Washington state budget

Washington's Gov. Christine Gregoire signed the FY2012-13 state spending plan of $32 billion into law on June 15, 2011.^[1] A special session ended in December 2011 after the legislature approved a $480 million budget bill that makes less than $200 million in actual cuts and relies on shifting funds to fill the budget gap.^[2] After two additional special sessions, the legislature on April 11, 2012 approved a supplemental budget that spends $1.1 billion less than a version approved last year.^[3] The governor signed it into law on May 2, 2012.^[4]

The state operates on a biennial budget cycle, which currently encompasses FY2012 and FY2013.^[5] The fiscal year begins on July 1.

Washington has a total state debt of approximately $81,330,651,000 when calculated by adding the total of outstanding official debt, pension and other post-employment benefits (OPEB) liabilities, Unemployment Trust Fund loans, and the FY2013 state budget gap.^[6] The FY2013 state debt total is down slightly from the prior year's total of $83,215,274,000.^[7]

Washington's total state debt per capita is $11,907.79.^[8]

See also: The Washington State Budget on State Budget Solutions

Economic Freedom

A new Fraser Institute report on economic freedom ranks Washington 26th in economic Freedom. Delaware ranks 1st and New Mexico ranks 50th. The study examines the impact of economic freedom on both the level of economic activity and the growth of economic activity. According to the study, the freest economies operate with minimal government interference, relying upon personal choice and markets to answer basic economic questions. More governmental restrictions on those choices curbs economic freedom. The study looks at three major categories per state – size of government, taxes and regulations. ^[9]

Federal Aid to State Budget

The chart below represents how much of the state’s budget comes from the federal government. The number is the corresponding ranking in relation to the rest of the nation (if #1, the state receives the highest percentage of federal funding in the nation):

Figures are calculated by dividing each state’s intergovernmental revenue into its general revenue. Data is available at in U.S. Census.

Fiscal Year 2012-13 State Budget

The state's operating budget as originally enacted can be found here. The state's capital budget as originally enacted can be found here. The transportation budget as originally enacted can be found here.

The supplemental budgets enacted in spring 2012 to the operating, construction and transportation budgets can be found here.

Pensions

In July 2012, state budget director Marty Brown announced a $390 million increase in its contribution to numerous public pension plans in 2013-15, about $51 million more than the Office of Financial Management had been assuming.^[10]

Corrections

Lawmakers cut funding for the Department of Corrections by more than $300 million, requiring the department to reduce its work force by 20 percent and close three prisons.^[11]

2012 Special Legislative Sessions

When lawmakers failed to address the $1 billion budget shortfall in the state budget during their regular 60-day legislative session, Gov. Chris Gregoire called a 30-day special session to begin on March 12, 2012.^[12] When that special session expired on April 9 and lawmakers failed to complete their work, Gov. Gregoire called lawmakers back into a second, one-day special session at midnight on April 10.^[13] Lawmakers passed the supplemental state budget on April 11, 2012. The Senate passed the measure on a 44-2 vote and the House earlier passed the negotiated agreement on a 64-34 vote.^[13] Lawmakers also approved a $1 billion capital budget package that supporters say will lead to 18,000 construction jobs.^[13]

Highlights of the supplemental budget passed in April 2012 include

• no cuts to education;^[13]
• implementing the accounting change by which the state will claim control of local sales taxes before they are redistributed back to jurisdictions at the appointed time, usually a month after they are collected. The change is expected to generate $238 million for the state;^[13]
• increased taxes, generating $14.5 million by eliminating a tax deduction for some large banks, and changing rules on roll-your-own cigarettes to generate an expected $12 million; ^[13]
• leaves some $320 million in reserves.^[13]

Republicans had criticized Democrats for wanting to push a payment to schools into the next budget period, and Democrats criticized the Republicans' budget plan to skip a payment to underfunded pension plans. Gov. Gregoire proposed a third plan under which sales-tax revenue collected by the state on behalf of local governments would stay in the state's general fund longer, giving he state an additional $238 million to spend elsewhere. Local governments would lose a relatively small sum in the form of interest but the state said they would pay the governments those funds.^[14]

House Democrats abandoned their initial proposal delaying a payment to schools into the next budget cycle and instead adopted the Governor's plan to use an alternative accounting maneuver regarding local sales taxes. That plan includes a two-year balanced budget measure that would require an outlook for a four-year budget. Republicans want a four-year requirement in statute, that is more than an outlook.^[15]

The Special Session ended April 30, 2012.^[16] The governor signed the supplemental budget into law on May 2, 2012.^[17]

Regular 2012 Legislative Session

After addressing only a portion of the state's $1.5 billion shortfall in a special session at the end of 2011, the legislature took up budget issues during the regular session in 2012 which began on Jan. 9, 2012. ^[18][19] On March 7, 2012, with one day left until the end of the regular session approaching and no deal in sight, Gov. Gregoire predicted that a special legislative session would be necessary to address the roughly $1 billion budget shortfall in the state budget.^[20] She was correct. No budget deal was reached and the governor called a special session.^[12]

