|Forecast Council Chair
Rep. Ed Orcutt
|House Ways & Means Chair
Rep. Ross Hunter
State faces $900 million shortfall despite $2 billion revenue increase
Published on November 14, 2012 at 4:31 PM;
updated November 14, 2012 at 4:32 PM
By Kari Bray
The Oregonian/Murrow News Service
OLYMPIA — Washington state’s budget numbers are not adding up for some legislators.
Despite an anticipated $2 billion increase in 2013-15 General Fund revenue compared to the current biennium, the state is facing a $900 million shortfall, according to the four-year economic outlook adopted Wednesday by the Washington State Economic and Revenue Forecast Council.
A four-year outlook is required from the council under legislation adopted this year. The document compares expected revenues with anticipated expenditures. The difference between those expenditures and revenues in the coming biennium represents a $900 million deficit, and the council expects the deficit to increase to about $1.1 billion in 2015-17.
The forecasted revenue for 2013-15 sits at about $32.5 billion, compared to about $30.5 billion for 2011-13.
Rep. Ed Orcutt, R-Kalama and chairman of the council, said he blames overspending and short-sightedness for the anticipated deficit.
State revenue is growing but the state is still seeing a shortfall, which doesn’t add up.
“I think we’re going to have to continue to look at the budget,” Orcutt said. “We really have to take a look at why we’re getting a $2 billion increase in revenue and getting a $1 (billion) to $3 billion deficit as a result.”
Orcutt said he thinks there is still cutting that can be done in state government.
“The problem has been overspending,” he said. “That’s the problem we always see. People who write the budgets get off the trajectory of long-term revenue and look at the trajectory now.”
When the government spends based on a positive bubble in revenue – such as in 2006 and 2007 – rather than looking at what levels of funding will be sustainable in the long run, the state finds itself in this kind of trouble.
He said the state can avoid large holes in the budget by planning several biennia ahead, not simply a couple years at a time. Long-term sustainability is the key.
In a statement from the Office of Financial Management, outgoing Gov. Chris Gregoire also cited one-time fixes and temporary expenditures or cuts as contributing factors to the upcoming biennium’s shortfall.
Rep. Ross Hunter, D-Bellevue and chair of the House Ways and Means Committee, said the state shortfall is worse that the outlook indicates and he does not see a solution without further increasing revenue somehow. The state is not facing a $900 million problem statement, he said, it faces a $3.5 billion problem. The $900 million calculated in the outlook does not include additional state costs associated with McCleary or any other unforeseen and expensive necessities.
Orcutt voiced the only opposition to the adoption of the four-year outlook on the seven-person council based in part on the lack of these other calculations.
He requested a no-vote because he feels the document needs to take into consideration some of the long-term budgetary impacts beyond four years, such as education funding required by the McCleary decision of the Washington Supreme Court. The court ruled that Washington has been inadequately funding basic K-12 education. Estimates of how much money will be required to correct this under-funding in accordance with the court’s ruling range from $1 billion to nearly $4 billion in the next biennium, according to councilmembers.
Hunter said decisions on how the state will approach McCleary must be made by legislators and they cannot ask the staff working on the outlook to anticipate those decisions.
“I agree that we’re on the hook for that funding,” he said.
Sen. Dino Rossi, R-Sammamish, said he, like Orcutt, is frustrated with the legislature’s approach to spending. He thinks state leaders need to look at real, hard numbers rather than a fantasy of what they wish those numbers would be.
“In the real world, in my business, a dollar more is growth and a dollar less is a cut,” he said.
The four-year outlook will need to be revisited when the governor releases her proposed budget in December and when a final budget is adopted this spring.
Gregoire will present her proposed budget by Dec. 20, before leaving the office in January. After assuming office, Governor Elect Jay Inslee will begin developing his own budget with his own priorities.
Regardless of the budgets and outlook revisions, the revenue forecast holds no surprises for the governor, governor elect or legislators. The ERFC anticipates that revenues will come in about $8 million higher for the current biennium than assumed in its September forecast. The council also decreased the coming biennium’s projected revenue by nearly $90 million. In a total of more than $30 billion, neither adjustment represents much of a difference.
“What we’re seeing is essentially no change,” ERFC Director Steve Lerch said. “Not to trivialize $88 million, because that is a lot of money, but as a fraction of the forecast, that’s a relatively small change.”
In other news on the council, Orcutt recommended Hunter to replace him as chairman for the next two years. The chairmanship must rotate between caucuses or chambers, meaning that the new chair had to be either a Senate Republican or a House Democrat since Orcutt is a House Republican.
None of the committee members objected to Hunter’s appointment as chair.