Tag Archives: Budget

“All-Cuts” Budget on the Horizon

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Reports indicate that Governor Gregoire heard the message from Tuesday’s election – no on taxes- and is now preparing the state for an all-cuts budget next session.

The 2011-13 budget shortfall ($4.8 billion), which increased slightly with the repeal of the soda and candy tax on Tuesday, will need to be addressed when legislators arrive in Olympia for the 2011 session. In addition, it is assumed that legislators can expect little help from the feds on issues such as extention of employment benefits to help ease the burden here at home.

There is speculation that a December special session may be in the works. Governor Gregoire remained open to the idea of a special sesion if lawmakers can agree on quick passage of her supplementa budget. Gregoire expects to share that proposal with lawmakers soon after the November 18 revenue forecast.

The November forecast will be the basis by which Governor Gregoire rewrites the current two-year budget to respond to the $520 million shortfall in the current biennium and drafts a new budget for the 2011-13 biennium.

With a potential for increases in caseloads in November, the Governor predicts she will either need to order additional across-the-board cuts in December or call a special session.

Preliminary Economic Forecast Suggests More of the Same

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This morning the Washington Economic and Revenue Forecast Council issued a preliminary November economic forecast.

The forecast shows no change in the near term from the September forecast. The preliminary report, however, does show a slight weakening for 2012 and 2013, reflecting a weaker national economic tide.

Arun Raha, Washington’s State Economist, pointed again to public sector job cuts. He noted that the 1,000 jobs created in the private sector in September were swallowed up by the 3,500 jobs that were eliminated in the public sector.

The Council is scheduled to adopt a new quarterly economic forecast on Nov. 5. That will help drive the forecast of state tax collections the Council will adopt on Nov. 18. Assumptions provided in that forecast will be used by the governor as a basis for the operating budget proposal she’ll announce in December.

The Legislature will then convene in January to begin work on one last re-write of the budget for the current two-year budget cycle and then draw up a budget for the next cycle that begins July 1.

Evergreen and Other Public Baccalaureates Talk Budget in Spokane

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Yesterday, President Purce, The Evergreen State College, and the presidents of the other five public baccalaureate institutions presented to the Higher Education Coordinating Board (HECB) an overview of their institutional budget requests for the 2011-13 biennium in Spokane.

All of the presentations focused on the impacts of state funding reductions on students, faculty, and the institutions and what is at risk as a result. This included conversations regarding reductions taken over the 2009-11 biennium, the recent across-the-board reduction fo 6.3%, and the Governor’s proposed 10% reduction for 2011-13. 

State law requires the HECB to “review, evaluate and make recommendations” on the operating and capital budget requests of the public colleges and universities.  The HECB is scheduled to adopt a set of budget recommendations in November and will then forward them to the state Office of Financial Management, which will use them to help prepare the Governor’s biennial budget proposal to the Legislature.

Washington State Agency Responses to Recent Across-The-Board Cuts

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This week the Washington Office of Financial Management released a website that provides information regarding the impact of the recent mandated 6.3% reduction for all state agencies.

The website offers inforamtion regarding what agencies are impacted and how across-the-board reductions are defined. In addition, the website provides a list of state agencies and details of each agency’s response plan. Some agencies have yet to submit their plans.

These plans will remain in effect until the Legislature approves a new supplemental budget during the 2011 legislative session.

Congress Passes Budget Stopgap Legislation

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This morning the U.S. Congress passed a continuing resolution to allow for continual funding of federal programs through December 3, 2010.

The stopgap legislation allows the federal government to continue operations at the FY 2010 funding levels. President Obama is expected to sign the bill this Friday.  

The stopgap legislation was the final act of Congress prior to adjourning to their home districts to campaign. Congress will not return to D.C. until November 15 at which point they have their work cut out for them.

Upon their return, Congress will need to pass all twelve appropriation bills by the resolution’s deadline of December 3, pass an omnibus spending bill (which combines several appropriations bills into one), or pass an additional continuing resolution.

To date the U.S. House has passed two of the twelve appropriations bills. The Senate has not passed any appropriations bills, but the Senate Appropriations Committee has approved eleven of the twelve spending bills.

Joint WA House Hearing Focuses on Higher Education

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Tuesday morning the Washington House Higher Education Committee joined the House Education Appropriations Committee to discuss several bedrock issues for higher education.

The Committee heard several presentations focused on the state’s current approach to higher education funding, accountability and performance, and the work of the Governor’s Higher Education Task Force.

Ways & Means Committee staff reported that the Legislature will likely need to consider an emerging ARRA Maintenance of Effort (MOE) issue.  Given recent reductions the state is approximately $25-$30 million below the MOE requirement that was tied to the stimulus dollars Washingon received in the 2009-11 biennium.

