Article by Erik Smith. Published on Saturday, Aug 1, 2010 EST.

Governor Wants Help and Demands Answer by Noon Monday – GOP Says Yes but Dems are Nervous

By Erik Smith

Staff writer/ Washington State Wire

OLYMPIA, July 31.—Gov. Christine Gregoire has given lawmakers until noon Monday to decide whether they want to hold another special session – or force her to make blunt across-the-board cuts in the state budget.

            And the answer is something you might never have expected, if you’re not familiar with the ways of the Capitol.

Republicans are saying sure, they’ll be happy to give the governor a helping hand.

But lawmakers in the governor’s own Democratic party aren’t leaping to her defense – and they may be willing to let her face the music all by herself. It’s really their call. They hold the majority in the House and the Senate, and the decision-making power is theirs. They proved during the Legislature’s last special session that they can’t come to a decision easily. And a bad show is the last thing they need in the middle of an election season.           

In a conference call with legislative leaders Thursday, the governor asked Republican and Democratic leaders in the House and Senate to decide whether they want to return to Olympia if federal aid falls through. That looks more and more likely as Congress approaches its August recess without an appropriation in sight. States were counting on billions in additional Medicaid money, but it appears Congress is going to welsh on the promise. And that’s a big problem for Washington and 31 other states that built their budgets on the promise.

            So far the Dems haven’t told the governor where they stand. But it appears they’re leaning toward a no-go decision – and that hands a huge headache to Gregoire. The state was counting on $480 million from the feds. Because lawmakers left a slim reserve when they wrote their last state spending plan in spring, that means the governor will have to chop about $300 million from the state spending plan adopted by the Legislature earlier this year, and the law won’t allow her to do it with finesse.

            The governor has said she needs to know by Aug. 10. By that point Congress will be on vacation and the state will have a new tax-collection report in hand. If she waits until later in the year, and Congress still doesn’t pony up, that means the cuts will have to be deeper.

            Wants Short Session

            The governor told reporters at a press conference Wednesday that if she calls a special session, she wants leaders to come to an agreement beforehand about where they would cut. She is eager to avoid the unpleasantness of the special session that took place earlier this year, when Democratic leaders in the House and Senate told her they could wrap things up in a matter of days – and then spent a full month squabbling while rank-and-file legislators twiddled their thumbs.

            “My question to them will be, if I call them into special session, can they get it done and can they get it done in 48 to 72 hours?”

            If she doesn’t call a special session, the law doesn’t allow her to make surgical cuts – taking money from one program and leaving another alone. All programs would have to take cuts of somewhere between 3.5 and four percent. Agency managers would have to decide how the cuts would be implemented.

            The law dates from the early ’80s, when the state found itself with plummeting tax revenues and Gov. John Spellman, who didn’t have the authority to order cuts, was forced to call lawmakers back into session time and time again. The law allows the governor to order across the board cuts, but doesn’t give her much decision-making power. The Legislature was unwilling to give the governor power to make what is essentially a political decision.

            The governor warns that the across-the-board cuts will be brutal – rather like the “all-cuts budget” she proposed in December, and which was greeted with distaste by lawmakers and interest groups alike. Even Gregoire said at the time that she hated it. And a rather insensitive approach to the matter could mean big problems. The only exceptions to the cuts would be the items that are designated by the state constitution as the state’s top priorities. So pension and debt payments would be safe, along with basic education.

But what about the rest? Some state programs may be more vital than others. For instance, the state prison system could lose $25 million – and where would all the prisoners go?

            A Four-Corners Call

            The governor formally proposed the special-session option in a conference call Thursday with representatives of the four party caucuses in the Legislature. Representing the Senate Republicans were Senate Minority Leader Mike Hewitt of Walla Walla and Sen. Joseph Zarelli of Ridgefield. House Minority Leader Richard DeBolt of Chehalis represented the House Republicans.

            Senate Majority Leader Lisa Brown of Spokane represented the Senate Democrats. House Dems were represented by Ways and Means Chairwoman Kelli Linville of Bellingham.

            The Republicans promptly issued formal statements calling for a special session.

