Print  email 

Cuts loom as state faces $5.1 billion budget shortfall

No special session planned to sort out mess

By Brad Shannon | The Olympian • Published November 20, 2008

• Comments (0)

Washington faces a bigger-than-expected budget shortfall of at least $5.1 billion in the 2009-11 cycle, raising the specter of immediate spending cuts to balance the books.

The state's slowing economy knocked $1.9 billion out of the state government's expected revenues over the next 21/2 years.

Gov. Chris Gregoire's budget director, Victor Moore, said he sees no need for a special session of the Legislature, which will convene in a regular session Jan. 12 in Olympia anyway. But he plans to talk with the newly re-elected Democratic governor about executive orders she can issue to cut state spending immediately in light of the shortfall.

Spending drop

State revenue forecaster Arun Raha said the revenue slump is caused by an unprecedented drop in consumer spending that grew out of the national credit freeze that "exploded" into a crisis in September.

"The automotive sector, once the backbone of our industrial economy, is in shambles. Car sales are at recessionary levels not seen since the early '80s, when there were 40 percent fewer drivers. Housing starts are the lowest they have ever been since we started recording them," Raha said during his quarterly report Wednesday to the state's Economic and Revenue Forecast Council, which includes lawmakers.

"I'm not surprised the American consumers have finally decided to just sit on their wallets," Raha added. "Our state revenues are dependent on people buying cars and homes and gifts over the holidays. And right now, no one is buying cars or houses and, at best, we can expect a holiday season that shows no decline over last year."

Better position

Even so, Raha said, Washington is better positioned than other states and is moving into recession later than most of the country, and it will emerge from it sooner than others in the middle of next year. That's because aerospace and software-publishing sectors still are growing, he said, and net job losses are expected to hit only about 30,000.

The revenue drop includes $503 million through June 2009 and $1.42 billion more in the two-year period ending in June 2011.