State lawmakers got rare good budget news this morning as a new caseload forecast shaved $287 million off the anticipated cost of government through June 2013.
The big and unlikely savior: federal health reform.
The Caseload Forecast Council released its draft report here. Too few lawmakers serving on the council were present to form a quorum to adopt the forecast.
Marty Brown, budget director for Gov. Chris Gregoire, said the forecast in effect cuts $78 million from costs for public schools, Medicaid, prisons and other programs through June and another $209 million for the next two-year budget cycle. Caseloads are not actually shrinking, but are growing slower than November's forecast in many categories.
But reduced use of state-paid medical services is a major driver of the lower costs, accounting for $70 million of the avoided costs in the short term and about $117 million of in the next cycle, Brown said.
"That's mostly health-care reform," Brown said. "A lot of it is drug rebates and a reduction in premiums we have to contribute to" for Medicare recipients eligible for the shared state-and-federal Medicaid assistance.
But lower than expected enrollments in welfare, or Temporary Assistance to Needy Families, also lowered costs. That was due in part to pushing people off welfare who were cut off benefits for not meeting program requirements. On the other hand, more were on the Disability Lifeline.
Republican Rep. Gary Alexander of Thurston County serves on the council and said the lower costs "are going to be helpful in addressing our budget. We were very concerned it would go in the opposite direction. Unfortunately, we will see a revenue forecast that will go in the opposite direction."
Brown said Gregoire was "pleased" by the news of lower costs (one has to think she also doesn't mind seeing health-reform getting some credit: she and Republican Attorney General Rob McKenna have been feuding about the national health reform suit.
In other news, the Economic and Revenue Forecast Council released its monthly tax-collections today, saying they are down by a cumulative $85 million through early March, compared to the November forecast. The collections for the state general fund fell $39.9 million below the previous forecast over the last month alone. But the state's economy is growing and tax collections overall are still higher than in the previous year.
The revenue council makes its next quarterly report on Thursday, March 17, and lawmakers are all over the map in their expectations – some fearing revenues could fall as much as $2 billion below November's predictions.
State revenues are tied in a major way to sales and business activity, and sales are linked to consumers’ sense of job security or job prospects. But the quarterly economic forecast issued a week ago said the state is still 180,000 jobs below the pre-recession peak, and full job recovery won't occur until after the next biennium ends June 30, 2013.
About all that legislative leaders have agreed on at this point is to first to try writing a budget without tax increases.