Gov. Chris Gregoire asked state government agencies to get ready for across-the-board budget cuts of 4 percent to 7 percent as soon as October and ordered a phase-in of $51 million in cuts to state welfare aid.
Gregoire painted a gloomy scenario, with state budget reserves now totaling just $72 million for the remaining 10 months of the budget cycle. The money cushion could disappear if revenue forecasts in September and November show further tax losses, which Gregoire said Tuesday she expects.
“To be fiscally responsible, we must transform the way we provide services and take action now to prepare for potential shortfalls,” the second-term Democrat said in a statement. Gregoire said she also faces a shortfall of $3 billion in next year’s two-year budget, a deficit estimate that she thinks might be optimistic.
The cuts – including steps to disqualify 2,500 families from child-care subsidies in October and an additional 5,500 families from cash welfare benefits in February – come on the heels of good news from Congress this week. Washington is expected to receive about $543 million in federal medical and public-school assistance from the federal government after the U.S. Senate and House voted for the aid and President Barack Obama signed a $26 billion package into law.
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The school money is expected to pass through state books directly to school districts, a situation that gives state budget writers no wiggle room. But Gregoire and her budget director, Marty Brown, said they still are seeking details.
Gregoire said she shouted with joy over the medical aid, adding that deeper cuts would be needed without it. But the help is $142 million less than state lawmakers had counted on for Medicaid programs when they wrote their budget in April.
Minority Republicans in the Legislature say Gregoire’s cuts won’t be quick enough or surgical enough. Sen. Joseph Zarelli, the ranking Republican on budget issues in the Senate, said lawmakers should come into a special session within 45 days to cut spending in a way that does not penalize more-deserving programs.
“While I applaud the governor for planning ahead, I believe there are many flaws to an across-the-board cuts approach,” Zarelli said in a news release. “Using that blunt instrument implies our funding priorities for things like tourism and programs for people with developmental disabilities are exactly the same. And, if revenues drop as significantly as they are likely to do in September, it is doubtful that across-the-board cuts could achieve the level of savings necessary to keep the state out of the red between now and next summer.”
Democrats holding majorities in the House and Senate have ruled out another special session. Senate Democratic Caucus chairman Ed Murray and House Ways and Means Committee chairwoman Kelli Linville said recently they do not think lawmakers can reach quick agreements on the budget cuts in the thick of an election season; they’d rather let Gregoire make cuts this fall, then adjust the cuts during the session in January.
Gregoire said the size of across-the-board cuts still depends on how far in arrears the Sept. 16 revenue forecast puts the state. Gregoire can order cuts that, in effect, bring the state into a budget balance.
A full 7 percent cut could save about $500 million through the budget year that ends in June, and it would wreak havoc on programs, according to Gregoire. She noted it would close a prison, likely Larch Corrections Center in Yacolt.
It also would end state-funded hospice care for the elderly and get rid of podiatry and vision care for adults in poverty. It also could eliminate 9,000 enrollment slots at community colleges and end levy-aid payments to tax-poor schools in rural areas.
“Levy equalization will be the subject of cuts, no question about it,” Gregoire said.
Gregoire said that however deeply she cuts, she will leave it to lawmakers to decide if they agree with or want to change the cuts when they return to session in January.
State schools superintendent Randy Dorn has said public education is not immune to cuts – despite the state’s legal and constitutional duty to provide amply for basic education.
Besides levy aid, cuts could hit class-size reduction money for early grades and even eliminate all-day kindergarten. But looking ahead to the 2011-13 budget, levy equalization is the single largest piece where the state could save money in education, said Brown, the budget director.
The reason for the state’s thin financial margin is the slow economy, which drained the voter-approved rainy-day fund after the national and international economic crisis hit in late 2008. Gregoire said the state cut $5.1 billion from its budgets over three years, and her budget office released figures that showed the number of state employees in agencies and higher-education institutions has fallen by about 3,000 over the past year.
Gregoire supported tax increases this year to help protect school funding and the social safety net, but she said Washington “can no longer do” some of the things it has previously done to help the poor. She said the private sector, churches and charities must pick up some of the slack left by the cuts to the welfare programs.
Gregoire recently held a series of budget hearings with the public around the state, soliciting ideas for balancing the budget. One of her findings was the budget needs to be smaller.
According to state Social and Health Services Secretary Susan Dreyfus, spending for the state’s WorkFirst program is about $51 million over budget. That welfare-to-work program costs $968 million a year, and it has seen its caseloads swell by more than 30 percent over two years – “from 51,106 in July 2008 to 66,634 in June of this year,” according to DSHS.
The governor’s order cuts $14.8 million in child-care aid to about 2,500 low-income working families starting in October. Dreyfus said subsidies are available to families that participate in the program and earn up to 200 percent of the federal poverty line; the cuts lower the eligibility to 175 percent, or $2,600-a-month income, for a family of three.
Another major reduction of $16.4 million is gained by allowing fewer hardship exemptions to the five-year lifetime limit for welfare aid. It takes effect in February for 5,555 people who have not found jobs. Exemptions still are allowed for several categories of welfare recipient, including those who are disabled or care for a disabled relative at home.
Without congressional action in September to send additional federal assistance to the program, the state’s Temporary Assistance to Needy Families program faces additional cuts of perhaps $62 million.
Activist Robin Zukoski of Columbia Legal Services said Gregoire is saying, in effect, that the state “can no longer afford to have a safety net.”
Zukoski said activists knew cuts would have to be made, but DSHS could have taken a different approach to getting the welfare savings. For child care, it could have relaxed a requirement that participating families work 32 hours, instead setting it at 20 hours; Zukoski said this would reduce the cost of child-care subsidies without punishing families that lived up to program rules.
The cuts to Temporary Assistance to Needy Families won’t affect the monthly food-stamp allotments for participants, or their medical coverage, but it does cut off their cash help.
“I do see them turning to the shelter system and the churches and the charities … My impression is they are pretty maxed out already. There aren’t a lot of extra beds at the shelters. The food banks don’t have excess food right now,” Zukoski said. “I really fear there will be a lot more homelessness as a result of this.”
Brad Shannon: 360-357-1688 email@example.com www.theolympian.com/politicsblog