By Jason Mercier
Washington Policy Center
Although the new fiscal year and biennium are only a week old, it’s not too early to start thinking about next year’s supplemental budget. Based on last week’s caseload forecast showing hundreds of millions in increased costs, Gov. Chris Gregoire already is hinting at further reductions in spending.
Combining the caseload forecast with last month’s poor revenue forecast, the state’s new budget already is projected to be in the red. In response, Gregoire’s budget office (OFM) sent a memo to agency directors July 1 detailing her strategy:
On June 18, the governor directed the following administrative actions by Cabinet agencies:
- Full Time Equivalent (FTE) reductions equivalent to a 2 percent reduction in 2009-11 budgeted GFS FTEs.
- Continuation of specific GFS savings in out-of-state travel and training, personal services contracts and equipment purchases.
- Spending restricted to only critically necessary activities.
She also has encouraged non-Cabinet agencies to impose similar measures.
The governor’s reductions are intended to create savings that mitigate the effect of the June revenue drop. OFM will continue to watch revenue collections and caseload/enrollment projections as we approach the September and November forecast updates for GFS revenue. Ongoing expenditure and revenue pressures will very likely require further action, including revisions in a 2010 supplemental budget. The reductions in this memo represent the first steps toward supplemental budget changes for expenditures funded by the GFS."
Included in the memo are two tables showing the projected FTE and spending reductions. These figures are a good first look at what Gregoire may propose in a supplemental budget.
If enacted by agencies, Gregoire’s proposal would reduce FTEs below budgeted numbers by about 642 and spending by $374 million.
Although this is a good first step, additional spending corrections by the Legislature next session will be necessary to rebuild the state’s rainy-day account. Otherwise, we may not be able to respond effectively to any future curveballs the struggling economy may throw our way.
Jason Mercier is the director of the Center for Government Reform at the Washington Policy Center. He serves on the Executive Committee of the American Legislative Exchange Council’s Tax and Fiscal Policy Task Force and is a contributing editor of the Heartland Institute’s Budget & Tax News. Mercier also serves as treasurer on the board of the Washington Coalition for Open Government and was an adviser to the 2002 Washington State Tax Structure Committee.
