Believe it or not, state revenues are still projected to increase by $2.1 billion for the 2011-13 biennium over the 2009-11 biennium. Unfortunately for lawmakers this increase is $1.4 billion less than what was estimated at the June Revenue Forecast meaning a budget deficit exceeding $1 billion now exists.
According to the state’s chief economist, Dr. Arun Raha:
“We are in the fragile aftermath of the Great Recession where a return to normalcy seems like a mirage in the desert – the closer we get to it, the further it moves away. Fear and uncertainty have overwhelmed consumer and business behavior. Every time our state has looked like it would break out of the malaise, it has been sucked right back in. Political gridlock in the nation’s capital gives little hope that the full toolkit of policy options will be acted on. In an increasingly interconnected world we are not immune to Europe’s problems either. Downside risks outweigh upside risks.”
Here are the revenue estimates for today’s and June’s revenue forecasts (Dollars in millions):
- 2011-13: $31,723.7
- 2009-11: $28,218.5
- Increase: $3,505.2 or 12.4%
- 2011-13: $30,310.5
- 2009-11: $28,193.6
- Increase: $2,116.9 or 7.5%
The 2011-13 revenue projections are now forecasted to be slightly higher than the level collected during the 2007-09 biennium.
Currently lawmakers and the Governor have two options to address the budget deficit: A special session or the Governor can order across-the-board cuts.
There is a third option. Instead of attempting to balance the budget in a short special session, lawmakers could amend RCW 43.88.110 (the state budget and accounting act) to provide the Governor discretionary budget cutting authority versus the current across-the-board option.
This would allow the Governor to implement immediate surgical reductions while budget writers work together to come up with a supplemental budget blueprint that could be acted on in the first few weeks of the regular 2012 Legislative Session.
One potential way this new discretionary budget cutting authority could be structured could be something along the lines of allowing the Governor to make discretionary reductions that don’t exceed a set % (maybe between 5-10%) of an agency’s appropriations. Cuts in excess of the set % would require approval of a standing legislative emergency budget committee (made up of four corners). No reductions could be made in independently elected statewide officials’ budgets without their approval or the standing legislative committee.
All reductions made would have to be immediately reported to legislative fiscal committees and posted on OFM/fiscal.wa.gov. This type of enhanced budget cutting authority for the Governor should provide enough discretion while addressing any accountability or transparency concerns while providing budget reduction tools other than current one size fits all across-the-board cuts option.
One benefit of this type of discretionary budget cutting authority for the Governor is enhanced taxpayer protection. While the Legislature could decide to raise taxes in a special session to reduce a deficit, the Governor cannot raise taxes on her own. This means the default response for budget deficits that arise when the Legislature is adjourned would be surgical spending reductions, instead of the uncertainty of possible tax increases enacted in a special session.
This type of discretionary budget cutting authority for the Governor would also incentivize the Legislature to leave adequate reserves in the first place to avoid allowing the Governor to decide what spending reductions to impose.
Speaking of tax increases, some lawmakers are already discussing putting a tax increase referendum on the ballot for voters to consider. If lawmakers are going to send voters a proposed tax referendum they should also put a constitutional amendment enforcing the four-time voter approved 2/3 vote requirement for tax increases on the ballot (especially since some are already talking about suspending it again and others are suing to have it overturned). The legislative vote for both measures could be clearly framed as not an endorsement of the policies but instead an opportunity for the citizens to decide.
Though not identical, this is similar to what lawmakers said they were doing in 2005 when they placed a constitutional amendment on the ballot to reduce the vote threshold needed for voter approved school levies. At the time several lawmakers said they didn’t necessarily support the policy but the voters should have the opportunity to be heard. This would provide voters the opportunity to weigh in on both proposals while finally putting to rest once and for all the debate about the 2/3 vote requirement.
[photo credit: Truthout.org]