Getting out in front of the shaky economy is a wise decision because the sooner budgets are cut the more dollars are saved.
You could feel the governor’s frustration in her letter to agency directors and front-line workers asking them to prepare for budget cutbacks as deep as 10 percent.
In her note, Gregoire wrote, “Part of the key to fighting this recession is to continue working to get ahead of it. ... For every two steps forward in the recovery, it seems we are taking one step back. Though our revenue collections have continued to show slight improvement this biennium, our near-term outlook has weakened. The uncertainty our state could experience as a result of downgraded credit ratings, federal debt concerns, European markets and the lingering effects of the tsunami in Japan, are causing us to be extra cautious. In other words, should more bad news happen, we must be prepared.”
We agree – totally.
We saw how difficult it was for lawmakers to balance the two-year budget this year. They knew the depth of the budget hole when they came to Olympia in January. Each revenue forecast brought additional bad news, but lawmakers adjourned their 105-day session without a budget agreement.
It was a clear failure of legislative leadership.
Gregoire called lawmakers back into special session and gave them another 30 days to reach an accord. They used all 30 days before adopting a 2011-13 spending plan that left very little money in the bank in the event of additional revenue losses.
Meanwhile, in Washington, D.C., another set of lawmaker played a frightening game of chicken with President Barack Obama over spending cuts, taxation and reducing the national debt. They took this nation to the brink of disaster, only to craft an agreement that in essence delays the hard decisions until year’s end.
The political posturing angered the American public and caused Standard & Poor’s to reduce this country’s once-sterling credit rating which only prompted further angst on Wall Street.
The political infighting and slow economic recovery have destroyed consumer confidence and raised the spectre of a second recession. It seems everyone is on edge, uncertain about the fiscal stability of the nation and their families.
It’s under that umbrella of uncertainty that Gregoire and her budget chief asked state officials to begin assembling plans for 10 percent budget cuts in 5 percent increments.
“We need to review our options across state government and assure we are taking cuts only where we can possibly take them,” Gregoire said. “I have recently met with the state treasurer, the state economic forecaster and the four legislative leaders to assure that, as a state, we are prepared to get through this by making smart decisions early on.”
The governor’s request raises the possibility of going back to some of those suggested cuts that lawmakers did their darndest to avoid during the 2011 budget debate, things such as funding of prescription drug services to adult Medicaid clients who are not being cared for in hospitals or nursing homes.
Medicaid cuts alone in the 10 percent scenario could top $445.5 million. At the Department of Corrections, the share of cuts is $105 million at the 10 percent level. A similar cut at DSHS would require more than a half billion dollars in reductions. Cuts of that magnitude, on top of those already taken, would have a significant impact on the lives of the poor and the infirm.
Even so, budget leaders on both sides of the political divide applaud the governor’s early action.
“I think this is a good thing. I think it is good for us to come together and make the reductions where we think they can have the most impact,” said Rep. Gary Alexander, R-Thurston County, who is ranking minority member on the House Ways and Means Committee. “That may mean a special session – if we’re going to do something other than across the board reductions.”
Rep. Jeannie Darneille, a Tacoma Democrat and vice chair of the House Ways and Means Committee, agreed it is good to start looking at options. But she wants possible tax increases back in the discussion. That won’t sit well with conservatives in the state Senate, paving the way for additional budget battles.
The governor summed up the feeling of most of us when she told state employees, “Trust me, I continually wish I had better news to share.”
Absent a miraculous turnaround in the economy, state leaders must be prepared for yet another round of budget reductions. The sooner those cuts are in place, the better. That’s why the preemptive action by the governor and her budget director is well advised.
