Washington state budget (2009-2010)

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Washington's faces a $5.3 billion budget shortfall through June 2013 and lawmakers were working in a special session to draft the state's FY2012-13 state budget that would eliminate that shortfall.[1]

For the budget year, the Washington state legislature passed a state budget on April 13, 2010, at the conclusion of a special session.[2] On May 4, 2010, Gov. Christine Gregoire signed a revenue package that nets roughly $780 million to avoid deeper cuts in education, health care and human services, which adjusted the previously passed two-year state budget, which lasts through mid-2011.[3] Gregoire, a second-term Democrat, said the tax package was a reasonable response to the estimated $2.8 billion budget deficit that the Democrat-controlled Legislature confronted in its recently concluded special session.[3] Two other special sessions were required to close a projected $1.1 billion shortfall in FY2011 and in a special session had made cuts in funding to K-12 schools, colleges and universities, and social services.[4]

Washington had total state debt of $30,455,510,003 when calculated by adding the total of outstanding debt, pension and OPEB UAAL’s, unemployment trust funds and the 2010 budget gap as of July 2010.[5]

2011 State spending & deficit in billions[6]
Total spending Pension Healthcare Education Government Protection Natural resources Other
$32.1 $1.9 $10.3 $17.3 $0.8 $1.6 $0.3 $0.47
2011 Local spending & deficit in billions[7]
Total spending Pension Healthcare Education Welfare Protection Transport Deficit
$47.2 $0.2 $3.4 $11.6 $1.8 $3.6 $5.8 $48.3

2009-11 Biennial State Budget

See also: Archived Washington state budgets

Since December 2010, the state Legislature had worked to close a projected $1.1 billion shortfall in FY2011 and in a special session had made cuts in funding to K-12 schools, colleges and universities, and social services.[8]

Special Sessions

With the state facing a $550 million deficit despite prior cost cutting, the legislature negotiated a deal to address the deficit by cutting funding to several state programs, including the state's health-care program for the poor and aid for the disabled, and also transferring funds from other programs. The plan cuts the deficit by about $370 million, with about $242 million in cuts and $125 million in transfers.[9]

In Dec. 2010, the National Conference of State Legislatures said that the state faced a midyear shortfall of $1.1 billion, which represents 7.1% of the FY2011 state budget.[10] Lawmakers met in a special session in December 2010 and cut about $590 million from that shortfall.[11] House Democrats released a budget bill on January 18, 2011, which would trim another $340 million by cutting $216.5 million and transferring $123.8 million from other sources.[11] Treasurer Jim McIntire, who had argued for swift budget-balancing to preserve the state's credit rating.[11]

Gov. Gregoire signed an order on September 13, 2010, that would require budget cuts.[12][13] The cuts would be around 6.3%[14], which was required to balance the budget before the end of the fiscal year in June 2011.[12] The legislature can make adjustments when it returns in January 2011.[12] As part of those cuts, state agencies eliminated 725 jobs, with most of the layoffs occurring a the Department of Social and Health Services.[15]

Gov. Gregoire signed on May 19, 2009, the 2009–11 biennial budget passed by the Washington State Legislature that addressed a potential $9 billion shortfall (March 2009 estimate) for the coming two-year period.[16] Gov. Gregoire referred to the state's revenue shortfall from November 2008 as being "pushed off a cliff." In November 2009 the Governor announced, "The state was now facing a new shortfall estimated at around $1.7 billion (estimates as high as $2 billion over its two-year biennium) that must be closed in the 2010 supplemental budget," which she would propose in December[17] and asking all state agencies to report the impact of a 2% to 5% cut in their FY 2010 budgets.[18]

The budget eliminates nearly $755 million from state programs.[2] The governor warned that some 1,500 workers would be laid off because of budget cuts and the state was closing or downsizing five youth or adult corrections facilities for the first time in years.[3] The budget also relies on federal funds totally approximately $625 million and roughly $600 million in fund transfers and reserves.[3] Gregoire vetoed transfers of money away from the state insurance commissioner's office and a fund for biotechnology research and reduced the legislature's planned reserves by about $30 million.[3] Tax increased in the budget were expected to raise approximately $780 million in revenue, mostly from taxes.[2] The budget leaves around $480 million in reserves to guard against higher-than-expected state costs or drops in tax collections.[2]

Shortly after passage of the budget, the governor floated ideas for raising revenue, including privatizing the ferry system and selling naming rights to highways or rest stop in response to news that the state faces a projected shortfall of about $3 billion for the next biennial budget. The governor noted that tax streams may not rebound to pre-recession levels for a very long time and assembled experts to focus on budget issues.[19]

