Politics & Government

Gregoire: Budget crisis eases - for a month or more

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

Gov. Chris Gregoire said today that federal aid moving through the U.S. Senate this week could be worth $543 million to Washington state, including $338 million in Medicaid assistance and another $205 million in education help.

The likely aid, which U.S. Sens. Patty Murray helped past a critical hurdle this morning, means Gregoire does not need to order across-the-board cuts or consider bringing state lawmakers to town for a special session for now.

But the state's September and November revenue forecasts could change that, Gregoire said in a meeting with reporters at the state Capitol this morning.

The Democrat also foresees a budget crisis in January and wants her own Cabinet to consider spending reductions that could provide an early start on closing an expected $3 billion budget shortfall for 2011-13.

Gregoire was reacting to news this morning that the U.S. Senate voted to limit debate on H.R. 1586, which provides about $26 billion in federal medical and education aid to the states. Washington's Legislature had assumed $480 million in federal medical aid when it approved a supplemental budget in April, and loss of that funding would have created a $227 million deficit in the state accounts.

Revenue collections reported in early July showed the state was already $85 million below forecasts of a few weeks before, which meant the governor was looking at cuts of up to $300 million.

A full Senate vote on the aid is expected Thursday and state officials are in touch with U.S. House Speaker Nancy Pelosi’s office in a bid to get her to bring members back for a quick vote on the package, Gregoire said. “I’m hoping the speaker will bring them back in,” the Democratic said.

Gregoire said the education funding in the bill was not something the state had counted on. Her budget office still needs to learn what strings might attach to the school aid. She described Washington’s schools as being in better shape than others around the country that faced teacher layoffs.

The governor also said she is confident the medical-aid funds are going to arrive, because the House had approved a higher level of medical help to the states in earlier bills that passed the chamber in December. The Senate then stripped that higher funding out of a war-funding bill, which led to the more recent crisis, Gregoire said.

Absent the federal aid, Gregoire said she faced a tough decision next Tuesday, Aug. 11, whether to order across-the-board cuts of 4 percent to 5 percent — or to call lawmakers back into session. A special session wasn’t much of an option, though: Gregoire had said previously she wanted lawmakers to assure her they could reach an agreement on cuts in two or three days of session, and Democratic leaders in the state House and Senate this week ruled out such a scenario.

House Ways and Means Committee chair Kelli Linville, D-Bellingham, and Senate Democratic Caucus chairman Ed Murray, D-Seattle, both said it was better for the governor to make cuts that the Legislature could adjust when it returns to Olympia in January.

Despite the apparent budget reprieve, Gregoire said she has asked big agencies such as the Department of Social and Health Services, the Department of Corrections and the community colleges board to share spending-cut scenarios with her cabinet on Thursday. Gregoire wants agencies to be looking ahead to January’s likely shortfalls with an eye to getting a jump start on reducing the $3 billion shortfall.

Budget director Marty Brown said agencies already have been saving more money than the Legislature ordered, and unofficial savings from Corrections may already total $20 million.

Gregoire also wants lawmakers to approve new powers for a governor to make budget reductions that allow some leeway. Under current law, she can order across-the-board reductions that hit all non-exempt agencies equally, sparing only basic education, debt service and pensions. Gregoire said she would like “sideboards” on any new powers that might require, for instance, consultations with legislative budget-committee chairmen.