Tag Archives: Governor Gregoire

“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.

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.

Governor Says No to Federal Position

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 Governor Gregoire will not be moving to D.C. anytime soon. 

This afternoon the spokeswoman for Governor Gregoire announced that the Governor informed the White House that she did not want to be considered for the job of solicitor general. 

“She (the Governor) explained that she does not want to be considered. She mentioned it is not the right time for here and it is not the right time for the state”, stated Karina Shagren, spokeswoman for the Governor.

It was announced earlier this summer that Governor Greogire was on a list of individuals to be considered for the position of solicitor general which was vacated by Elean Kagan upon her appointment to the Supreme Court last week.

State’s Budget Gap Shrinks Thanks to Federal Funds

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Today, the U.S. Senate took the necessary final vote to provide $26 billion to states for Medicaid and education.

The bill extends programs enacted in last year’s stimulus law to help preserve the jobs of teachers and other public employees and provides an extension of federal Medicaid funds to states.

The U.S. House will return from their August recess to take a vote on the bill next Tuesday.

Once the House passes the bill and the legislation is signed by the President, Washington is expected to receive $530 million. The state will receive $320 million for Medicaid and $208 million to pay salaries for 3,000 teachers who were in line to lose their jobs.  

The influx of federal dollars does stave off a special session for now. However, Washington policymakers are now focused on the latest revenue forecasts, expected August 10, to gauge the health of the state budget.

Special Session Unlikely

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It is unlikely that Washington will experience another special session this year. Early this week, Democratic leaders in the Washington Senate and House ruled out holding a sepcial legislative session to fill budget gaps related to a lack of federal aid and declining state revenues.

Governor Gregoire had set a noon deadline on Monday for Democratic leaders to determine whether or not they could bring their caucuses for a short special session to remedy the looming budget gap.

Though the spokeswoman for the Governor did not announce how the budget gap will be bridged, the alternative is to require across-the-board cuts of up to 4 percent to solve the budget gap.

The question of whether to hold a special session or implement across-the-board cuts would be eliminated if Congress acts. The U.S. Senate is considering an extension of $16.1 billion in federal medical assistance funding and $10 billion in aid for schools to avert teacher layoffs for states.

Action on the added funding was delayed from Monday to tomorrow (Wednesday). Even if the Senate approves the funding it is required to go to the U.S. House for final approval.

Committee to Transfrom Budget Holds Last Public Hearing

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Last night the Governor and members of the recently formed Committee on Transforming Washington’s  Budget held the last of four public hearings in Spokane.

The hearings mimicked many of the same messages that the Governor and committee members have heard over the last month in Tacoma, Everett, and Vancouver– spare services and reduce taxes.

Among the requests from the 43 people who testified: Don’t cut money that pays to educate our youth; Don’t cut jobs of parole officers who keep an eye on violent offenders; and Don’t cut money that keeps the elderly in their own homes.

Though the statewide hearings are over, the Governor and the Committee are still collecting input through the website launched to gather thoughts regarding what government should and should not fund.

Statewide Budget Hearings Conclude in Spokane

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Over the last two weeks the Governor and members of the Committee on Transforming Washington’s Budget have held three public hearings on the 2011-13 biennial budget with a fourth and final hearing to be completed this evening in Spokane.

In early July, the Governor and the Task Force traveled to Tacoma to listen to concerns and ideas regarding the 2011-13 biennial budget.

Last week the Governor held the second of four public hearings in Everett. Approximately 400 people showed up at Everett Community College to listen to the fiscal context facing Washington and share their ideas for reducing the state budget.

Nearly 50 people shared their views with the Governor and committee members. Ideas included reducing state employee salaries, selling off the state ferry system, and privatizing port districts. Others argued for funding for a variety of public services and the impact of failing to do so.

Advocacy for public services and programs dominated the third of four public hearings in Vancouver. Approximately 400 people arrived at the WSU-Vancouver campus to hear about the budget and share their ideas.

Special Session Decision Expected Early August

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Today Governor Gregoire announced she will decide whether or not to call a special session or make across-the-board cuts in early August.

A special session or across-the-board cuts would be required to reduce the $300 million budget shortfall if federal aid for Medicaid dollars falls through.

Not a fan of the across-the-board cuts, Governor Gregoire estimates that the cuts would reduce all state-funded programs by an additional 3.5-4.0 percent. The only exceptions to the reduction would be basic education, debt payments, and pensions.