Tax increased in the budget were expected to raise approximately $780 million in revenue, mostly from taxes.[2] Highlights of those taxes in the new budget included:

  • extend the state sales tax to bottled water, candy and gum[20]
  • two-cents more per can tax on soda pop[20]
  • 28 cents more tax per six-pack of mass produced beer, although microbrews were exempt[20][3]
  • $1 more tax on cigarettes[20][3]


The 2009–11 biennial budget signed in May 2009 closed the $9 billion shortfall by:[21]

  • $3.3 billion in program cuts
  • $3 billion with the federal Recovery Act funds
  • $2.1 billion by freezing state pay levels and transferring funds
  • $400 million from the state's Rainy Day Fund
  • $300 million from early reductions

The $3.3 Billion in Cuts and Efficiencies included:

  • $600 million in K-12 through class size increased.
  • $557 million in higher education by reducing 1,800 employees and raising tuition 14% (universities), 7% (community colleges) per year.
  • $386 million through administrative or across-the-board cuts.
  • $255 million from Basic Health Plan by increasing premiums 70% and reducing enrollment by 36,000 (36%).
  • $127 million in payments to hospitals.
  • $130 million from Corrections, including $73 million by reducing beds and community supervision.

Sources of the estimated $2 billion shortfall:[22]
Revenues declines

  • $686 million June forecast
  • $238 million September forecast
  • $237 million tax lawsuit
  • $32 million October revenue collections
  • $65 million November revenue collections

$1.26 billion subtotal
Costs rising, issues emerging

  • $659 million increased demand for health care, schools, prisons
  • $12 million forest fires, landslides, dam failures, other possible emergencies
  • $71 million lawsuits blocking planned cuts

$742 million subtotal

Gov. Gregoire's November 16, 2009 presentation The Budget Story outlined 70%, $21.6 billion as "protected" and $9.3 billion as "non-protected" categories for the $31 billion 2009–11 biennial budget. The non-protected areas listed for cuts in Gov. Gregoire's presentation are:[23][24]

  • Mental health and developmental disabilities services: $1.6 billion
  • Prisons/community supervision of offenders: $1.6 billion
  • Care for low-income elderly: $1.3 billion
  • Economic support for low-income families: $1.1 billion
  • K-12 non-basic education funding (class size reduction, others): $635 million
  • Higher education: $500 million (most was financial aid)
  • Juvenile corrections: $198 million

The budget timeline is:[25][26]

  • Mid-December Governor’s Supplemental Budget released
  • January 11, 2010 the 2010 Legislature's Regular Session begins
  • Feb. 18, 2010 revenue forecast released
  • March 11, 2010 session adjourns

Ballot Initiatives

The Nov. 2, 2010, election featured initiatives and a referendum, all of which could alter the state budget landscape.[27] Many would lessen the stream of money flowing into the state treasury, although the income tax on high-earning residents would bring in additional funds.[27]

  • Initiative 1098 proposes to tax income above $200,000 a year for individuals and $400,000 for couples. It would raise $1.58 billion in new net revenues in calendar year 2012 and could grow to $2.28 billion in 2013.[27] If passed, it would face legal challenges.[27]
  • Initiative 1107 was a measure to repeal temporary taxes on soda and bottled water as well as a permanent sales tax on candy. If it passes, it would erase $107.8 million in projected revenues in 2012 and $109.7 million in 2013.[27]
  • Initiative 1100 was one of two liquor-privatization proposals, and this one, if passed, would shut down state-run liquor stores and a distribution center by the end of 2011.[27]
  • Referendum 52 was a measure provided for an energy-upgrade for public schools and buildings under which the soda tax would take effect in 2014, which was expected to generate at least $33.9 million the first year.[27]
  • Initiative 1105 was the second liquor-privatization measure on the ballot. It would shut down state-run stores and distribution facilities by April 2012.[27]
  • Initiative 1082 would allow private insurers compete in the state's workers’ compensation market.[27]
  • Initiative 1053,would require a two-thirds supermajority vote for any Legislature-enacted tax increase to pass, but it allows an option to put the measure to a public vote. It essentially restores the two-thirds vote requirement that was in effect after voter passage of I-960 but was suspended by majority Democrats this year through mid-2011.[27]

