Today the House and Senate passed a bipartisan supplemental budget bill that sets us up to finish the 2010 fiscal year (ending in June 2011) in the black. In December we faced a $1.2 billion shortfall between expected revenue and expected expenses and solved $588 million of the problem. We solved another $367 million today, and have a solid (and agreed-upon) plan to address the rest in March when the last revenue forecast is released.
I’m not excited about this budget, but voted for it because we have few other options. We are legally required to balance our budget every two years and the decisions we made are required to do so. We don’t have a lot of choices at this point and I find the cut exercise somewhat unsatisfying because there is no way to use strategy in the short run. We basically made all the cuts we could live with. The choices we will have to make to balance the upcoming 2-year budget will in many ways be more painful.
In summary, we:
- Reduced eligibility in the Basic Health Program to only those people who will qualify for Medicaid in 2014 when the federal healthcare law takes effect, eliminating about 1/3 of the people on the program.
- Cut 40% of the cash grant that goes to folks on the Disability Lifeline, a program for adults who are unable to work for short periods of time due to some kind of disability.
- Cut about $25 million more from K12, in a way that will basically take it out of the fund balance school districts have. (I particularly hate this cut, but alternatives are fiscally difficult.)
- Cut another $25 million from higher education the same way.
- Cut subsidies we give to low income disabled seniors to help them with the copays on their prescription drugs.
- Lowered nursing home rates for Medicaid clients.
- Cut the pay of state employees who do not have contractual rights by 3%, pulling this cut about 4 months ahead of the rest of the employees who agreed to it in the next contract.
There’s more, and detailed information is available online. https://leap.leg.wa.gov/leap/budget/detail/2011/ho2011p.asp
I remain concerned that the revenue projection is March will see us drop another $30-50 million, and we’re expecting about $100 million in caseload increases. We have techniques to deal with this that all four budget negotiators (house, senate, democrat, republican) agree with, but it will be close. The Christmas season wasn’t as good as we had hoped it would be.
The budget picture for the 2011-13 budget is not great either. The national outlook is starting to trend upwards, which is hopeful. I’m still expecting a lowered revenue forecast, perhaps by as much as $500 million to a billion. If the federal government follows through with the cuts they are proposing we will see hundreds of millions more in reductions. And I asked for this job.
There is a bright side though. We have the opportunity to seriously think about what we want to do as a state and make some long-term decisions that will drive how we budget for the next decade. In the midst of cutting $3.5 to $5 billion from the long-term budget over the next few months I hope to lay the foundations for future growth and improvement.
Here’s what I think we need to do, and what I’m working on over the next several months:
- Create an education funding model that takes us from where we are today to the fully-funded model school approach by 2014. The best proposals I’ve heard so far involve taking 50% of the growth of the state budget over the next decade and fixing how we do property taxes for schools to address a host of problems. We may need to do the second part in 2012. This model would include our early learning plan, which is part of how we address preparedness for kindergarten.
- Create a higher ed system that isn’t the part of the budget that gets cut to deal with deficits. In order to be a high income state we need better outcomes from our system as well as more capacity.
- Consider the recommendations of the Governor’s Higher Ed Funding task force, including their endowment idea.
- Change some of the mix from 2-year to 4-year workforce capacity, including converting Bellevue College into a 4-year program focused on serving our local kids who can’t afford to go away to college and aren’t going to the UW.
- Plan the shift of our healthcare programs to the new federally-funded Medicaid program in 2014. This is a complex shift that we’ve already started on. This funding shift will enable some of our education investments over time.
- Seriously re-work how we fund and manage the social services agencies that deal with children, particularly foster kids. This system seems fundamentally broken to me.