Monthly Archives: November 2009

November 19 Revenue Forecast Places Washington’s Shortfall at $2.6 Billion

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The Economic and Revenue Forecast Council convened the morning of November 19th for a sobering task: outlining the depth of our state’s budget crisis. State Economist Dr. Arun Raha characterized the situation as a “revenue-less recovery,” pointing out that, while the recession ended during the second quarter of this fiscal year, consumer confidence & spending are still too weak to adequately bolster our economy. Since sales and Business & Occupation taxes constitute the bulk of our revenue, the economic downturn has left Washington vulnerable.

Forecast estimates include an additional $760 million in revenue loss for the 2009/2011 biennium since Septemember’s forecast, a combination, according to Dr. Raha, of $97 million lost during the last two months alone, and a $663 million loss in projected taxable activity for the remainder of the biennium.

This information comes with only a handful of working weeks left before the state legislature convenes for a supplemental session. What this shortfall – and subsequent forecasts – spell for Evergreen’s budget is uncertain now, and will remain so until early 2010, after the Governor has proposed her supplemental budget. From there, state legislators will work in their respective houses to reach agreement about how the budget will look before the legislative session comes to a close in March.

State Faces $1.7 Billion Funding Gap in Supplemental Session

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The 2010 supplemental session is only two months away. Taking into account the upcoming holidays, this really leaves about six working weeks until the Washington Legislature convenes in Olympia.

Recently, the Governor’s Office released a status report on the 2009-11 budget. The Office of Financial Management expects that the Legislature will need to find $1.7 billion to close the most recent gap in state funding.

So how did the state find its way again into another operating budget deficit after filling a $9 billion gap in April 2009. The simple answer is that the Washington and national economies have not bounced back. 

Since the 2009 session adjourned state revenues have dropped by $1.2 billion. The revenue forecast in June showed declines in revenue of $686 million and an additional revenue reduction of $238 millionwas realized in the September forecast. In October, revenue collections fell again by $32 million. In addition, the state had to pay out $237 million on a tax lawsuit.  

At the same time costs have risen (i.e. increased demand for public services) and new issues have emerged (i.e. natural disasters) that have impacted the state budget. These unexpected costs accounted for another $533 million in state dollars that are now unavailable for appropriation. Bringing the total reduction in state revenues to $1.2 billion.

Finally, the November caseload and revene forecast are expected to both impact state revenue in a negative way. 

So while the Legislature and Governor were successful in closing the first state funding gap through cuts, federal stimulus dollars, and one-time transfers, the state and national economy did not replenish the state coffers. As suggested by the Economic and Revenue Forecast Council state revenue and job growth continues to lag economic recovery, unemployment remains high, and revenue collected in 2009-11 is lower than revenue collected in 2007-09. Hence, the $1.7 billion shortfall in the 2010 session.

So how does the state begin to address this issue.  To begin to answer this at this time would be difficult because future events that will shape this discussion have yet to occur, such as the December revenue forecast, the release of the Governor’s supplemental budget, and the court cases that have yet to be decided whether the definition of basic education will be expanded. However, here is what we do know.

Reduction options are limited by constitutional and federal spending mandates limiting the programs and services that can be cut.  The majority of the state’s $31 billion budget is protected. Specifically $21.6 billion for mandatory medicaid/foster care, debt service/pensions, K-12 Basic Education, and Higher Education Federal Requirement.  The Higher Education Federal Requirement refers to the required stipulation associated with the acceptance of federal stimulus dollars. Washington as a recipient of federal stimulus dollars for higher education is required to fulfill a maintenance of effort that does not allow funding for higher education as a sector to go below 2006 funding levels.

This leaves $9.3 billion in programs and services by which to the Legislature has to focus, which includes Corrections, Human Services, General Government, Higher Education (approx. $500 million most of which is financial aid), and Other K-12.

Governor Names New Head of Ecology

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Today, Governor Gregorie announced a new leader for Washington’s Department of Ecology (DOE). Ted Sturdevant was appointed to serve as Director of Ecology.

Sturdevenat has spent the past seven years as the Director of Government Relations for Ecology. 

Before joining the senior management team at the Department of Ecology in 2003, Sturdevant worked under Gov. Gary Locke, leading Locke’s external affairs team. Sturdevant has also worked for Rep. Mike Nelson and Rep. Tony Federici in Oregon. In 2008, Gregoire presented Sturdevant with the Governor’s Award for Leadership Management.

Legislators’ tour of prison highlights Evergreen’s sustainability program

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A group of Washington State legislators recently toured the Sustainable Prisons Project, a collaboration between Evergreen and the Department of Corrections at Stafford Creek Correctional Center.

The program, co-directed by Dr. Nalina Nadkarni, a member of Evergreen’s faculty and Dan Pacholke, Deputy Director of Prisons for The Washington Department of Corrections, and managed by Jeff Muse, M.S., brings science into prisons by training offenders and staff in sustainable practices.

The program has received national and international praise for its unconventional approach to offender education and its impacts on the economic, environment and human costs of prisons. Sustainable Prisons focuses on green-collar education and training, sustainable operations in prisons, and scientific research and conservation.

Senators Karen Fraser, Debbie Regala and Brian Hatfield and Representative Mary Helen Roberts took a tour of the program’s greenhouses and gardens, recycling and composting facilities, and the prison’s library and living quarters before watching a 7-minute multimedia presentation on the project titled “Connecting Prisons With Nature” (you can watch it here).

The legislators’ hosts highlighted the dynamic benefits of the program. From an economic standpoint, sustainability provides a cost savings; from a scientific one, the program contributes to climate restoration as part of its partnership with Fort Lewis and The Nature Conservancy.

Photo by Benjamin Drummond

Photo by Benjamin Drummond

Sustainable prisons also partners with Cedar Creek, McNeil Island, and Washington Corrections Center for Women, and activities include beekeeping, frog raising and horticultural education programs.

The next steps for the project including an assessment of their operations so far in the hopes that the successes of the program can become a valuable tool for prisons nationwide.

More information on the Sustainable Prisons Project can be found at the program website.

System Design Takes Center Stage

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Last week, the  House Higher Education Committee met to preview three major policy reports/recommendations for higher education in Washington.

The hearing provided those of us in the audence a sense of the direction the wind is blowing on issues ranging from tuition policy to system design.  

It was clear that the greatest amount of attention was given to the work done on system design for higher education. This is not to say that tuition or technology policy, both on the agenda, were not critical. Instead it is likely that tuition policy and tranformations in the delivery of technology in higher education will be key components that will be dicussed and acted upon with the context of the system design work done over the interim.

All three reports remain in draft status as recommendations and language are finalized.  Given the testimony during the hearing it is clear that further discussion and dialogue will continue as these reports move from the Higher Education Coordinating Board and into the legislative arena.

For information on system design, tuition policy, and technology transformation go to: http://www.hecb.wa.gov/