March 17, 2011 in News, City

Washington’s budget gap grows by $778 million

Jim Camden The Spokesman-Review

Tags:2011 Washington Legislaturebudgeteconomy

OLYMPIA — The gap between Washington state’s projected revenues and the cost of current programs grew by $778 million in the latest economic forecast, resulting in a possible deficit of about $5.5 billion if nothing were changed in the next biennial budget.

Arun Raha, the state’s chief economic forecaster, said several factors are stifling economic recovery in the state: uncertainty over oil prices, the tragedy in Japan and a slow housing market. “Clouded with a great deal of uncertainty,” is the way he put it.

Revenue is projected to drop another $80 million for the rest of this biennium, which ends on June 30. It will be about $700 million lower for the 2011-13 biennium.

The forecasting council released a preliminary forecast two weeks ago, but since that time, the earthquake and tsunami hit Japan, which is one of the state’s major trading partners, Raha said.

“The preliminary economic forecast presented two weeks ago is already outdated,” he said. Forecasts have updated their models with “early and rough estimates” of the effects of the disasters in Japan.

It’s not yet possible to factor in the possible impacts of problems at the nuclear powre plants, unknown amounts of productivitiy lost in the Japanese auto industry which accounts for about a third of auto sales in the United States or possible disruption to the sales of Washington wheat and apples, for which Japan is a major customer.

The Legislature will use this forecast to craft a General Operating Fund budget of about $31.9 billion for the two year budgeting cycle. If they can’t do that before April 24, the end of the current legislative session, they’ll need a special session.

Democrats and Republicans who serve on the Forecast Council clashed over several items involved in that two-year budget. GOP legislators, including the ranking Republican on the Senate Ways and Means Committee Joe Zarelli of Ridgefield, have called for the Legislature to reject contracts the governor’s office has negotiated with unionized state workers and seek more reductions in wages or benefits.

“We negotiated a contract with significant givebacks,” Marty Brown, Gov. Chris Gregoire’s budget director, said. “If we reopened it, I don’t know if we’d get anything better.”

And if the Legislature rejects the contract, unions receive their current pay and benefits schedule for another year, Rep. Ross Hunter, D-Medina, the House Ways and Means Committee chairman, said. That would cost the state more for the year starting July 1.

True, said Zarelli, but it could more than make up with by demanding lower pay and higher benefit costs in the next year: “The Legislature would be free to do whatever it wants in the second year of the biennium, and … write a budget based on what we can afford to do.”

Rep. Ed Orcutt, R-Kalama, said the Legislature needs to address its budget problems by increasing jobs: “I don’t see enough concern to get Washington working again.”

Sen. Ed Murray, chairman of the Senate Ways and Means Committee, shot back that the state’s economic problems are not the fault of Washington families or the Legislature but the loss of some $2 trillion taken out of the world economy by problems in the financial market.

As the forecast council was unanimously adopting the projections, some 1,000 protesters were gathering in the Capitol rotunda to demand the Legislature cut tax loopholes for businesses instead of programs for the poor. The marbled mezzanine echoed with shouts of “We’ll be back,” as they left with plans to return for more protests against budget cuts the first week of April.

28 comments on this story so far. Add yours!

