Gregoire laments state budget

Gov. Chris Gregoire (The Olympian File Photo)
Gov. Chris Gregoire (The Olympian File Photo)

Gov. Chris Gregoire on Wednesday presented a budget proposal to cut $1.7 billion more in programs, calling it an unjust plan that she wants to rewrite in January with as much as $700 million in new tax revenue.

“Let me be clear: I do not support this budget,” Gregoire said during a morning news conference. “As required by law, it is balanced. For me, it is unjust.”

Her announcement is the latest run-up toward a looming battle over tax increases in the Legislature, which meets Jan. 11 for a 60-day session and faces a $2.6 billion revenue shortfall. Gregoire hopes to let the proposal sink in before then and for advocates to make the case that cuts cannot solve the state’s budget crisis.

Both Democrats and Republicans in the Legislature weighed in from opposite sides of the tax divide. Advocacy groups meeting at the Capitol warned that the cuts would damage the state’s already-unraveling social safety net.

Among other things, the budget proposal kills off what is left of the Basic Health Plan’s subsidized health insurance for the working poor, which could raise the number of uninsured people in Washington to more than 1 million, said David Flentge, chief executive of the Pierce County-based Community Health Care clinics.

The budget also reduces “Apple Health” insurance subsidies for children, eliminates the temporary assistance program for the chronically unemployed, slashes financial aid for 12,300 college students, cuts all-day kindergarten programs, eliminates levy subsidies for poor school districts, cuts medical and hospital programs for the poor and care for the developmentally disabled.

Those are just the things that Gregoire, a two-term Democrat, wants to restore if she is able to win support for tax increases. Democrats who control near supermajorities in the House and Senate said taxes or closing tax exemptions need to be part of the solution – but neither Senate nor House budget leaders were advocating for much more than what Gregoire laid out.

The budget would lop 1,527 more jobs in state government and higher education, on top of the approximately 3,200 positions eliminated in those sectors through the original 2009–11 budget.

Tim Welch, a spokesman for the Washington Federation of State Employees, said the budget would cause ill effects for state workers, besides layoffs. They include higher out-of-pocket health-care costs in 2011, triggered by rising health-care costs for the state policies. He also warned that layoffs at downsized institutions such as Maple Lane School in Grand Mound and Green Hill in Chehalis could be a “tragedy waiting to happen” if youths put into group homes are not successful.

Gregoire said during her 2008 re-election campaign that it was the wrong time to raise taxes, but she seems to have changed her mind. She said the public still needs to be educated about how dire the state’s situation is, and how at risk the state’s values are. She penned a “letter to Washingtonians” and in it pledged to seek about $700 million in unspecified new revenue.

Gregoire hasn’t decided whether to seek a permanent tax increase or temporary tax increases, and she wants time for the public to understand the state’s situation and to consult with economic experts. She also is unsure whether lawmakers or voters should pass the taxes, although she prefers action in the Legislature and said it all depends on the tax.

She told The Olympian’s editorial board late Wednesday that she is “looking at both” temporary and permanent options. The reason: The economic recovery might be flat, and she needs to think ahead to the 2011-13 budget cycle, when a $2.8 billion shortfall already is forecast because federal economic-stimulus money won’t be available any longer.

“We clearly have to get through three years. I don’t know, candidly, where we’ll be in three years,” Gregoire said. “We want a month to debate among ourselves, including economists ...”

Business groups such as the Association of Washington Business have warned against tax increases, a message the GOP has also taken up. Gregoire said she shares that concern and doesn’t want to touch the business and occupations tax.

She also said she is “not really looking at” a sales tax but that it is something “I’ve not taken off the table.”

A half-cent sales tax could raise $518 million over the next year, or nearly $650 million over a 15-month period – if it could be in place by April 1, the Department of Revenue said.

But even with $700 million in buy-backs, advocate groups worry that the cuts are so severe that the safety net will be impaired, and Jerry Reilly of the Eldercare Alliance says as much as $2 billion is needed. He and others have put this year’s shortfall into the context of two years, including last year’s shortfall, arguing that $2 billion is not a large portion of a $12 billion, two-year budget problem.

A coalition of organized labor met at the Capitol to lay out the argument that the cuts will be ruinous. Sandeep Kaushik, a spokesman for the new labor-backed Rebuilding Our Economic Future Coalition, said the budget “represents a veritable tsunami of heartbreak for working families in Washington state.”

And Mike Ragan, the vice president of the Washington Education Association, which represents 80,000 public school employees including classroom teachers, said the budget represents “overwhelmingly devastating cuts on top of overwhelmingly devastatingly cuts” of earlier this year.

“We took on a $1 billion cut last year,” Ragan said. “We need revenues. We can’t just cut. We already are 45th in per-pupil spending.”

The proposed cuts include $375 million from public schools, $90 million from higher education and $145 million in financial aid, according to the WEA, which predicted classroom cuts of up to 3,000 teachers.

But Republican Rep. Gary Alexander of Thurston County said his party is not ready to embrace new revenues, instead saying lawmakers need to dig deeper into state government’s delivery of service to find savings.

Alexander favors handing more work to the private sector, cuts to management and other reduced spending, and he accused Gregoire of holding schools “hostage” to a tax increase by proposing to cut levy aid to tax-poor rural school districts.

Gregoire said she didn’t have any choice, given the state’s obligation to protect basic education, pay debts and pensions, and sustain programs it promised to maintain when it took $3 billion of federal stimulus money for schools and health care this year.

Sen. Joe Zarelli, the top Republican on Senate budget issues, also wants to change service delivery. In a statement, he said:

“There are reform opportunities across state government. At the K-12 level we can improve the way bilingual education and learning assistance programs are delivered, and consider options that could prevent the elimination of levy equalization. In health care we could institute Medicaid co-pays, premiums, and more frequent eligibility verification, rather than eliminate services. In higher education the reforms could include limiting tuition waivers, eliminating subsidies for career students, and examining a high-tuition, high-financial aid model, rather than significantly reducing financial aid.”

Zarelli also suggested changes in the way the state buys information technology. House Ways and Means Chairwoman Kelli Linville, D-Bellingham, said she also has concerns about the state’s technology purchases.

But Senate Majority Leader Lisa Brown, D-Spokane, said she wants to blunt the cuts with tax increases, something she advocated in the most recent session.

Brad Shannon: 360-753-1688