Politics & Government

State budget looks at another $2 billion in cuts

The budget hole facing state lawmakers in January has widened to a projected $2 billion, swollen by more recent dips in revenue collections and other factors.

A new state revenue forecast due out Thursday could paint an even bleaker picture. The state’s revenue-forecast agency also reported this week that tax collections over the past two months have fallen short of expectations by about $97 million since September’s forecast.

Added to that are rising caseloads in public schools and other programs, and greater costs associated with medical assistance provided to the poor. The latter costs for people already receiving services likely will increase by an additional $200 million by June 2011, Gov. Chris Gregoire’s budget office confirmed Friday.

The Office of Financial Management also estimates that the overall budget shortfall now is $2 billion, spokeswoman Kate Lykins-Brown said.

That includes the effects of the latest caseload forecast, which carried only mildly bad news: Expected costs resulting from rising enrollments for various programs such as schools, welfare and medical aid are up $27 million since a midsummer forecast.

“It carries forward what we already knew was an upward projection four or five months ago,” said state Rep. Jeannie Darneille, the Tacoma Democrat who serves as the chairwoman of the Caseload Forecast Council as well as the House General Government Committee.

The lousier news: The cost of providing medical care for those already receiving state-assisted care is up by about $200 million, Lykins-Brown said.

The bits of bad news add up to a pretty big problem for Gregoire, who is crafting a budget for release just before Christmas. It could include steep cuts into programs once thought immune to cutbacks.

It probably means programs such as the Basic Health Plan and General Assistance Unemployed are doomed – unless federal aid is secured to help pay for them, said Rep. Gary Alexander, R-Thurston County.

Alexander is his party’s ranking member on the House Ways and Means Committee, and he has pushed for quicker and deeper action to cut the budget.

“Two billion dollars is a significant objective to hit in terms of reductions. But it is not impossible to do that,” he said. “It can be done if we roll up our sleeves.”

Alexander said whole programs have to be considered to be eliminated or transferred into the private sector. For instance, he wants to team with Democratic Sen. Tim Sheldon of Potlatch on a bill to privatize more of the state’s liquor stores.

Darneille said some of the cuts last year seemed unthinkable, and more will be required next year. But she is certain the budget debate no longer will focus only on cuts and now will focus more realistically on tax or revenue increases too.

“I’m absolutely certain that the debate will have to broaden,” Darneille said.

Lawmakers are in some ways “waiting for the other shoe to drop” while being realistic, she said.

“You may recall a year ago we were looking at $5 billion (for the shortfall), and by the end of session it was $9 billion,” Darneille said.

Friday’s caseload included a predicted 561 more students in public schools through June and 2,768 more through June 2011, bringing total enrollment in the K-12 system to 993,229 by mid-2011.

That enrollment growth reflected a shift of more students from private schools and fewer students quitting school mid-year because of the poor job market, forecast council staff member John Steiger said.

Brad Shannon: 360-753-1688

bshannon@theolympian.com

www.theolympian.com/politicsblog

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For more information about the state’s caseload, go to www.cfc.wa.gov. For more about its revenue forecasts, go to www.erfc.wa.gov.

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