ZagChuck on March 17 at 12:57 p.m.
The only way this is a “deficit” is that the government keeps spending more of OUR money than we have. We must STOP growing government!
On March 19, 2009 the OFM sent out a similar press release (http://www.ofm.wa.gov/news/release/2009/090319.asp ), indicating the state “only” had $27.9 billion of our money to spend. They spent it all, and then some.
Here we are 2 years later, with $4 billion dollars more in forecasted revenue, and it’s still not enough? They still can’t balance the budget?
Who are these idiots? When will they start acting responsible with OUR money?
Gato on March 17 at 1:42 p.m.
Jeepers, ZagChuck. It is our money, that’s why they spend it on our needs, like schools and human services. The state is currently cutting crucial services for our residents. People are suffering. Good people are being hurt. I think your outrage is both off-point and tiresome.
mikeln on March 17 at 2:00 p.m.
Maybe the good old boys club could take a little less profit.
soccermomsusie on March 17 at 2:10 p.m.
Senator Bumgardener should get some of his Halliburton friends to take over the state!
I hear that he is turning down his pension and switching it from a defined benefit plan to a defined contribution plan! What a guy!! He is living proof that contractors are, I hate to say it, better than soldiers!
Go Bumgardener go!
HEAR OUR VOICE!!!!
BrandonHansen on March 17 at 2:25 p.m.
I like how Montana has it in their constitution that their budget has to be balanced. A wonderful idea eh?
philipgregory on March 17 at 2:29 p.m.
Does anyone think they really know what they are doing in Olympia?
We need to hear from unbiased financial experts whether these people have a clue.
ZagChuck on March 17 at 2:41 p.m.
Gato,
You couldn’t be more wrong. It’s entirely on point.
The growth in government, and the growth of their budget is both ludicrous and unsustainable. They already taking in $4Billion more than the last budget cycle, but they want to spend an additional $5.5 Billion. $9.5 billion in growth in two years, on a $30billion budget, and you want us to sit back and say nothing? Seriously?
And try to sell the BS line that this is about “taking care of people” to someone else. If it were truly about taking care of people, the government would allow more local control of the money, to ensure it was spent in a fiscally responsible manner, that better suits the community. They don’t do that, because they don’t want to provide a service, they want to control people’s lives, and control the outcome of the spending.
This is about making people more dependent on government, not helping people. For them, it’s not about providing, it’s about maintain and building their power, and retaining their positions.
“Ask not what your country can do for you, but what you can do for your country” means the same thing as “Government is not the solution, government is the problem.” It really doesn’t matter what level of government (country, state, county, city) you apply those statements to; it means the same thing.
We have failed to stand up in the past; we can no longer afford to be silent.
Ninch on March 17 at 3:21 p.m.
If the protesters get their way and cut those so-called “business loopholes” then I myself may be unemployed and in need of those programs for the poor. In other words, just because Obama and his ilk misuse the term “loopholes” to get people to hate economic producers (aka business) does not mean that exemptions are not useful to keep people employed. Being in business does not mean that such businesses have unlimited disposable income.
vanman on March 17 at 3:34 p.m.
so many experts, so little wisdom….
biker on March 17 at 3:34 p.m.
Lower wages and benefits across the board now, and not just convoluted schemes to pay more into the benefits package…it’s not enough. Public employee wages skyrocketed in unison with the overblown credit and housing market. Those markets suffered incredibly when they collapsed because valuation was not realistic. The same must happen with the public employment sector, including the sacred cow of public safety; fire, police, courts, prisons and related administrative. We do not need to cut jobs, we need to cut wages 10 to 15%. No ones going to leave, there’s no place to go. Even with a wage cut…the wages are fair, if not still a bit bloated given the very nice benefit packages.
vanman on March 17 at 3:35 p.m.
and my comment refers to state legislative folks AND those who post on this site
Patanjali on March 17 at 3:37 p.m.
Ninch: Are you referring to the 7 million dollar sales tax exemtion for cosmetic surgery or the 3 million dollar sales tax exemption for the purchaers of private jets? There are 4.5 billion in tax loopholes in every two year budget, and I hestitate to call it a “loophole” when they are for the advantage of the wealthy. Does eliminating sales tax for the purchasers of a private jet increase sales of private jets? Maybe, but probably not.
hawken on March 17 at 3:52 p.m.
It’s like the “Ever Ready Bunny”,,,, the debt just keeps “growing and growing and growing.” While we keep “spending and spending and spending.”
