State layoffs will hit hard in county The 515-page budget that lawmakers left on the governor’s desk will change thousands of lives in South Sound and rattle the local economy.
As the hub of state government, Thurston County is due for a one-two punch from the recession, losing both the services that have been cut and the jobs that went with providing them. Jobs began vanishing in the county in September, and the county unemployment rate hit 8.5 percent in March, lower than the state rate of 9.2 percent.
But more job losses are expected after July, when state budget cuts take effect.
It’s impossible to tell at this stage how many of the 21,700 full-time-equivalent state workers in the county are in danger of receiving pink slips. But the loss could have a significant effect: The average annual salary for a state worker here is $58,600, and county planners predict a loss of 135 private-sector jobs for every 100 state positions eliminated.
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“I’m thinking it is going to look like it did in the early ’80s, when we had some pretty significant drops in total employment. We are going to experience that again. … We won’t necessarily experience a drop in population,” said Pete Swensson, a senior planner with the Thurston Regional Planning Council who tracks demographic and economic trends.
Swensson also drew a parallel to the brewery closure in Tumwater in 2003, which eliminated 400 jobs. For every 100 lost brewery jobs, 224 local spin-off jobs were lost in retail and other sectors, for a total loss of 1,300. But state jobs have less of an effect, so Swensson predicts about 135 jobs lost in other sectors for every 100 cut from the state payroll. It would take a loss of 550 government jobs to equal the number of jobs lost from the brewery’s closure.
In the early 1980s, total employment in Washington peaked at 1.6 million jobs, and state government employment in Thurston County peaked at 13,722 jobs, including the two local state-funded colleges. By the time employment bottomed out in the severe recession of 1982, statewide employment had dropped to 1.57 million jobs, and employment in state government and at the two state colleges in Thurston County had declined to 13,093.
More than 25 years later, both the state and the local job bases are almost double what they were in the early ’80s. Statewide employment in all sectors grew to nearly 3 million in 2008; state government and college employment increased to 25,000 in Thurston County, Swensson’s figures show.
The $4 billion in reductions in the state budget will trigger an estimated 7,000 to 8,000 government-related layoffs statewide. Most will be in public schools – with somewhere between 2,000 and 3,000 in colleges and state agencies, according to the Office of Financial Management.
Getting more precise than that isn’t possible because managers in each program have many choices of how to reduce spending, including whether to ask for unpaid time off for workers or reduce work hours to curb layoffs, according to the agency.
State employment already has been shrinking.
The ranks of state government have been dropping since August, when Gov. Chris Gregoire ordered a limited hiring freeze that remains in effect. At the end of March, 65,016 people throughout Washington were receiving state paychecks, down 2,124 from the start of the freeze. Those figures do not include the state colleges.
The Evergreen State College and South Puget Sound Community College, both state schools, have operated under the same freeze. Positions left vacant will be eliminated in the budget cycle that starts July 1, officials say. Office expenses, equipment and other purchases were postponed. Division leaders in the largest state agency, the Department of Social and Health Services, still are looking for more ways to share resources and reduce expenses, interim agency financial director Roger Wilson said.
“We think there are some dollars there, probably not significant, but if we can find some dollars there, we can save some people,” he said. “And it’s people who are the resource, who deliver the services. So it’s worth wringing that sponge, and wringing it again.”
The agency received funding for the equivalent of 18,562 full-time jobs – 506 fewer than planned a year ago. But legislators made it clear that they want to preserve as many services to the public as possible, so they ordered large cuts in vague areas such as “operation efficiencies.”
“We’re on the hook for $115 million in reductions in the next two years, and about 270 (full-time jobs). Those are just the administrative ones,” Wilson said.
The agency already has issued 120 layoff notices, and Wilson expects more in the next two months. But because state workers often have the right to move into a less-senior job, it could be months before the results are final.
The cuts would have been doubled if it weren’t for a massive infusion from the national stimulus package, Wilson added.
But tax revenue coming into the state coffers has yet to stabilize.
“I think it will be continual adjustments. As each of the events takes place, the revenue forecasts, there may need to be more adjustments, and adjustments are reductions,” Wilson said.
