Tag Archives: Operating Budget

Governor Launches Budget Idea Website

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On the heels of the Governor’s statewide tour regarding the 2011-13 budget an interactive website was launched.

Over the next month Governor Gregoire plans to hold public hearings in Everett, Spokane, and Vancouver to share the budget decisions facing Washington and the resources that will be available for the budget as well as hear from the public their ideas and thought about what services the government should and should not deliver.

The website, launched the same day as the first public hearing in Tacoma, is an interactive website that will allow Washingtonians to share, comment, and vote on budget ideas.

The most highly rated ideas by viewers will rise to the top of the list and be considered by state budget writers.  Ideas will be posted between 8:00 a.m. and 5:00 p.m. Monday through Friday.

Governor Announces New State Budget Process

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Governor Gregoire announced a new state budget process for the 2011-13 biennium. Her intention is to develop a new biennial budget with more transparency, community involvement, and expert outside advice.

The new budget process will assume zero-based budgeting from the beginning. Zero-based budgeting focuses on reviewing the current and alternative funding levels for each agency activity (including zero).

In addition, each agency will be asked eight critical questions before their budgets are increased or shuffled. These eight questions are:

  • Is the activity an essential service?
  • Does state government have to perform the activity or can it be provided by others?
  • Can the activity be eliminated or delayed in recessionary times?
  • Does the activity need to be paid for with state general funds? Should users pay a portion of the costs?
  • Are there federal funds or other fund sources available to support this activity?
  • Are there more cost-effective, efficient ways to do the activity?
  • Can the activity be the subject of a performance contract?
  • Can the activity be the subject of a performance incentive?

The process will include a public component involving the opportunity for citizens to submit suggestions and a statewide tour to share the new budgeting process.

Finally, the Governor has asked leaders from across the state in a variety of fields to serve on the Governor’s Committee on Transforming Washington’s Budget. This panel will serve in an advisory capacity to the Governor during the budget development process. The charge of the committee is to quest budget assumptions, serve as a sounding board, and lend guidance.

The Governor also issued a time-line for the development of the 2011-13 budget. It is expected that as other dates and locations for budget hearings across the state are confirmed they will be announced.

  • Spring 2010                        Committee on Transforming the Budget formed
  • July 19, 2010                     First Budget hearing (Tacoma)
  • Early September 2010   Agency budget requests due
  • September 16, 2010        Updated revenue forecast adopted
  • November 18, 2010        Update revenue forecast adopted
  • Mid-December 2010      Governor’s proposed 2011-13 budget released
  • January 10, 2011             2011 Legislative Session begins

Washington House Ways and Means Committee Meets to Discuss Current Budget Issues and Potential Reform Ideas

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Yesterday afternoon the Washington House Committee on Ways & Means met to receive several updates on the current budget and discuss potential areas of reform as the 2011 legislative session approaches.

The Committee began the hearing with an update on the June Revenue Forecast released last week.  The forecast showed an economy that is recovering at a slow and uneven rate. This was perhaps best exemplified in the news that the June forecast was down over $200 million from the February forecast.

The Committee then received an update with regard to the anticipated federal Medicaid funds that have been up in the air.  At this time, the U.S. Senate is considering H.R. 4213 which includes the six-month extension for Medicaid funds to states. The Senate has voted twice to close debate and move the legislation, but both votes have failed.

The latest information shared with the committee suggests that policymakers in Congress may consider an extension with a phase out. What this means for Washington is that instead of receiving the full $480 million anticipated in the 2010 supplemental budget, the amount provided to the state would be tapered over the six months resulting in fewer dollars.

Though many things remain up in the air, for example policymakers may extend the Medicaid funding in other legislation or provide for another option for distribution of these funds to states, it was shared that the tapering of funds could provide as much as $410 million to Washington or it could be much less.

Finally, though the Committee agenda publicized a discussion of possible budget reform ideas, including the fiscal note process, standard approaches to reviewing the budget and agency budget requests, and adding performance measures to the budget, the committee chose to continue to discuss these issues among themselves via email and continue this discussion at the next meeting of the Committee.

State budget deficit for 2011-13 Biennium -$3 billion

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The Washington Office of Financial Managment (OFM) expects that the gap between state revenues and “basic spending pressures” will be approximately $3 billion next biennium.

In a report that provides state agencies, including higher education, with operating budget instructions for the next biennial budget, OFM suggests to provide funding to move current state programs forward, state funds will need to replace nearly $2 billion in federal funds that were made available to Washington during the recession. Part of these funds were used to offset cuts to higher education during the 2009-11 biennium.

In addition, funding requirements for pending funding obligations, statutory requirements to support important reforms in basic education, and restoration of voter approved commitments to reduce class size (I-728) and provide cost of living adjusts for teachers (I-732) add another $2 billion in spending pressures.