Budget background

See also: Washington state budget

Washington operates on a biennium budget. The biennium included a 24-month period from July 1st of odd-numbered years to June 30th of odd-numbered years, such as the 2009-11 biennium, which runs from July 1, 2009 to June 30, 2011. According to state law the Governor was required to submit a budget recommendation by December. Although the biennium included two fiscal years, an approved budget the legislature can modify the budget through changes to the original appropriations. This can be done in any legislative session. Since 1979 the House and the Senate enact revisions annually to the state’s biennial budget. These revisions were referred to as supplemental budgets.[28]

The Economic and Revenue Forecast Council was composed of representatives from both the legislative and executive branches. Each fiscal quarter, the Council adopts an official forecast of General Fund-State (GF-S) revenues for the current and (at some point) the ensuing biennia. These forecasts, together with any reserves left over from previous biennia, determine the financial resources available to support estimated expenditures.[29]

Sources of State Revenues − All Governmental Funds 2009-11 Biennium Estimates[30]

Taxes $32.2 billion
Federal Grants $19.5 billion
Licenses, Permits, Fees $1.9 billion
Charges and Miscellaneous Revenues $18.2 billion
Total $71.8 billion

Budget figures

The state's budget shortfall had increased to $2.8 billion.[31]

Fiscal Year General Funds Expenditures  % Change from Previous Year
1997-1999 $39,397,275,000[32] --%[32]
1999-2001 $44,535,542,000[32] 13.0%[32]
2001-2003 $49,527,904,000[32] 10.1%[32]
2003-2005 $53,463,296,000[32] 7.9%[32]
2005-2007 $60,517,243,000[32] 13.2%[32]
2007-2009 $69,176,280,000[32] 14.3%[32]


General Fund[33]

Category FY2009 Amount in millions Actual FY 2010 Amount in millions Estimated
Beginning Balance 790 189
Revenues 13,089 13,791
Adjustments 928 392
Total Resources 14,807 14,373
Expenditures 14,617 14,848
Adjustments 0 0
Ending Balance 189 -476
Budget Stabilization Fund 21 96

Fiscal 2010 Tax Collections Compared With Projections Used in Adopting Fiscal 2010 Budgets (Millions)[33]

Category Amount
Sales Tax Original Estimate 7,551
Sales Tax Current Estimate 7,031
See also: Washington state budget (2008-2009)

Accounting principles

See also: Washington government accounting principles

Washington State Auditor's Office looks at financial information and compliance with state, federal and local laws on the part of all local governments, including schools, and all state agencies, including institutions of higher education. The State Auditor's Office publishes its audit reports online. The State Auditor's Office was established in the state's Constitution as part of the executive branch of state government. Washington citizens elect the State Auditor to four‑year terms. Brian Sonntag had been State Auditor since first elected in 1992.[34][35]

The Institute for Truth in Accounting (IFTA) rates Washington “Timely” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA did not consider Washington's CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis did not included significant liabilities for the pension plans and for other post employment benefits, such as health care.[36] Washington's CAFRs were publications of the Washington Office of Financial Management in accordance with Revised Code of Washington 43.88.027. Victor A. Moore was appointed Director of OFM in January 2005. The Office of Financial Management:[37][38]

  • Plays a central role in budget planning, policy development, and fiscal administration for the executive branch.
  • Prepares the executive budget proposal and monitors budget implementation.
  • Maintains state government's statewide accounting systems, central books of accounts, and financial databases while also providing accounting services to state agencies.
  • Oversees statewide personal service contracting activities.
  • Conducts executive policy research and develops legislation to support the Governor's policy goals.
  • provided estimates of state and local population, monitors changes in the state economy and labor force, and conducts research on a variety of issues affecting the state budget and public policy.
  • provided a comprehensive risk management program for all state agencies.


Credit Rating Fitch Moody's S&P
Washington[39] AA Aa1 AA+

Budget transparency

The State of Washington had an official spending database online, thanks to the passage of Washington Senate Bill 6818, Promoting Transparency in State Expenditures, a bill that had mandated the creation of such a database by January 1, 2009.[40][41]

The following table was helpful in evaluating the level of transparency provided by a state spending and transparency database:

Criteria for evaluating spending databases
State Database Searchability Grants Contracts Line Item Expenditures Dept/Agency Budgets Public Employee Salary
Washington State Fiscal Information
{{{1}}}
N
600px-Red x.png
N
600px-Red x.png
N
600px-Red x.png
{{{1}}}
N
600px-Red x.png
See also: Evaluation of Washington state website

