Editorial: Lawmakers must adjust to worsening forecasts
Washington’s ongoing budget challenges threaten to take the “special” out of special session.
Although Gov. Chris Gregoire has not yet decided whether to summon lawmakers back to Olympia, she has asked her department heads to draft plans that would cut expenditures by five percent and, in case of a severe economic downturn, 10 percent. The latter would be a $1.7 billion whack on a budget that left only about $163 million in reserves for the rest of this two-year budget cycle.
That budget was the product of painstaking negotiations between Republican and Democratic senators – and a 30-day special session. Few legislators embraced the final result, but the hope was those skimpy reserves would be enough until a recovering economy increased state revenues.
Remember, the stock market was still riding a win streak. The debt ceiling ruckus and Standard & Poor’s downgrade of U.S. debt were two months in the future. So were the downward revisions of the nation’s economic growth in the first and second quarters.
That was then, this is now, and the governor recognizes that as well as anybody. But just how serious the state’s problem might be will not be known until Washington’s chief economist, Arun Raha, releases his latest quarterly revenue forecast next month. Raha has had the unfortunate task of dialing back expectations quarter after quarter.
Thursday, Raha junked his guarded optimism of the spring for a “sinking feeling of pessimism” for the fall.
Gregoire can respond to whatever new shortfall Raha predicts next month with across-the-board cutting, but that will not fly for K-12 education or for corrections, two big budget items. Constitutionally, only legislators can make more selective trims, and that will require a special session, one with a framework that can bring the gathering to a quick end.
This spring’s special session dragged on while key lawmakers resolved their differences behind closed doors. A few potential cuts – items passed by one chamber, but not the other – remained on the table when they closed up shop, but those nickels and dimes will probably not get the budget right for the rest of this year.
The governor has been at this pass before, in the fall of 2008, when revenues tumbling as the financial crisis unfolded forced her to make cuts before lawmakers could reconvene. There has been little joy since then. She has been forced to set aside or roll back treasured initiatives like the Basic Health plan. University tuitions have soared.
The best financial news for the state has been continued investor confidence. Despite the economic headwinds, Washington bonds – which now share the same Standard & Poor’s rating as federal government debt – continue to sell well. A refinancing of $18 million in bonds on Tuesday will save the state $2 million, including $500,000 in this biennium.
The other good news: It’s not an election year for state offices. And the debt-ceiling disaster in Washington, D.C., makes compromise look good. Even special.
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