Dear Friends and Neighbors,
As many of you know, the governor has called the Legislature back into a special session beginning Nov. 28 to address another $2 billion budget shortfall. The good news is that the state is actually expected to bring in 6.9 percent more for the current 2011-13 budget than the 2009-11 budget. I think any family or employer would love the “struggle” of balancing their budgets with a 6.9 percent raise.
There are many stories floating around that the state is spending less than in previous years. I think it's important to define exactly what we're talking about. There is reduced spending out of the general fund, but there is increased total spending. The chart below shows the total revenue sources for the state, including federal dollars.
Some of these dollars go into the general fund and some go straight to state agencies and institutions for specific programs. Either way, all of these dollars at some point come from you, either at the check stand, in your property taxes, or from your paycheck for the federal government. In 2007-09 and 2009-11, the budget writers accepted a large sum of federal “stimulus” funding to backfill state spending. This allowed them to continue the same rate of spending at an unsustainable rate. Now that the federal dollars have run out, the state is forced to reduce spending. However, as you see in the chart below, spending as adopted by the majority in May still continues the historical trend of increased spending.
Even when adjusted for inflation and spending per person, there is a constant increase in spending. The state will spend $3,981 per person in the current two-year budget compared with $2,807 per person in the 1981-83 budget. Though our population has grown, state spending has surpassed it by far. Our spending continues to outpace revenue, and this is a trend we must end if we are to adjust to a changing economy.
So what does this mean for today, and for the special session? It means our state has a current $1.4 billion shortfall between our projected revenues released today and the spending approved in May. In addition, the governor has said she wants the state to have a good-sized reserve. She wants the Legislature to make up a difference of $2.0 billion. There are already rumors of tax increase packages, from sales tax to corporate income tax, being cooked up for the special session to go before voters in February or March. However, with voters speaking loud and clear against tax increases in 2010, the Legislature should make responsible spending reductions as soon as possible to capture savings now.
The governor has said 64 percent of the budget is considered “off-limits” for the Legislature to cut. The majority of this “required” spending is due to federal matching and statutory requirements. But our hands are not completely tied. Most state statutory provisions can be changed by the Legislature, although there is a risk that spending reductions could be challenged in court.
The million-dollar question is what can and should be reduced in order to make up the $2 billion shortfall. This is the discussion being had across the state in school boardrooms, higher education institutions, hospitals, criminal institutions and more. Nothing is set in stone, but many ideas are being thrown out to see how they are received.
I believe an acceptable budget should adhere to these principles:
• Must be sustainable;
• No use of one-time money for ongoing programs;
• Minimize transfers from other budgets;
• Strong reserve to meet unforeseen emergencies or revenue drops;
• Protect constitutional mandates;
• Transparency – no gimmicks;
• Use the priorities of government approach;
• Minimize legal disputes;
• Seek efficiencies and reforms where cost effective;
• No new taxes;
• Restrict fee increases to the benefit of the payer; and
• Provide flexibility in administration and compliance.
These goals help frame the direction of how to balance the budget. If something is considered a top priority, it should see the least amount of reductions. If we minimize budget transfers, do not use gimmicks and find every efficiency and reform to craft a financial document that is sustainable, then the public has faith in the budget and the Legislature has done its job to use public dollars responsibly.
I want to hear your thoughts because I care what you think and I want to represent you well in Olympia.