In Our View: Reality Stuns Legislators

State's latest economic forecast defines tough task for lawmakers

Published:

 

So much for basking in the glow of election night victories by Washington's state legislators. The culprit for a new cloud hanging over the Legislature goes by the seemingly harmless name of Economic and Revenue Forecast Council. On Wednesday, the council doused any lingering celebrations with these cruel facts:The state faces a $900 million deficit for the next two-year budget ending in mid-2015.

A four-year outlook shows an even greater projected revenue shortfall of $1.1 billion through 2017.

These figures, grim as they are, don't even accommodate a court-ordered requirement to increase state spending on public education.

Our advice to the lawmakers: Do your homework, and prepare to make some tough budget decisions when your next session starts on Jan. 14.

Whether the state budget can be balanced (as required by law) without increasing revenue is hotly debated. Gov. Chris Gregoire, who retires at the end of the year, says it can't be done without new revenue, perhaps tax increases. Governor-elect Jay Inslee, also a Democrat, disagrees and repeats his campaign vow that a combination of new efficiencies plus new revenue that would just naturally come through economic growth can accomplish the trick.

And that second tactic reminds us of this major point: State government revenues actually are already known to be growing. There is no mystery about that. The Washington Policy Center reports that state revenues will increase by $1.5 billion for 2013-2015 and by $3.1 billion for 2015-2017.

How, then, could there be a deficit, you ask? Because spending will also be increasing, partly in new caseloads but also in other areas. And it's not hard to identify one major area of cost increases: compensation and benefits for state workers. WPC lists these new demands for the next biennium:

$166 million to restore K-12 salary reductions.

$171 million to restore 3 percent salary reductions for state employees.

$362 million for K-12 pay increases under Initiative 732.

$37 million for a new step increases for state employees.

$20 million for state employee and K-12 health care ratios.

$14 million for paid family leave.

Remember, none of those gains can be typically expected by workers in the private sector. So we're back to the same old problem: about $770 million in compensation-related new costs, backed up against a $900 million deficit. And that is why getting tough in negotiations with state-worker unions is so important. It's the most logical way to balance the state budget.

Meeting the state Supreme Court mandate to increase K-12 education funding will be difficult. A task force is required to report to the Legislature next month with recommendations, at which time the problem will only worsen. Suddenly, electoral triumphs are losing their comforting aura. Reality sinks in. When Inslee gave his acceptance speech, he declared: "Let's get to work." He and members of the Legislature have no other choice.