gonzomo on March 17 at 3:55 p.m.
Gato-
you are incorrect. The reason they have cut education and social services last year was to intimidate the voters into supporting the income tax. Well, things didn’t work out for them. They simply don’t know what to do right now. They could privatize the ferrys and liquor stores, but no. They could eliminate the government PR office and printing office in Olympia, but no. State workers could pay SOMETHING for their dental care (or more for their healthcare and pensions) but no.
Things will not get solved until Lisa Brown and Chris Gregoire are out of a job,
CougarGold on March 17 at 3:56 p.m.
Gato - I got this statement from the Governor’s Budget Director, Marty Brown a couple of months ago. He stated that the ‘complaints about budget cuts impacting the poor or disadvantaged don’t recognize the reason why those groups are impacted. The reason though is simple, they are the State’s clients. That is where State money is spent so when it’s time to cut, that is where the cuts are made.’ His words, not mine.
When you complain that these are the people impacted, it’s because they are the ones receiving the benefit of tax supported services. The easy answer people try to push is to increase the revenue (tax) side of the equation thereby putting even further burden on those who don’t benefit from the services the State provides. (Certainly we all benefit from roads and infrastructure and the statement is simplistic but it hits home on the basis of the problem.) That is a financial death spiral. Cuts need to be made and those will impact people directly but it’s the only way to keep from kicking the can down the road. We are seeing a financial death spiral in State spending and budgeting right now and if there is no corrective action taken, it will soon be too late to pull out.
liberal_in_right_wing_land on March 17 at 4:47 p.m.
Yes, its those evil teachers, police and firefighters that are bankrupting this state.
ZagChuck on March 17 at 4:50 p.m.
No, it’s the over-tax/overspend liberals in both parties who have bankrupted this state.
They’ve grown our government too large, and it is no longer sustainable.
Nice attempt at spin though.
liberal_in_right_wing_land on March 17 at 5:09 p.m.
No Zag, nice try by you.
Thankfully we live in Washington and not Idaho or some other redneck conservative state…..your lies and talking points your getting from Fox News and talk radio wont fly here otherwise this state would be republican controlled also. However, we are smarter than that and this state is still democratic.
Don’t like the way we run things here then move over to Idaho and they will probably welcome you and your ilk with open arms.
west on March 17 at 5:50 p.m.
Wisconsin is the solution…get over it..
hawken on March 17 at 5:53 p.m.
Wisconsin IS the solution.
Bruce (aka thatoneguy) on March 17 at 5:58 p.m.
Gay marriage is the solution! Yay!
Oh…. sorry, wrong problem.
:-P
johnclarke on March 17 at 6:05 p.m.
Personally, I wish all the conservative economic professors here on the board would move to Idaho right now. That’s were all you backwards thinking right wing nut jobs belong - with your fellow Republican voting buddies. This entire state is essentially carried by King County, and Idaho is carried by the Fed, therefore us tax and spend liberals - who by the way carry all the conservative states. That’s right, move to Idaho. We will not miss you. Cut down all the trees, mine everything until it becomes a polluted wasteland and watch your teeth fall out.
Shadedmuse on March 17 at 7:10 p.m.
Washington state is NOT Broke. Washington state doesnt have a spending problem, washington state has a revenue problem, its time to get rid of these consumbation based tax like sales tax and replace it with a state income tax and make the free looading rich and big corperations PAY THEIR FAIR SHAIR and stop free loading. its time to Spread the wealth then have it sit in the the riches greedy little misery hands.
jddavis on March 17 at 8:05 p.m.
Traveling between Ritzville and Sprague this morning around 10am the DOT was spreading de-icer on I-90, which was bare and dry. The temperature was 42 degress, and the sun was shining brightly.
With such a budget crisis and important programs being cut, it doesn’t make sense to waste money and resources like this.
Dazzeetrader11 on March 17 at 8:46 p.m.
Hawken is correct. Rid the state of the public unions and the debt dries up within 3 years. It’s just so obvious. Hey Libs…no whining. You’ve had it wonderful for 20 years when the unions quietly stole money with help from the Dem Libs.
Time to cut your party off.
liberal_in_right_wing_land on March 17 at 9:32 p.m.
Dazzeetrader11, so its not OK for unions to contribute to political parties but it is ok for corporations to contribute as much as they want?
DickAdams on March 17 at 9:45 p.m.
Thanks to Lisa Brown and Gregoire, for nothing except an increase in my taxes.
ZagChuck on March 18 at 10:01 a.m.
@ Liberal,
I quoted FACTS, not lies, From OFM. ( hardly Fox News)
Thanks for proving my point yet again that facts and liberals simply don’t mix.