‘WHAT YOU’RE ABOUT’
An example of the ripple effect is Fresh Measures cafe, an eatery that South Puget Sound Community College’s culinary program took over two years ago.
A haven for lobbyists and legislative staff members adjacent to the Capitol, the restaurant sits nearly empty during the summer, and the college plans to abandon the operation in June, despite its educational value.
“It wasn’t a money maker, and you have to pare down to what you’re about in these tough times,” said Kellie Purce Braseth of the college. “The budget reality is that’s money we could have used on our students.”
The college has a two-year budget of about $23 million and is expecting a cut of $2 million in the next cycle. College administrators have met with the staffers and students, drafting a list of core functions that should be preserved, Purce Braseth said.
Empty slots will be cut first, and the college has asked staff members how many might be willing to retire early, which would also reduce layoffs, she said.
“There’ll be a few that will be cut. But there won’t be a lot,” she said.
Evergreen expects to keep its enrollment at 4,213 full-time slots, but the four-year liberal arts college west of Olympia is looking at some steep spending cuts.
“Real people are going to lose their jobs. Students are going to be affected. We are aiming to preserve the exceptional job we do in educational quality here,” Evergreen spokesman Jason Wettstein said, describing the budget situation as “fluid.”
EVERGREEN TO CUT IN JUNE
The college board of trustees will meet June 11 to go over options. Wettstein said dozens of jobs are on the chopping block but that he could not be more precise.
“We experienced a $14.1 million cut, or 13.2 percent, across the biennium” that begins July 1, Wettstein said. “That’s before the tuition increases. After the proposed tuition increases of 14 percent (a year), our net budget cut would be $8.7 million, or 8.2 percent over the biennium.”
College leaders have limited travel, purchased less equipment, looked for energy-cost reductions of 10 percent, and printed fewer publications and forms – all in a bid to reduce nonpersonnel costs and limit the hit on instruction.
Curriculum advertised for 2009-10 in college catalogs will be delivered as promised, despite the cuts. Student-teacher ratios are set out in collective bargaining agreements with permanent faculty members, so the college is hiring fewer temporary faculty members and cutting support services in a bid to preserve core educational offerings. Likely effects on students include a jump in in-state undergraduate tuition of $578 in the coming year and $659 the next – on top of the $4,297-a-year rate today.
Students also could see less help in the library and longer lines in administrative offices as fewer employees are available to help and hours of service are reduced.
DIVERSIFYING JOB BASE
Swensson and Michael Cade, executive director of the Economic Development Council of Thurston County, both say the county job base has diversified since earlier recessions. And that could help soften some of the overall economic effect of state layoffs.
Cade said the community must wait to see how many state jobs will be cut locally.
“One of the things we should probably consider is that our economy today in Thurston County is much more diverse than the last recession and certainly than two recessions ago,” Cade said. “We have a lesser percentage of (overall) jobs in state government.”
“The government share is smaller. The private sector has been growing faster than the public sector” locally, Swensson added, comparing state government’s reduced effect in the county to Boeing’s shrinking effect statewide as Microsoft and other industries have sprung up. Fewer than 1 in 5 jobs in Thurston County’s job base of 133,000 to 137,000 now are in state government. Sectors such as transportation and distribution warehousing have grown, and health care remains a steady growth sector as Thurston County continues to serve as a regional hub for care.
ECHOES OF 1982
Secretary of State Sam Reed said he remembers the cuts of 1982 when he was Thurston County’s auditor, and he expects to see those kinds of reductions in both public- and private-sector activity again.
“It is going to hurt this community. We are not a widely diversified economy that has large industry. Even the brewery, which was a pretty big private employer, is gone,” Reed said. “I do think we’re going to see a bit of downsizing in the private sector – in the discretionary areas, restaurants and retail. … Unfortunately, some of them are probably going to go under.”
Reed said that at the same time, he was impressed in the 1980s, and in the milder recessions of 1991 and 2002-3, by community efforts.
“This community also is very good at pulling together and helping out, helping out neighbors and doing more generously in many cases,” Reed said. “I think you will see that. We are a county that is rather extraordinary in terms of volunteerism. … I think we are going to see those things again, too.”
Adam Wilson covers state workers and politics for The Olympian. He can be reached at 360-753-1688 or email@example.com.