Bert Caldwell: Roundtable pushes fiscal conservativism

Washington Chief Revenue Forecaster Chang Mook Sohn did it again earlier this month. He boosted his quarterly revenue projection, this time by $484 million. That was the 14th consecutive increase and each one, though welcome, frustrates the state’s business leaders.

Their message of fiscal restraint has been drowned out by the ringing of the treasury cash register.

“It’s an uphill climb,” says Steve Mullin, president of the Washington Roundtable, a group that includes many of the state’s top business executives, the publisher of The Spokesman-Review among them.

Sustainability is a Roundtable priority. The group met in Spokane last week to discuss how the organization and its members might have more success keeping public officials mindful of the long-term effects of budget decisions made with just a one- or two-year time frame in mind. In other words, the election cycle.

Not surprisingly, the Roundtable’s concerns reflect those of Republicans who had little leverage this year against overwhelming Democratic majorities in the state House and Senate. And Sohn keeps moving the fulcrum.

Sohn has so consistently — and accurately — anticipated higher revenues, says Mullin, that many in the Legislature have no experience with years when that was not the case.

But the dot-com bust, followed closely by the post 9/11 aviation industry woes, were not so long ago. Mullin says it will not take anything like the dislocation those events caused to put Washington back in a financial hole.

The state’s health care bills are the case in point.

This year Gov. Chris Gregoire asked for, and got, $35.7 million more for the Basic Health Plan that covers low-income residents. The program had been budgeted for $470.4 million. Medicaid expenditures will increase by $672 million, on top of $6.5 billion, and the trend line looks poorly.

Mullin says the state will not be able to raise taxes fast enough to keep pace. Something else will suffer. Historically, that has been Washington’s universities and colleges, for which increased funding this session was a bright spot from business’ perspective.

When past state budgets were tight, Mullin says, the higher education piece was the hindmost, absorbing cuts lawmakers were unable to make elsewhere. More of the burden was shifted to students and their families. And Washington campuses were unable to meet employer demands for skilled workers.

“Higher education is probably the most important investment for our future,” Mullin says. The Roundtable was particularly pleased with the attention paid this year to degrees in high demand by business, and the dollars directed towards basic research.

But the Roundtable was disappointed with the Legislature’s decision, at the governor’s behest, to delay for five years the requirement that high school students pass the WASL math standard before being allowed to graduate. A three-year delay might have been OK, says Mullin, “Five years sounds like giving up.”

Although pleased the state will expand full-day kindergarten, Roundtable is concerned about future costs, as it is with those associated with a family leave policy that takes effect in 2009. Funding for the leaves has not yet been identified.

Mullin says the Roundtable remains frustrated by the balkanized control of transportation in the Puget Sound area, where infighting among 149 local government entities stalls badly needed improvements. Votes this fall on a regional transportation plan may finally clear the way for at least some of that work. Roundtable members voted in Spokane to endorse those measures, but with the assurance of strict oversight.

Also in voter hands this fall will be an amendment to the state constitution creating a rainy day fund that would capture 1 percent of revenues. The fund, a Roundtable priority, could be tapped only under limited circumstances.

Mullin says the Roundtable will meet in September to determine its agenda for next year, with the likelihood health care quality and costs will be among the most urgent items.

Sohn, he says, cautioned Thursday that revenue growth during the next biennium will be less than half the 18 percent of the last two, two-year cycles.

“At some point, you need to stop spending,” Mullin says.