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Spokane, Washington  Est. May 19, 1883
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Spin Control

WA budget woes: cuts can only go so far

OLYMPIA -- One of the state's top budget hawks points out today that Gov. Chris Gregoire's ability to order across the board budget cuts only goes so far if the federal government doesn't come through on Medicaid funding.

In other words, if Congress punts on FMAP, a special session would be needed to allow the state to have something in the bank at the end of the biennium, Jason Mercier of the Washington Policy Center says.

That makes the prospect of a special session more likely if Congress doesn't vote to approve some $480 million to Washington state for higher federal medical assistance percentages, Mercier contends.

The Office of Financial Management confirms that Mercier is right about the limits on why a governor can order cuts in the face of budget problems. The governor has the authority to order cuts to avoid a projected deficit, Glenn Kuper of OFM said. There's some leeway for the size of a deficit based on economic projections or forecasts, so if all the signs point to a downturn, the ordered cuts could take that into account.

But the governor can't order cuts to create a surplus, which is really what an ending fund balance is -- the money left over at the end of one budget cycle that carries you into the next budget cycle, when expenses are immediate but income might be slow in showing up.

The state budget has an ending fund balance of about $450 million, which was going to be provided by the FMAP money. Gregoire said last week that she was willing to wait until Congress goes on its August recess to see if the two chambers can pass FMAP before deciding on what route to take.

That's still her plan, Gregoire's staff said today. Without FMAP across-the-board cuts are a real possibility but a special session isn't automatic, spokeswoman Karina Shagren said. The governor won't call the Legislature back unless she gets some assurances they'll be in and out in one or two days.

"The last special session, though, lessened her confidence that the state Legislature can follow that timeline," Shagren said.

OFM will be watching projections in August as Congress approaches its recess, and should have updated figures available for Gregoire to consider when making the decision. The next state Revenue Forecast isn't until Sept. 16.

The Spokesman-Review's political team keeps a critical eye on local, state and national politics.