On July 19, 2010, Gov. Gregoire launched a website called Transforming Washington's Budget for citizens to contribute their ideas. The site said, "We know you've got ideas on how to transform the budget and we want to hear them. Share the ideas that matter to you."[42] The governor also held public hearings on the budget.[43][44]

Public employee salary information

One man by the name of Louis Bloom had assembled (via FOIA) a very thorough listing of 2007 Washington State Employees, Job Title and Salaries.[45]

See also

Washington government sector lobbying

Washington public pensions

Washington state budget

External links

Additional reading

References

  1. The News Tribune "State's budget gap grows to $5.3 billion" March 18, 2011
  2. 2.0 2.1 2.2 2.3 2.4 Business Week "WA lawmakers pass budget, adjourn special session" April 13, 2010
  3. 3.0 3.1 3.2 3.3 3.4 3.5 3.6 The Associate Press "Washington governor signs package of tax hikes" April 23, 2010
  4. The Seattle Times "Wash. budget shortfall could be worse than thought" March 13, 2011
  5. State Budget Solutions “States Hide Trillions in Debt” July 22, 2010
  6. Office of the Governor, Proposed Budget Expenditures
  7. USA Spending, State Guesstimated* Government Spending
  8. The Seattle Times "Wash. budget shortfall could be worse than thought" March 13, 2011
  9. The Seattle Times "Deal made to shrink state budget deficit" Feb. 16, 2011
  10. The Wall Street Journal “States Face Budget Shortfalls of $26.7 Billion“ Dec. 8, 2010
  11. 11.0 11.1 11.2 The Seattle Times "State House budget bill cuts deficit by $340 million" Jan. 18, 2011
  12. 12.0 12.1 12.2 The Seattle Times "Gregoire said budget cuts may go deeper than expected" Sept. 14, 2010
  13. State Budget Solutions, Governor orders budget cuts while lawmakers campaign, Sept. 14, 2010
  14. Cite error: Invalid <ref> tag; no text was provided for refs named deficit
  15. The Seattle Times "Washington state plans 725 more job cuts" Oct. 5, 2010
  16. Gov. Gregoire Press Release, "Gov. Gregoire signs responsible budget for tough times," May 19, 2009
  17. Gov. Chris Gregoire Web site, accessed November 17, 2009
  18. National Conference of State Legislatures, " FY 2010 Post-Enactment Budget Gaps & Budget Cuts," November 13, 2009
  19. The Seattle Times "Wash. governor seeks reforms, budget overhauls" June 24, 2010
  20. 20.0 20.1 20.2 20.3 [1]
  21. Gov. Gregoire's Office, "The Budget Story," November 16, 2009 (dead link)
  22. Gov. Gregoire's Office, "The Budget Story," November 16, 2009 (dead link)
  23. Gov. Gregoire's Office, "The Budget Story," November 16, 2009 (dead link)
  24. The Budget Story (dead link)
  25. Gov. Gregoire's Office, "The Budget Story," November 16, 2009 (dead link)
  26. Washington State Legislature's Web site, accessed November 17, 2009
  27. 27.0 27.1 27.2 27.3 27.4 27.5 27.6 27.7 27.8 27.9 The News Tribune "Ballot to shape budget" Aug. 30, 2010
  28. Washington Office of Financial Management, "Washington State Budget Process," July 2009
  29. Washington Office of Financial Management, "Washington State Budget Process," July 2009
  30. Washington Office of Financial Management, "Washington State Budget Process," July 2009
  31. The Seattle Times "State's budget gap expected to grow to $2.8 billion" Feb. 12, 2010
  32. 32.00 32.01 32.02 32.03 32.04 32.05 32.06 32.07 32.08 32.09 32.10 32.11 Washington Government, Expenditure History - Operating & Capital
  33. 33.0 33.1 National Governors Association and National Association of State Budget Officers Fiscal Survey of States June 2010 (dead link)
  34. Washington State Auditor's Office Web site, accessed November 17, 2009 (dead link)
  35. audit reports (dead link)
  36. Institute for Truth in Accounting, “The Truth About Balanced Budgets—A Fifty State Study,” Page 35
  37. Washington Office of Financial Management Web site, accessed November 17, 2009
  38. CAFRs
  39. State of Indiana, “State Credit Ratings-as of June 24, 2009"
  40. Washington Senate Bill 6818, Promoting Transparency in State Expenditures
  41. Washington State Fiscal Information
  42. Transforming Washington's Budget home page
  43. "Budget ideas, many pleas not to cut" July 20, 2010
  44. Transforming Washington's Budget
  45. 2007 Washington State Employees, Job Title and Salaries.