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State budget forecast takes another hit, and Federal Way feels the pain

The Washington economic forecast took another hit, with the state’s chief economist Dr. Arun Raha saying the state will take in $122 million less than anticipated with the last economic forecast released in September.

“Our current economic forecast is very similar to our September forecast, with the same muddle — though conditions expected for the rest of the biennium, along with a high degree of downside risk,” Raha said. “Revenues depend on the economy, and the economy is a moving target.”

The September forecast anticipated a $1.4 billion shortfall from previous estimates, causing Gov. Christine Gregoire to announce a special session of the state Legislature that month. That 30-day special session will begin Nov. 28 in Olympia.

“Our November adjustments reflect uncertainty in various markets, but not another downshift in expectations,” Raha added.

According to the Washington State Office of Financial Management (OFM), the state has experienced six consecutive negative forecasts dating back to September 2010. This downward trend has meant the state’s General Fund projections have decreased by approximately $5 billion. Since the beginning of the economic collapse in 2008, General Fund projections have declined by more than $7.6 billion, the OFM notes.

In Federal Way, the continued downward trend of both state and federal funding has pushed the city and Federal Way Public Schools into difficult spots. The city was forced into numerous layoffs and reorganizations in 2010, and may have to make more in the near future, especially with Federal Way’s recent inability to get all parties on board with a change in its employee health care plan.

For FWPS, a $10 million budgetary shortfall had to be overcome last year, forcing the district to eliminate some positions and scale back a number of programs. The district anticipates a similar shortfall this year, and is also having to consider the loss of its Local Effort Assistance funds, a monetary stream that was initially created to help financially poor districts like FWPS have equal footing in the state.

As the special session of the Legislature begins, OFM director Marty Brown said his office is ready to meet the challenge head-on in a collaborative effort with the legislators.

“Today’s forecast underscores the urgency of our budget situation,” Brown said. “We have been working hard for months and are ready to go to work with the Legislature to find a balanced solution to our latest shortfall.”

 

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