Gov. Chris Gregoire is expected to sign an order Monday for across-the-board budget cuts, but the depth of the cuts won't be known until state revenue forecasters release their quarterly revenue report Thursday.
Based on lower-than-expected tax collections since the mid-June revenue forecast, the state’s general fund reserves have fallen to about $84 million for the budget that runs through June 2011. That means that with any kind of drop in revenue, Gregoire will have to order cuts starting Oct. 1 to keep the state out of the red for the remaining nine months of the budget year.
“Given the signs we’ve already seen with collections going down and (last week’s) economic update, we’re fairly certain we will be seeing a significant revenue shortfall,” said Glenn Kuper, spokesman for Gregoire’s Office of Financial Management.
Gregoire will sign the order three days before forecast council leader Arun Raha gives his report because she is set to leave Monday night on an 11-day trade mission to China and Vietnam. Signing it early lets budget staff members move immediately upon learning the size of the problem, state budget director Marty Brown said.
The order sets out directions to agencies and to Brown to “do the math” after Thursday’s forecast. Agencies would start the cuts Oct. 1, he said.
Gregoire told agencies Aug. 12 to prepare for cuts of 4 percent to 7 percent, although cuts might go deeper if the forecast is bad enough. Brown said agencies were told a $500 million budget shortfall would require 6 percent cuts.
In his economic forecast issued a week ago, forecaster Raha sounded gloomy. “Since our last forecast, the economic recovery has slowed to an agonizing crawl,” he wrote. “May and June saw a pause in activity, and July brought little relief. Job growth remains anemic; housing is looking for a new bottom; and, despite some easing in credit conditions, small businesses continue to face a challenging credit environment. There is still considerable drag in the economy, little lift, and increased uncertainty.”
Minority Republicans have argued for holding a special legislative session to allow more tailored spending cuts to spare programs that help the disabled or vulnerable. Under the law, Gregoire’s power to order cuts is limited to across-the-board action, which she has described as a fall-back position if lawmakers can’t agree to take action.
But majority Democrats in the House and Senate said they did not think their caucuses could agree on short notice, having spent 30 days earlier in the year in special session on a tax package. Senate Democratic Caucus Chairman Ed Murray and others said they did not want to get caught in a fruitless and protracted session during the election season.
Republican Rep. Gary Alexander of Thurston County said Friday that he still thinks the top budget writers from each caucus should come to Olympia to work out a budget-cutting agreement.
“The proposal I set forward was just send your budget leaders in from the four caucuses and give us a number to obtain. Then I think we could have called a session for one day for an up-or-down vote,” he said.
Brad Shannon: 360-753-1688 firstname.lastname@example.org www.theolympian.com/politicsblog