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Thu., Aug. 9, 2012

Editorial: Candidates for governor should explain how they will balance budget

One of the smart reforms that came out of Olympia in the spring was to require the Office of Financial Management to produce a budgeting document in which spending is matched to revenue over a four-year period. The idea was to put the kibosh on the accounting tricks lawmakers employ to slip past the constitutional requirement to balance the budget each biennium.

For instance, sometimes legislators would push spending obligations one month past the biennium – the so-called 25th month – by delaying a payment to schools or a pension fund. On paper, this balanced the budget. In reality, it did not. And so the day after legislative sessions ended, the state would instantly be back in the red.

A four-year budget exposes such shenanigans, so the result is more honest accounting. It also makes it tougher for candidates to make budget-related promises.

On Monday, OFM produced its first four-year outlook, and it suggests that by 2015 the state will run up a deficit of $1.5 billion, and that’s only if the state spends its entire rainy day fund. If it doesn’t, the deficit would grow larger.

This poses an acute problem for the two gubernatorial candidates, Jay Inslee and Rob McKenna, because both have promised to spend more on K-12 schools and higher education without raising taxes. Based on the Supreme Court’s basic education funding decision, the state needs to spend at least $1 billion more over the next two years, according to the OFM, and a total of $2.6 billion over four years. Both candidates also want to spend more on colleges and universities to end the long slide in the state’s commitment to higher education.

In response to the OFM projection, both candidates said, in essence, “We got this.” But both seem to be engaged in wishful thinking.

Marty Brown, the governor’s budget director, isn’t so confident, telling the Seattle Times, “I’m thinking of political realities and budget realities and the uncertainties of the economy, and I can’t see it today.”

Inslee has offered fewer specifics to date. Like a lot of candidates, he says he would spur economic growth and then count on that to increase government revenue. He also notes the possibility of ending some tax breaks, which is something Democratic legislators have sought for years without success.

McKenna says he would cap growth in non-education spending at 6 percent per biennium, but to achieve that he must persuade government workers to move into high-deductible health care plans. He would also reduce the workforce through attrition. However, there are no guarantees that those goals can be achieved quickly enough, or at all.

Obviously a lot can change in four years. The economy could grow beyond expectations or fall backward. Nonetheless, with this first forecast in hand, each candidate ought to revisit the spreadsheets, make the necessary adjustments and then explain to the voters how they can still balance the budget with nothing up their sleeves.

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