Late this morning the Washington Legislature released the 2010 supplemental operating (SB 6444) and capital budgets (HB 2836).
The release of the budgets was followed by a press conference with leadership from both chambers. Legislators discussed a balanced approach to remedying the $2.8 billion state budget gap, including reductions to state programs and services, one-time transfers of dollars, federal funding, and new revenue.
Legislators acknowledged that Washington has a structural problem with regard to taxes, citing the state’s regressive tax system and the narrowing limits placed on new revenue through various initiatives passed over the years. Legislators plan to continue discussions on reforms and solutions through the interim in preparation for the 2011 legislative session.
An overview of the budgets released today echoes the implementation of this multi-pronged approach to remedying the $2.8 billion state budget shortfall this biennium.
The Legislature reduced funding for state programs and services by $755 million. Among the multitude of reductions, some of the major reductions included:
- The elimination of the remaining $79 million in Initiative 728 per student allocations to school districts;
- Reductions in funding of $73 million to institutions of higher education near the minimum level required for the receipt of federal stimulus funds;
- Savings of $67 million from the implementation of an additional assessment on hospitals and leveraging federal match;
- Reductions of $49 million to all areas of state government through the requirement of temporary layoffs or salary savings;
- Reductions of $46 million from correctional facility capacity;
- Reductions of $30 million to reduce the grade 4 class size enhancement;
- Savings of $30 million from information technology;
- Reform of the Security Lifeline programs (formerly GA-U), $ 28 million
- Savings of $15 million through the elimination of the learning improvement day for teachers.
The Legislature incorporated approximately $618 million of approved/anticipated additional federal relief to Washington State. The supplemental operating budget anticipates $480 million in additional resources based on the Federal Medical Assistance Percentage (FMAP) enhancement being extended by an additional six months through June 2011. Congress is considering legislation that would extend the enhancements beyond the current end date, December 2010.
In addition, based on a recent U.S. Department of Health and Human Services reversal of the decision to disallow state savings from Medicare Part D “clawback” payments for prescription drugs, the state expects to receive $87 million in additional federal resources beyond the current level assumed in the state budget.
Finally, the Legislative budget offsets $39. 5 million in the Security Lifeline and Basic Health programs based on receiving a waiver allowing a portion of these state costs to be supported with federal funds; and the budget assumes additional federal resources of approximately $12 million from two smaller sources of federal aid.
The supplemental operating budget, in addition to reductions and federal funds, makes $461 million in additional transfers from various funds to increase General Fund-State resources.
Some of the larger transfers include:
- $141 million from the Public Works Account
- $101 million from the Education Savings Account
- $21 million from the Job Development Account
- $18 million from the Education Construction Account
- $16 million from the Life Science Discovery Fund
- $16 million from State and Local Toxics Account
- $15 million from the Performance Audit Fund
- $15 million from the Public Service Revolving Account
- $12 million from the Treasury Service Account
- $10 million from the Savings Incentive Account
- $10 million from the Streamlined Sales Tax Account
Finally, the Legislature plans to pass legislation that would raise $794 million with a net increase of $757 million after $12 million in legislation that decreased revenue is acknowledged. This includes:
- $7.4 million in tax loopholes
- $241.9 million B&O tax on service businesses
- $59 million beer tax increase
- $33.5 million soda/pop tax increase
- $32.6 million bottled water tax increase
- $101.4 million cigarette and other tobacco product tax increase
- $10 million convention center
- $15 million lottery marketing
The House is expected to take up the operating budget first today, followed by the Senate.