OLYMPIA – For more than 100 days of a regular session, and for months before that, state leaders worried about and debated over “the budget.” They’re not done. The regular session concluded Friday without agreements on state spending for the next two years, and legislators are coming back Tuesday for another go.
At intermission, we offer a primer on budget issues confronting the state.
Q. What’s in the budget, anyway?
A. The state actually has three major budgets the Legislature must set every two years, and each is hundreds of pages long. The largest is the state’s general fund operating budget, which covers most state agencies, programs and employees. The state budgets on a two-year cycle, known as a biennium, and the 2011-’13 biennium, which begins on July 1, will lay out spending worth about $32.5 billion. The state also has a separate transportation budget, for roads, highways, bridges and ferries, of about $9 billion. There’s also a capital projects budget of nearly $3 billion that goes for construction projects large and small, everything from a possible medical school in Spokane to baseball fields in Cheney.
Q. Which one is facing a deficit?
A. The operating budget is the one with the biggest problem, although unlike the federal government, the state can’t run a deficit. The Legislature must pass a balanced budget based on what the state is expected to collect over the next two years in taxes, fees and other revenue, and what laws on the books require the state to pay out. The amount of money coming in and money going out are projections from the state’s economic forecasters, and when they expect that revenue will drop too low or the demand for state services will rise too high, they project an imbalance that is sometimes called a deficit. Right now, they project a gap of about $5.1 billion in the operating budget between what the state expects to collect in the coming two years and what it would pay out if all the programs, policies and salaries now in place, stayed in place for that period.
Q. Why is there a gap?
A. Revenues, particularly taxes collected from things like construction, property sales and auto sales, began dropping because of the recession. Demand for some programs that help low-income and unemployed residents is going up and the number of children in public schools is expected to increase slightly. The cost of health care is also going up faster than inflation, which affects both the cost of state-sponsored health programs like Basic Health and Children’s Health, and the state’s cost for health insurance for state employees. Conservatives also contend that for years the state has tried to do too much, for too many people, and done a poor job of making sure that the money is spent properly.
Q. This sounds really familiar … or am I experiencing déjà vu?
A. The state projections began showing more going out than coming in late 2008, and the trend has continued since then. Last year the state needed a major rewrite of the second half of the 2009-’11 budget because of falling revenue and rising costs. That budget, called a supplemental, had a combination of program cuts and tax increases, but voters canceled some tax increases in November. The Legislature made more cuts last December because revenue projections continued to fall, and more cuts this February.
Q. What’s the status of the operating budget right now?
A. Different versions have passed each house. The most recently passed version is a Senate plan that was developed by Democrats and Republicans; it is now in the House, which earlier passed a budget that only Democrats supported. Different versions of the capital projects budget must also be reconciled. The transportation budget passed the Legislature on Friday and is expected to be signed by the governor in the near future.
Q. Some people say the budget cuts deeply. Others say it has the state spending more than this biennium. Who’s right?
A. Both, when you consider different aspects of the budget. Two years ago, the state expected to take in about $28.4 billion in state revenue, but Democrats in the Legislature approved a budget of about $31 billion because they shifted money from other accounts, drew down reserves and relied on federal recovery funds to supplement state money. Republicans are correct when they say the current revenue estimate of $32.5 billion is $4 billion higher in state money than the Legislature had two years ago. But the demand for state services and programs grew, and the amount needed to keep all state programs at the current level is about $36.3 billion, so some programs will be cut and some eliminated because many of the reserves have been drawn down and federal money isn’t expected to be available.
Q. So can the Legislature just pass the two remaining budgets in the special session and go home?
A. No. Because any budget will make significant changes to state programs, the Legislature must pass separate bills to change state laws covering those programs. They may need to pass 60 bills besides the general operating and capital budget bills. And before you ask, no one knows how long this will take. The special session by law can last 30 days.