Gov. Chris Gregoire expressed support for the federal debt-limit deal that was passed by the U.S. House on a divided vote Monday, but her state budget director said it still is unclear how the called-for spending cuts might effect the Evergreen State.
“It is clear – Washingtonians deserve certainty and they need it now,” Gregoire said in a letter she sent Monday to the state’s nine U.S. House members and two U.S. senators. The deal to raise the debt limit and make cuts of $2.1 trillion or more over 10 years was announced Sunday by President Barack Obama.
“Until we have more certainty, I fear our revenues will continue to suffer, while businesses remain anxious and reluctant to hire. We have no time to wait and risk our economic recovery,” Gregoire said. “While I am not aware of all the details of the compromise, maintaining funding to support state programs including Medicaid and our state’s Pell Grants is critical to our state and its future.”
Among Northwest lawmakers, Republican Reps. Dave Reichert of Auburn and Jaime Herrera Beutler of Camas voted yes, as did Democratic Rep. Jay Inslee of Bainbridge Island. U.S. Sen. Patty Murray, D-Wash., put out a statement saying she intends to vote for the measure today in the Senate.
Medicaid, the shared federal-state health program for the poor, had been a big worry to many state budget officers. But Gregoire’s budget director, Marty Brown, said Monday that the agreement appears to spare Medicaid.
“It’s supposedly covered in everybody’s fact sheets that we’ve seen,” Brown said. “We’ll have to wait to see if they pass it."
Brown said other details about the $21 billion in near-term cuts in the agreement might not be clear for another week. Treasurer Jim McIntire said last week that the state had enough cash in its investment holdings to handle state costs for six to eight weeks if a federal default occurred.
Medicaid is the largest state-run program that depends on federal assistance, and the fear in the states had been that cutbacks in Medicaid, which costs many billions a year, would send states reeling after already making deep budget cuts in spending this year. Health reform in 2010 prevents states from watering down Medicaid coverage, although some provisions deemed “optional” can be cut entirely.
Overall, Brown said the situation was “better than it was Friday" when it was less clear that Congress would get a deal and default was a greater probability.
The compromise calls for about $917 billion in deficit reduction over 10 years, according to a Congressional Budget Office memo. But an additional $1.2 trillion in cuts would become more identifiable around Thanksgiving – about the time that a bipartisan committee is supposed to offer up recommendations for cuts and tax-code changes to Congress.
The murkiness around cuts and the effect on the states might last a while. There are not a lot of specifics on the timing of cuts or on what gets cut, Brown said. He is hoping to see some “guidance” from federal agencies in the next week.
Gregoire’s letter cited comments last week from state economist Arun Raha, saying he “warned that our state continues to lag. He suggested that the inaction and unrest at the national level continues to hurt consumer confidence in Washington state – sending our tax revenue in a downward spiral. That theory was recently reinforced by the University of Michigan Consumer Sentiment Index report, which found consumer confidence has fallen to levels not seen since the height of the recession in March 2009.”