Inslee issues directive to freeze most hiring, contracts and purchases due to COVID-19

Faced with a potential massive revenue decline because of COVID-19, Gov. Jay Inslee on Wednesday directed all agencies under his control to freeze most hiring, personal service contracts and equipment purchases.

“The full impact is unknown, but the state’s revenue situation warrants immediate fiscal restraint,” Inslee said in a memo to executive and cabinet agencies.

Inslee also asked higher education institutions, boards and commissions, and other statewide elected officials to impose similar restrictions.

An unofficial revenue forecast earlier this month said the state could face a reduction in projected state revenues of $7 billion through mid-2023 due to the new coronavirus pandemic. The official quarterly forecast is set to be released June 17 by the state’s Economic and Revenue Forecast Council.

In a memo to agency heads, the Office of Financial Management directed them to identify savings in the budget for the rest of the biennium, which ends June 30, 2021. The target for spending reduction is $1.9 billion, wrote the agency’s director, David Schumacher. That amounts to a 15 per cent spending cut.

Sen. John Braun, R-Centralia, said the details of potential effects on services won’t be known until the agencies by June 1 identify those potential savings.

“I certainly appreciate that they’re going out and looking for how they’re going to balance this. It helps us both understand the challenge we have in front of us from a budgetary standpoint, but also understand why it’s so important that we get our economy rolling anywhere we safely can.

“If we continue on the path we’re on, there will be enormous cuts in important services to our citizens,” added Braun, who is the ranking Republican on the Senate’s budget-writing committee.

Jason Mercier, director of the Center for Government Reform with the Washington Policy Center, a nonprofit free-market group, said Inslee immediately should reopen state employee contracts to cancel a 3 per cent pay raise before it takes effect July 1.

State law says when a “a significant revenue shortfall occurs resulting in reduced appropriations, as declared by proclamation of the governor or by resolution of the legislature,” the state and unions shall immediately enter into collective bargaining for a mutually agreed upon modification of the agreement.”

“Facing a massive budget deficit and record private sector unemployment, now is not the time for government pay raises,” Mercier wrote in a blog post.

Braun agreed and said he favors a special session shortly after new revenue projections are released on June 17. He said legislators could balance the budget, address the needs of the Department of Health in its COVID-19 response, take the step needed to reopen state union contracts, and give guidance to public schools about reopening in the fall.

Inslee has said it’s probable that he will call the Legislature into a special session, but has not indicated when. The current fiscal year ends June 30, and the Legislature’s next regularly-scheduled session begins in January.

The directive issued by Inslee takes effect Monday. The hiring freeze does not cover positions that:

• directly impact public safety.
• are essential to the health and welfare activities of state government.
• generate revenue.
• are required to meet statutory mandates.
• are related to the state’s response to the pandemic.

The freeze on personal services contracts does not include contracts, contract amendments, or other agreements related to:

• the protection of life or public safety.
• tax collection or other revenue-generating activities.
• those funded exclusively from private or federal funding sources.
• approved information technology projects.
• other essential categories included in guidelines established by the Office of Financial Management.

The freeze on equipment purchases does not apply to equipment.

• costing less than $5,000.
• necessary to protect life or public safety.
• funded by private or federal grants.

This story was originally published May 13, 2020 at 11:32 AM with the headline "Inslee issues directive to freeze most hiring, contracts and purchases due to COVID-19."