When Washington Gov. Chris Gregoire and Senate Majority Leader Lisa Brown of Spokane met with our editorial board last week, they were feeling pretty good about what the Democrat-controlled Legislature accomplished this year. At one point, the governor noted: “We always look at our budget and ask what is it as a relationship to the percent of total personal income. And it is the lowest in history.”
A couple of days later Senate Minority Leader Mark Schoesler of Ritzville and Rep. Lynn Schindler of Otis Orchards stopped by to offer the Republican perspective. The governor, they said, was wrong on that point (and some others). Asked for elaboration, Schoesler had the Senate Republican communications staff to e-mail me more information. They sent this:
Within the last decade only the 2001-03 budget was a higher share of the state's personal income than either of the budgets Gregoire wrote, and that's due to the fact that revenues plummeted.
She gets to her statement by making two misleading -- and undoubtedly intentional -- assumptions:
1. She uses the November 2006 revenue forecast, not the most recent March 2007 forecast. The Nov. 2006 forecast for personal income was higher for 2007-09 than the March 2007 forecast. This means that it makes the budget expenditures look smaller as a percentage of personal income in 2007-09 than the March forecast. When you incorporate the most recent data the figures go up.
2. Even more egregiously, she COMPLETELY EXCLUDES the expenditures from the Education Legacy Trust Account and the Pension Funding Stabilization Account. This excludes over $1 billion of near general fund state spending that comprises the $33.4 billion near general fund total everyone is citing. (And notably she claims credit for the "Ed Legacy Trust Account" expenditures when she tours the ed boards citing the increase in K-12 spending, yet she excludes it in this rhetorical claim.)
To which the governor’s office responded by e-mail with this:
1. Simply not true. There was an earlier chart in December that used the November personal income forecast but that was updated on April 21. The chart Governor Gregoire presented reflects the most updated data.
2. The chart was prepared using state spending subject to the spending limit - the general fund and five other funds. This is a common and valid way to capture the trend in state spending (and the same calculation that was used throughout the chart). The trend line in the chart, showing spending as a percentage of the state economy (or personal income) is clearly down since the 80s and essentially flat since the early 2000s. Furthermore, the Republican Caucus staff made the same conclusion even after adding the Education Legacy Fund and the Pension Funding Stabilization Account. Adding these accounts is statistically insignificant as personal income base is huge ($280 billion in 2009) and the combination of those funds - $560 million - comprises a tiny fraction compared with that base. The Republican Caucus staffer who worked on this - and added the ELF and PFSA back into the data - said "It does not change the general trend line significantly. "
Another thing to note is that last year the Governor and Legislature set aside more than $900 million last year to pay for upcoming (i.e. 07/09) expenses in pensions, education and health care - that money increased the expenditure THIS biennium, as expected and planned. As a result, we are now back on track with what was a huge unfunded pension liability and ALSO ended 07/09 with over $700 million in reserves (which includes the Rainy Day Fund). This will put us in a much better position in the future - for years/biennia to come.
Here’s your chance as a reader to join the conversation. Let the posts begin.