            But it’s a trickier question for the Democrats. Not only would a legislative breakdown be a black mark for all the lawmakers who are seeking reelection, it also would prevent them from raising money for their campaigns. State rules prohibit fundraising while the Legislature is in session.

            Will Dems Leave it to the Governor?

            Already there’s one sign that the Democrats will let the governor take the heat. On Wednesday, before the conference call occurred, Linville and House Finance Chairman Ross Hunter, D-Medina, sent a preemptive letter to the governor with a simple answer: No.

            The letter said: “If Congress does not act on the FMAP [Medicaid matching funds] prior to leaving for their August recess, we recommend that the governor, in consultation with legislative leadership, take option 3 [across-the-board cuts] on Aug. 10, with the cuts to take effect Sept. 10.

            “If it turns out that Congress does deliver the FMAP extension or the economy improves significantly, we can revisit the decision, or these cuts can help us address the deficit we face next session. If they do not, we will have taken the prudent action and made much less severe cuts than would be necessary in January. The consequences of these cuts will be felt across the state, but the alternative of waiting puts us at a much greater risk of having to make draconian cuts that will leave a damaging lasting impact.”

            Republicans Happy to Help

            Republicans, meanwhile, say they’re happy to pitch in and help the Democratic governor. It should be noted, of course, that the final say on the budget cuts would be up to the other side. But it is a bit of a switch – and they make a political point in the process.

            DeBolt said, “The lawmakers who have led us into this deficit should have the guts to step up and solve it, not pass off their responsibility to someone else. Budget writers should develop a plan for balancing the budget and then hold a one-day special session to put us on a course of responsible and sustainable state spending.”           

            The Republicans say the Democratic majority sent the state down the road to disaster when they wrote a budget that depended on a promise from the feds. The state lost the gamble, they say.

            “Lawmakers owe the taxpayers our best efforts to deliver critical services while being mindful that every dollar government spends comes from someone who earned it,” said Gary Alexander of Olympia, ranking Republican on the House Ways and Means Committee. “Allowing agencies to be cut across the board is not living up to that responsibility.

            “Simply allowing across-the-board cuts demonstrates a lack of leadership and poor decision-making. It would require that funding for the developmentally disabled be cut at the same level as funding for the arts. It would require funding for poor school districts be cut the same as the state printing office. We were elected to lead and lawmakers should have the courage to come fix the problem they created.”

            Praise Bipartisan Approach

            Senate Republicans offered a rather more measured endorsement of the governor’s plan, while making much the same point. In a letter to the governor that came immediately after the conference call, Hewitt and Zarelli said:

            “Your invitation to leadership of all four caucuses as well as senior budget writers shows your intention to address this issue in a truly bipartisan manner.

            “State law grants you the option of enacting across-the-board cuts to eliminate the projected general fund deficit. This option has been advocated by some legislators in recent weeks. Instead, we strongly advocate calling the Legislature into special session. This will allow us to make strategic cuts in a compassionate way that prioritizes the values of the people of Washington. As lawmakers, it is our duty to make needed reductions in a thoughtful way.

            “We do not believe that services for the developmentally disabled should be cut at the same rate as spending on tourism, that funding for elderly in nursing homes should be cut at the same rate as health care for illegal immigrants or that financial aid for needy students should be cut at the same rate as public-art funding. However, under an across-the-board cuts approach, this would be the inevitable outcome.

            “Additionally, last month’s state revenue collections came in $84.5 million under target. While you are authorized to make across-the-board cuts to eliminate the general fund deficit, doing so would not account for any further drop in revenue should the September revenue forecast be markedly lower. We do not wish to see you forced to make yet another round of cuts just a few months later. Calling the Legislature into special session would allow lawmakers to resolve the current deficit and leave money in reserve to help compensate for any additional revenue shortfall.”

            A Niggling Detail

            Earlier reports of the problem indicated that the governor would have to make cuts of about 7 percent. That assumed that the governor would leave a couple hundred million dollars unspent, a reserve about the same size as the one left by legislators at the end of their session this year. Turns out the governor can’t do that. The rarely-used law that allows the governor to make across the board cuts does not allow her to leave a reserve.

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