Though this adds up to a shortfall of $4 billion, OFM project that new revenues will provide $1 billion to close the gap, leaving $3 billion to be settled by the state.

So one may ask is there any good news.

In the report issued by OFM, indications show that Washington is experiencing much stronger revenue growth of 8.8% for FY 2011. Though this growth is relative to a new, much lower revenue base, it is definitely a positive note when compared to the drop in revenue in the last two years.

As Washington nears the 2011 legislative session more details will come into focus to provide a much clearer picture of the state budget.  The next big step in the process will be in mid-June when both the state caseload forecast and economic and revenue forecast are released.

Federal Dollars for Washington’s State Budget Still Alive

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Late last week concerns arose about the likelihood that states would receive federal Medicaid match dollars.  However, it appears that these federal dollars may still be alive in the Senate.

The Office of U.S. Senator Patty Murray reported today that a federal Medicaid match worth $480 million to Washington state has been included in the American Jobs and Closing Tax-Loopholes Act now before the Senate.

This is in stark comparison to the U.S. House of Representatives  which passed legislation without language to extend federal Medicaid dollars for six-months, a $23 billion investment.

Washington, along with 30 other states, incorporated federal dollars to assist in offsetting state budget shortfalls. Washington’s 2010 supplemental operating budget anticipated $480 million in additional resources based on the Federal Medical Assistance Percentage (FMAP) enhancement being extended by an additional six months through June  2011.

Without these funds ($480 million) the dollars in reserves ($450 million) planned as a cushion would be eliminated, leaving the state vulnerable to changes in tax revenues.

If the American Jobs and Closing Tax-Loopholes Act passes with the federal funds intact, the bill will have to return to the House for approval.

Concerns Rise Regarding State Budget

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Doubt is emerging about anticipated federal funds for Washington.

Washington State’s budget was balanced based on four strategies: (1) Reductions to public services and programs, (2) Transfer of funds to the General Fund, (3) Increases in revenues, and (4) Incorporation of approximately $618 million of approved/anticipated additional federal relief to Washington State.

The 2010 supplemental operating budget anticipated $480 million in additional resources based on the Federal Medical Assistance Percentage (FMAP) enhancement being extended by an additional six months through June  2011.

In addition, based on  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 expected to receive $87 million in additional federal resources beyond the current level assumed in the state budget.

At the time the state budget was signed into law, Congress was considering legislation that would extend the enhancements beyond the current end date, December 2010. Legislation that both the House and Senate had considered before and passed.

However, today states, including Washington, are running into roadblocks with regard to the anticipated funds in Congress.

Last week the U.S. House of Representatives stripped language for a six-month, $23 billion extension. Washington is seeking approximately $480 million of these funds as part of the four-strategy approach to balancing the state’s most recent shortfall (2010).

Without these funds ($480 million) the dollars in reserves ($450 million) planned as a cushion would be eliminated, leaving the state vulnerable to changes in tax revenues.

Governor Gregoire along with 47 other governors, both Democrat and Republican, have asked for the extension. More than 30 states counted on these dollars in their budgets.

The legislation now moves to the Senate where the bill could be taken as soon as after the Memorial Day week long recess.

Stay tuned…

Governor Partially Vetoes 2010 Supplemental Budgets

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This afternoon Governor Gregoire partially vetoed the 2010 supplemental operating and capital budgets passed by the Legislature in April.

Operating Budget

The Governor vetoed several sections of the 2010 supplemental operating budget passed by the Legislature in April. In total she vetoed all or parts of thirty two sections of Senate Bill 6444.

Only a handful of the sections vetoed impact Evergreen in some way. None of the areas vetoed that impact Evergreen changed the state funding reduction to Evergreen’s institutional budget.