The accountabilityand performance discussion echoed much of the conversation that has happened over the last several years. Policymakers raised concerns regarding the absence of measurements about the quality of instruction and noted the emphasis on measurements that focus on pushing students through the system. 

Policymakers also dialogued with representatives from the Higher Education Coordinating Board, Council of Presidents, and the State Board of Community and Technical Colleges about the limits of current accountability and performance metrics, such as IPEDs, given the diverse way students approach and interact within the  higher education sector. In addition, policymakers expressed the need for “real” time data and the push to use technology to collect this data.

Finally, questions rose again regarding the use of the six-year graduation rate. Mike Reilly, Executive Director for the Council of Presidents, differentiated between the six-year graduation rate measurement and time to degree and the value of both.  It was also noted that using the 2003 cohort, Washington has the highest completion rate for public baccalaurate institutions in the nation; a rate that has improved by approximatley 9% over the last decade.

The Committees wrapped up their work this morning with a presentation from Governor Gregoire’s staff on the Higher Education Task Force regarding the work to date of the Task Force and next steps.

U.S. Congress to Pass Budget Stopgap Legislation

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Congress is expected to pass a continuing budget resolution in the next week.  The budget resolution is needed to continue government operations after September 30.

Though reports have hinted at the inclusion of extra funding for the Pell Grant or additional funds for implementation of the healthcare overhaul legislation enacted earlier this year, it is unlikely that these measures will be included.

Instead the stopgap legislation will likely be relatively “clean” and limited in duration.

Across-the-Board Cuts; State Revenues Decline

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Today Governor Gregoire directed state agencies to reduce their 2009-11 budgets by 6.3% beginning October 1. The Governor did not provide any discretion with regard to how the reductions should or would be applied.

The across-the-board cut imposed by the Governor comes on the heels of this morning’s release of the September state economic and revenue forecast.  The forecast shows the state faces a projected shortfall of $770 million for the 2011 fiscal year.  With $250 million in reserves, this creates an immediate deficit of $520 million for the state.

Washington’s Chief Economist, Dr. Arun Raha set the context for the latest reduction in state revenues. According to Raha, job growth is anemic, the housing market is in search of a bottom, and small businesses are still challenged in the credit environment. 

What the state is facing is not risk (defined as the unknown knowns) but uncertainty which are the unknown unknowns.

“Things will eventually get better, but at a slow and uncertain pace,” Raha said. “That cannot be entirely reassuring, but that is the best that I have at this time.”

Governor Issues Across-the-Board Cuts

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Yesterday, Governor Gregoire issued an executive order directing across-the-board cuts to state programs and agencies.

The level of the reductions, as stated in the executive order, are to be based on the September Economic and Revenue forecast.  As a result, the level of reductions to state agencies will not be revealed unitl after the release of the September Economic and Revenue forecast on Thursday.  The reductions will go into effect on October 1, 2010.

Over the last month, Governor Gregoire informed state agencies to prepare for across-the-board cuts that could range from 4 to 7 percent. However, given the continual decline in state revenues since June,  the Governor warned that the cuts could be even higher.

In addition, the Governor has stated that quick action by the 2011 Washington Legislature will be needed to pass a supplemental budget that reduces state support for public services by $500 million from the last six months of the current fiscal year. 

It is also expected that the 2011-13 budget will need to be reduced by 10 percent to bridge an estimated state shortfall of $3 billion.

Governor Announces Next Steps in the Budget Process

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During a press conference this afternoon, Governor Gregoire announced the steps she will take to address a potential shortfall in the current state budget and direct agencies to prepare for an additional shortfall in 2011-13.

Despite the receipt of federal funds for Medicaid and teachers, agency and department savings, and reductions in state spending, dollars for the state budget remain difficult.

Over the last two months revenue collections have declined by $125 million below forecasted levels. Though the state has a $72 million ending fund balance for the 2009-11 biennium, after taking into consideration revenue declines, the potential for additional budget shortfalls that would eliminate the remaining dollars in the ending fund balance remain possible if future revenue reports continue to show a decline.

Beyond the current biennium, the state is also estimated to face a $3 billion deficit over the next two year budget (2011-13).

Given this context, the Governor announced three actions she will direct state agencies to undertake to prepare for the upcoming two-year budget and potential revenue shortfalls in the short-term.

  • Prepare reductions of 4-7% for the possibility of across-the-board cuts starting October 1 if the September forecast or revenue receipts are lower than expected.
  • Prepare budget reductins for a supplemental budget for the last six months of the current biennium equal to $500 million statewide to be passed in January.
  • Draft 2011-13 budgets to prepare for the expected $3 billion shortfall which will require a 10% reduction in the expected general fund budget.