the fiscal year that ends June 30, then spend two or three months studying and debating changes. It’s better to start now, he contended.

“Our first responsibility as elected officials is to write a balanced budget,” Zarelli said.

But Rep. Ross Hunter, D-Medina, argued the Legislature, by design, doesn’t act quickly, so it’s important for the governor to order cuts now and let legislators make adjustments in January. The economy may be going through a major restructuring that will change employment and even living patterns, he said.

Throughout the day, the two parties continued the debate in a flurry of press releases. Senate Minority Leader Mike Hewitt, of Walla Walla, and House Minority Leader Richard DeBolt, of Chehalis, called for a special session in early October to make structural changes that save money now and in the next biennium.

Senate Majority Leader Lisa Brown, of Spokane, and House Speaker Frank Chopp, of Seattle, said state services need to be re-scaled for the new fiscal reality and that can’t be done in a special session. Spending $18,000 a day for a session when the state is trying to save money makes “no sense,” they said.

The current forecast is “much weaker” than the one offered in June, economist Arun Raha said Thursday. “What is plaguing the economy is uncertainty.”

Among the reasons for declining state revenue, Raha said: Job growth is anemic, consumer spending is flat, and housing construction continues to fall. People are saving more, which reduces consumption and the taxes that generates. Commercial construction is “still very grim” but exports could give the state a boost, especially for aerospace and software jobs.

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