  • Vetoe Section 501(1)(f)(iv) – Office of the Superintendent of Public Instruction, Exempting the Professional Educator Standards Board (PESB) from Expenditure Restrictions.
    This section exempted PESB from the restrictions on travel allowances and meeting costs that apply to other boards and commissions under Chapter 7, Laws of 2010 (Engrossed House Bill 2617). This law allows agencies to seek exceptions to the travel and meeting restrictions for critically necessary work. To maintain consistency in the application of these restrictions among state boards and commissions this section was vetoed.
  • Veto Section 708, pp.270-271, Washington Management Service and Exempt Management Services Reductions.
    This section ties to Section 2 of Senate Bill 6503 which was vetoed. The budget proviso assumes additional compensation reductions of $10 million in General Fund-State funding from the Washington Management Service and exempt managers, who comprise less than 5% of the state employees. This cut would require that specified staff take nearly two weeks of temporary layoff time beyond the ten days included in ESB 6503. This inequity is likely to create problems in recruiting/retaining qualified and experienced workers, as well as be disruptive to normal state operations. Managers will be subject to temporary layoffs in the same proportion as all affected state employees.
  • Veto Section 902, pp. 289-290, Agency Staffing Report
    The agency staffing report required by Section 902 adds another layer of complexity to the data already required to be reported through allotment and accounting systems. The addition of monthly job class information adds immensely to agency workloads with seemingly minimal benefit. The Governor directed the Office of Financial Management to work with legislative fiscal staff to identify alternative reporting formats that can be useful without creating an unacceptable workload burden.
  • Veto Section 920, pages 301-302, Washington State Quality Awards
    Section 920 accelerates the date by which agencies must apply to the Washington State Quality Awards program. It also limits that requirement for agencies that have more than 300 full-time equivalent employees. A great deal of time and effort is required for a well-executed Washington State Quality Award application. The new date of June 30, 2010 is too short a timeframe especially for large agencies that may have to submit multiple applications.

Capital Budget

The Governor vetoed only three sections of the 2010 supplemental capital budget passed by the Legislature in April. Of the three sections vetoed, two impact Evergreen.

  • Section 6003, p.111, Office of Financial Management Budget Instructions
    With this proviso the Office of Financial Management must require that preliminary energy audits be conducted on project requests that involved significant renovations or improvements in owned or leased facilities. Reducing energy consumption is a high priority, but requiring energy audits before funding decisions are made will be burdensome and costly. The Governor has directed the Office of Financial Management to develop instructions to state agencies that will serve the goal of reducing energy costs without requiring formal audits for every project.
  • Section 6012, pp. 121-122, Project Tranfer Authority
    This proviso eliminates existing authorization for the Office of Financial Management to approve the transfer of funds from one capital project to another within the same state agency. It also places limitations on approving spending plans for construction contingencies, bid alternates, and equipment costs for capital budget projects already approved by the Legislature. These limitations are too stringent for state agenices and may cause unintended cost increases and schedule delays. The Governor has directed the Office of Financial Management to continue to scrutinize capital project spending plans to identify additional savings that can be directed to new projects in the 2011-13 biennium.

House Majority Leader Lynn Kessler Announces She Will Not Run Again

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As the Washington Legislature entered the early hours of the 30th day of the first special session of 2010, Representative Lynn Kessler, the House Majority Leader, announced that she would not run again for her House seat this fall.

Representative Kessler ends her legislative career after 18 years of service to the citizens of Washington. She has been a strong advocate for women’s rights and access to an open and transparent government.

She will be greatly missed for her leadership, strength, and kindness.

House Passes Lottery Marketing Legislation

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Late in the evening the House passed Senate Bill 6409, which re-brands and markets the state lottery to recognize the expanded use of lottery revenues (established in the bill) to benefit higher education financial aid programs, early learning, and economic development.

Senate Bill 6409 creates the Washington Opportunity Pathways Account. Beginning in state fiscal year 2011, all net revenues from in-state lottery games that are not otherwise dedicated to debt service on the Safeco Stadium and Qwest Field and Exhibition Center are dedicated to the new account. All net income from the multi-state lottery games, other than those dedicated to the Problem Gambling Account, are deposited into the Washington Opportunity Pathways Account rather than into the General Fund.

The Washington Opportunity Pathways Account may only be used for the following programs: recruitment of entrepreneurial researchers, innovation partnership zones, and research teams; the early childhood education and assistance program (ECEAP); the State Need Grant; the State Work Study program; College Bound Scholarships; Washington Promise Scholarships; Washington Scholars; the Washington Award for Vocational Excellence (WAVE); the Passport to College Promise; the Educational Opportunity Grant; and GET Ready for Math & Science Scholarships.

Senate Bill 6409 is also  expected to provide another $15 million in lottery revenues, from re-branding and market efforts, to help offset the $2.8 billion state budget deficit.

Senate Bill 6409 now goes to the Governor for her signature.

Senate Concurs on 2010 Operating Supplemental Budget…Budget Heads to Governor

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Just after 10:00 pm the Senate concurred on the House amended version of the 2010 supplemental operating budget  (SB 6444) with a vote of 25-21.

The 2010 supplemental operating budget implements a 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 and incorporated approximately $618 million of approved/anticipated additional federal relief to Washington State.

The budget transfers $461 million from various funds to increase General Fund-State resources. The Legislature is also expected to pass legislation that will raise $794 million in new revenues.

The impact of the 2010 supplemental budget passed by the House on Evergreen is both positive and negative. The budget secures funding for student aid while at the same time reduces the College’s budget by over $1.2 million and makes further cuts through compensation reduction related-actions.

The 2010 supplemental operating budget bill now goes to the Governor for her signature.