Gregoire institutes a freeze on hiring

OLYMPIA – Saying that Washington is starting to feel the chill of the national economy, Gov. Chris Gregoire on Monday told state agencies and colleges to freeze hiring, cancel some travel and reduce state government’s use of gasoline by 5 percent.

Washington’s economy is resilient, she said, and the state has hundreds of millions of dollars in reserves. Many states, she said, are worse off.

But “a weakening national economy has affected us,” Gregoire wrote in a memo to agency heads. Acting now, she said, puts the state in a better position for its 2009-2011 budget.

The governor’s memo also asks state agency directors to put off buying new equipment when possible and avoid issuing new contracts for consultants and other services.

Gregoire spokesman Pearse Edwards said the changes are expected to save 300,000 gallons of gas over the next 11 months. All told, he said, the state will save an estimated $90 million.

State analysts predict a budget shortfall of about $2.7 billion in the next two-year budget, which lawmakers begin writing in January. Even with the state’s roughly $800 million in reserves and a hard-to-tap “rainy day fund,” the deficit could mean deep state budget cuts, tax hikes, or both.

Gregoire has for months stressed that Washington’s financial picture is not nearly as bleak as in other parts of the country. Real estate prices have softened, but haven’t tanked. The state has one of the lowest foreclosure rates in the nation. And international trade has surged, helped by the weak dollar and high prices for wheat and other commodities.

But Republican challenger Dino Rossi on Monday blasted Gregoire for not trimming spending earlier.

“I’m glad that Gov. Gregoire has started to recognize the budget crisis she’s created,” he said.

He said the governor should have taken action sooner. Earlier this year, state lawmakers and the governor added millions of dollars in new spending to the state budget.

Rossi said he would cut the governor’s office budget, freeze salaries for political appointees and halt salary negotiations with state-employee unions “until we know the full extent of our deficit next year.”

Although neighboring Idaho is comparatively well-positioned with large reserves, Washington is one of many states in which budget writers face red ink. States are now expecting budget gaps of more than $40 billion next year, according to the National Conference of State Legislatures. Of that, $15 billion is in California, where Gov. Arnold Schwarzenegger recently ordered layoffs of 10,000 part-time and temporary state workers, as well as temporarily cutting the pay of about 200,000 more to minimum wage. Schwarzenegger’s executive order also freezes hiring and promotions.

Most states are cutting spending, rather than raising taxes, according to NCSL. At least five states have trimmed their work forces, and at least nine – not including Washington – have a hiring freeze. Others, including Minnesota, Massachusetts and Nevada, are tapping state savings to pay the bills.