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State shortfall likely to increase

Governor to readjust budget after job, revenue outlooks are released this week

By Brad Shannon | The Olympian • Published November 18, 2008

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Gov. Chris Gregoire and state budget writers are bracing for other bad blows this week when the latest state employment and revenue outlooks are issued.

The new jobs report is due today, and a new revenue forecast is due Wednesday. Both should clarify just how serious the state's economic problem is, and whether the expected $3.2 billion state budget shortfall will swell to $4 billion or more in the two-year budget period that begins July 1.

The figures could get worse yet by January — even as Gregoire moves ahead with economic stimulus efforts at the state and federal level.

"I don't know what the final number will be but we do expect that it will grow," Gregoire spokesman Pearse Edwards said of the shortfall Monday. "We are preparing for the budget, which we will release the week of Dec. 15, to reflect the forecast coming out in the middle of this week."

State Sen. Margarita Prentice, the top budget writer in the state Senate, said she "wouldn't be surprised" if the shortfall hits $4 billion after Wednesday's forecast. She said the situation is "extremely bad" and warned of "gruesome" budget choices ahead.

"The whole story seems to get worse every day," Prentice said, blaming the national economic fall. "I just think it's going to be more gruesome. I think all of us have to get realistic."

Gregoire has ruled out tax increases. She also has been looking for ways to get more money into circulation and to keep people employed — including extending jobless pay benefits.

Late last month, she ordered the early release of $300 million in federal dollars allocated to the state. The federal money includes $200 million for housing, including rental assistance, the refinancing of mortgages and projects, and $84 million for low-income heating assistance. She also wants the federal government to speed up $13 million for fishers hurt by coastal salmon declines.

Gregoire had planned to send an updated list of infrastructure projects — such as local road projects and water projects — to Congress this week in the hope that federal lawmakers could put ready-to-go projects on a fast track for funding. The idea was to get people into jobs doing needed work, which might stimulate other economic activity.