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$900 million state budget shortfall predicted for 2013-15

Washington state will be looking at more serious budget battles for the foreseeable future, according to the Washington State Economic and Revenue Forecast Council.

In a report released Nov. 14, the council revealed an estimated $900 million shortfall for the state's biennium budget for 2013-15, and a $1.1 billion shortfall predicted for the 2015-17 budget.

Outgoing Gov. Christine Gregoire said that although the aforementioned numbers are grim, there are some signs that things are turning up for the state's economy.

"Housing is more affordable than it has been in a long time, and aerospace remains strong," Gregoire said. "While we are seeing clear signs of recovery, economic growth remains slow, and we have to ensure that every Washingtonian who wants a job has one."

The two-term governor is preparing her final budget before handing over the reins to Governor-elect Jay Inslee. Gregoire said the $900 million figure is slightly better than a forecast issued by the Office of Financial Management (OFM) in August.

The governor did note that the anticipated 2013-15 forecast doesn't account for education funding, which the state Legislature was tasked with "fully funding" last year after the state Supreme Court's decision in the McCleary case.

"We have a shortfall even before we begin trying to address McCleary," Gregoire said. "I've instructed state agencies and my fiscal staff to scrub the budget for every possible savings. But, as I've been saying for months, it will not be possible to solve this problem entirely with spending cuts."

OFM director Stan Marshburn echoed Gregoire's thoughts. He said that trying to cut the fat from a budget that's been trimmed down severely in the past couple of years is going to be difficult.

"Needless to say, we've already taken many deep and painful program cuts the past few years," Marshburn said. "Finding new places to cut will be very challenging."

Inslee spokesperson Jaime Smith said the governor-elect is going to be fighting an uphill battle in tackling these budget issues in his first term.

"There's going to be a lot of conversations to be had about ways we will have to make efficiencies, and what the real priorities are that we have to fund," Smith said. "There's going to be a lot of hard choices to make. We just aren't going to be able to afford all of the things we have been doing."

Federal Way connection

With the state budget in a constant flux for the past few years, cities like Federal Way have felt the crunch in their local budgets. This new forecast signals more of the same for the city, according to city spokesman Chris Carrel.

"State government's continued budget challenges have factored into the conservative approach the city has taken in developing the 2013/2014 budget," he said. "During its 2012 session, the Legislature cut Liquor Excise Tax revenue sharing with the cities. For Federal Way, that reduced our state shared revenues $450,000 (per year) over the 2013/14 biennial budget. Not only have the 2012 state budget cuts hurt cities financially, there is a strong possibility that in addressing the budget shortfall next session, as well as the State Supreme Court order to increase education funding, legislators will take actions that further increase the financial challenges for cities like Federal Way."

Carrel said the city will continue to try and work with legislators to stop the bleeding. Significant and well known social services programs are still at risk.

"The city will be working to convince legislators to resist further city revenue impacts and undo the recent cuts to revenue sharing with cities. Local services provided by cities are essential to the state's well-being. Public safety is largely dependent on local police; more than half of all trips taken in the state occur on local roads built and maintained by cities; and economic development largely occurs in the cities."

"Further cuts to cities will leave most Washingtonians worse off by impact the local services that support quality of life," he added.

 

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