Article by Erik Smith. Published on Monday, September 13, 2010 EST.
Gregoire Letting Legislature Off the Hook, Says Former State Rep – Cuts of More Than Half a Billion are Expected
Former state Rep. Bob Williams, now senior fellow at the Evergreen Freedom Foundation.
UPDATED Sept. 14, 1:30 p.m. — Gov. Christine Gregoire has stated that earlier estimates of the state’s budget problem were too small. Earlier her office estimated that a four to seven percent cut would be required. Now she says it’s more likely to be seven to 10 percent, a problem of more than a half-billion dollars.
By Erik Smith
Staff writer/ Washington State Wire
OLYMPIA, Sept. 13.—It’s official – budget cuts are on the way – and the only thing we don’t know is how big they’ll be. They’re definitely bigger than a breadbox, though — at least a half-billion dollars, Gov. Christine Gregoire told reporters Monday.
But the man who wrote the bill allowing the governor to slash the budget with a blunt axe says she is making a horrible mistake. She’s taking the easy way out, says former state Rep. Bob Williams, the conservative Republican lawmaker who sponsored the legislation nearly 30 years ago. She’s letting the Legislature off the hook.
And Williams says the state will be in worse trouble as a result.
Gregoire issued an executive order Monday directing most state agencies to slash their budgets on Oct. 1. Exactly how much they’ll have to cut won’t be known until a new state revenue forecast is issued on Thursday. But agencies have been told to get set for cuts of anywhere from seven to 10 percent.
It’s a darned shame, says Williams, the man who made it all possible.
Revenue Keeps Plummeting
The state right now is in the midst of what the governor likes to call the worst recession since the Great Depression. Lawmakers keep slashing state spending, but they never go far enough. Every official forecast of state tax revenue since the fall of 2008 has been lower than the one that came before, and while state officials say the state seems to have hit bottom and is on the way back up, the bottom turns out to be lower than anyone expected.
“The signs we’ve been getting have not been positive, and that’s why we’re getting geared up,” said Glenn Kuper, spokesman for the state Office of Financial Management. “We’re pretty well convinced it’s going to be bad news.”
At this point it seems clear that the bad news is going to wipe out all the money the state had left in reserve when lawmakers tried trimming their spending plan earlier this year. That leaves the governor with three options.
She can do nothing and leave the Legislature to deal with the problem next year. That means lawmakers would have to make even deeper cuts in order to bring spending back into line during the last six months of the two-year budget period.
She can call legislators back into session to deal with the problem right now – a prospect that thrills none of her fellow Democrats during the middle of an election season.
Or she can take advantage of a little-used law passed in 1981 that allows her to make across-the-board cuts in the agencies over which she has direct control.
Gregoire is picking the third.
Gregoire Wrong, Spellman Right
Gregoire isn’t telling state agencies how much they’ll have to cut. She’s on her way to a trade mission in China, and she signed the order in advance. Instead, she’s just telling them they will have to cut. The state Office of Financial Management will flesh things out with a memo on Thursday. Once the percentage is known, agency directors will have the ability to decide how the cuts are implemented, except in the Department of Social and Health Services, where specific programs get specific appropriations. There each program gets the same whack.
Gregoire told reporters last week, “We will be ready to go the day we get the forecast.”
The governor is complying with the letter of the law Williams wrote in 1981, back when he was a member of the House and a leader on budget and tax matters. But he says she’s missing an important bet. The law ought to be used as a political tool to get the Legislature to clean up the mess, he said. That’s the way it was intended.
“She ought to do what Gov. Spellman did,” he said.
These days Williams is senior fellow of the Evergreen Freedom Foundation, a free-market think tank that has been critical of lawmakers’ spending decisions. Until the Legislature gets its act together, Williams argues, the state can expect plenty more trouble in years to come. The problem won’t end with the relatively modest cut the governor is contemplating. Already lawmakers are expecting a $3 billion shortfall in the budget they will write next year for 2011-13. The situation will be even worse if voters pass a tax-rollback measure that appears on the ballot Nov. 2.
Right now lawmakers have a chance to take a deeper whack and help bring things into line, Williams said. The sooner they act, the smaller the problem will be in 2011-13.
Law Allows No Discretion
The 1981 law was intended as a way for governors to deal with minor budget emergencies without calling lawmakers back into session, Williams explained. The state was in the middle of another recession at the time, and back then, people were drawing comparisons to the Depression, too. The Legislature had already taken the first step toward sound budgeting practices, Williams said, by passing a law in 1979 that put tax-revenue forecasts in the hands of an independent non-partisan economic office. Before that time, the forecasts were decided by legislators themselves. If they didn’t like the numbers they were getting from their staff, they just wrote new ones of their own – and if the numbers didn’t match up with reality, that was a problem for the next Legislature.
But once lawmakers started getting numbers that weren’t skewed by politics, a new problem emerged. When the forecast numbers dropped and wiped out budget reserves, even if the budget glitch was just a few million dollars, the governor was forced to call a special session and ask legislators to rewrite their spending plans.
That was the rationale behind the 1981 law. It allowed the governor to order cuts in state spending, but it didn’t allow the governor to decide where those cuts ought to go. If a cut of just a few million dollars was required, the governor could handle it. But if it was bigger, the governor could call the Legislature back into session, wave the ax over their heads and challenge them to do a better job.
“The governor could say, if you don’t act by a certain date, this is what the budget is going to look like,” he said.
If they didn’t like what they saw, they’d have to take action.
Abdication of Responsibility
Gov. John Spellman found himself making the threat in September 1981. He issued an executive order calling for a 10.1 percent cut. The Legislature came back for a special session instead and wrote a new budget, tinkering with the nuts and bolts of state spending, cutting the lowest-priority items and letting others stand. The threat was rescinded.
Gregoire ought to do the same, Williams said. She ought to call a special session, he said, no matter what legislators think of the idea. That would force them to do the right thing, he argues. If cuts are targeted properly, they might do a good deal toward reducing the problem the Legislature will face next year.
One of the problems is that the governor can’t make big cuts in some areas — basic education, pension benefits, debt service and some spending within higher ed. And some of the spending that might be whacked actually generates additional bucks. If the state cuts Medicaid spending, it loses matching federal dollars.
“If you’re going to save money, you need to look at K-12, higher education and the delivery system under DSHS,” Williams said. “That’s where the big bucks are. You’re not going to get there by making cuts in some museum or archaeology program.”
The across-the-board cut authority has actually been used only twice – by Spellman in 1982, for a 4.9 percent cut as revenue continued to plummet during the recession of the early ’80s, and again in 1991 by Gov. Booth Gardner, for a 2.5 percent cut.
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