Saturday, March 12, 2011
Washington state's government is facing a fiscal crisis. The amount of projected revenue (mostly tax collections) looks to be far short of covering all the state's wants as well as some needs. As a result, Gov. Chris Gregoire and the Legislature have to trim about $5 billion from what state agencies had anticipated spending over the next two years.
And while $5 billion is a lot of money to trim, it can be done. Yes, it's going to be painful as the state is facing rising expenses it has no control over. The federal government has reduced its allocations to the state for some social services leaving the state on the hook. In addition, the lousy economy has created more demand for services.
In the end, this $5 billion cut - if it occurs - means the two-year budget for 2011-2013 will hover around $32 billion, which is about the amount budgeted for the current two-year cycle.
The reality of state government, at least in Washington state, is that wages and other expenses are expected to increase year after year creating what government insiders call "the bow wave" - the future and continuing cost of maintaining programs and services.
So the $5 billion cut from the budget requests essentially is the bow wave. But, unfortunately, because the cost of some things can't be cut - by law, constitutional mandate or necessity - other things really have to be eliminated. This means jobs are lost and services reduced or eliminated. And, as a result, the academic exercise of writing a state budget ends up turning lives upside down and hurting people.
Gregoire's budget proposal does just this - making hard choices - which is why it hasn't been embraced by all of her fellow Democrats. Some lawmakers in her party would like to find a way to preserve some of the spending and programs in the hope the economy will turn around, boosting tax collections along with it.
Perhaps that will happen. We all hope it does. But the state can't bank on it.
Still, there's been talk among Democrats about borrowing money to pay the state's bills so the cuts to spending won't have to be so dramatic.
Austin Jenkins, the Olympia-based political correspondent for Northwest News Network, reported recently House Education Appropriations Chairwoman Kathy Haigh, D-Shelton, confirmed Democrats have looked at "securitizing" revenue. This is essentially borrowing with interest against anticipated future revenues to free up some cash today.
Gregoire, to her credit, quickly denounced the idea.
Gimmicks like borrowing from future revenue - as Washington did in 2003 when it sold off a portion of the future tobacco settlement payments for 45 cents on the dollar - don't pan out.
We only have to look at the problems with the federal government, which has borrowed trillions to meet today's needs, to see this approach to funding government must be avoided.
It's better to make the hard choices now.