Transportation budget

The Senate passed a transportation budget on March 6, 2012, with $48 million in new spending over the next year for freeway projects, transit, the state patrol and the ferry system. The House transportation budget passed on March 5, 2012, has $9 million more in new spending. The Senate budget has a more modest set of driving-related fee increases. A joint-chamber conference will likely be needed to draft a compromise. ^[21] The biggest issues preventing agreement between the Republican and Democratic budgets were provisions to skip or delay certain payments.^[12]

Senate general fund budget proposals

On March 2, 2012, Republicans in the state Senate, joined by three Democrats, used a rare procedural move to take over the budget plan on the Senate floor. After midnight, the budget was narrowly approved 25-24 and sent to the state House.^[22] A summary of the Senate Republican proposed budget can be found here. It appropriates more for K-12 & Higher Education combined than any other budget proposal.^[23]

Senate Democrats release their budget on Feb. 28, 2012, and it can be found here. Now, both chambers, along with the governor, will craft a compromise. The legislative session is scheduled to end on March 8.^[24] A comparison of the plans:^[25]

House general fund budget proposals

House Republicans led the charge, and released the first legislative budget proposal of the 2012 Session on Feb. 17, 2012. It totaled $1.6 billion and included:^[26]

• $63 million in fund transfers
• $160 million in unspent agency funds (known as 'reversions')
• $64 million in local government distributions
• $336 million in savings from reduced caseloads
• $840 million in spending reductions
• $36 million from repealing three tax exemptions
• $26 million in the sale of surplus property
• $651 million left in reserves

In Feb. 2012, that lawmakers were told of a $200 million windfall due to reduced demands for state services.^[27]

The House Democrats released their proposed budget on Feb. 21, 2012, and a summary of it can be found here and the full 233 page proposal can be found here. It delays $405 million in payments to K-12 education. One significant difference between the House Republican and Democrat budget proposal is the amount spent and ending fund balance. Republican's leave a reserve of $651 million with $30.542 billion spent (reserve is 2.1% of spending) while Democrats leave a $504 million reserve with $30.661 billion spent (reserve is 1.6% of spending). For budget stability, a reserve of at least 5% is recommended.^[28] The Democrats' proposal does not propose raising sales tax but it permits local governments to boost taxes.^[24]

Proposed Tax Increase

Sen. Ed Murray, the Senate's chief budget writer, introduced a plan on Feb. 6, 2012, that would place a temporary sales tax increase on the ballot this year, as well as a permanent capital gains tax that would be dedicated to paying for education for the long term. The plan would also raise some business and occupation preferential rates, up the cigarette tax, and reduce the sales tax break for cars purchased from auto dealers, which Marray says are necessary to prevent cuts to education. The revenue votes that Murray wants to take up in the Legislature require a two-thirds vote.^[29]

Special Session in November-December 2011

Just months after passing a budget with $4 billion in cuts, the state announced that tax collections for the FY21012-13 two-year budget period were projected to be $1.4 billion less than expected through the end of FY2013, which Gov. Gregoire said she viewed as a $2 billion deficit given the need to leave money in reserve.^[30] In light of the shortfall, the governor told state agencies to prepare for another round of cuts which could be up to 10 percent of the agencies' budgets and total $1.7 billion.^[31] but she also said that she would not make across the board cuts.^[30] The governor called a special session of the legislature that began on November 28, 2011.

Gov. Gregoire proposed $2 billion in FY2012 budget savings on October 27, 2011, prior to the legislature's special session that began in November 2011. Although the governor had hoped the legislature would complete it's work by the end of December 2011, lawmakers said they would likely not be done until sometime in 2012.^[32]

The special session ended in December 2011 after the legislature approved a $480 million budget bill, known as the "early action bill" that makes less than $200 million in actual cuts and relies on shifting funds to fill the budget gap.^[33] The Early Action bill makes none of the cuts recommended by the governor^[34] but instead on money from a variety of sources, including:

• $82 million in unspent money from the previous biennium ^[33]
• $50.6 million from quicker conversions of unclaimed property by the Department of Revenue^[33]
• $50 million in school-bus spending is delayed until 2013^[35]
• $38.4 million comes from additional federal welfare aid allocated to the state^[33]
• $752,000 saved from limits that will end “over-the-counter” replacement of electronic-benefits cards for welfare clients^[33]
• $22.6 million would come from a three-year delay in the law changing when people mental-health disorders are detained or committed involuntarily.^[33]

The bill does not address the whole $1.5 billion shortfall as the governor asked the legislature to do.^[36] The governor's budget director, Marty Brown, said, "We're kind of disappointed."^[35]

Rep. Ross Hunter, the Democrat in charge of the House budget writing, said the funding can be revisited after lawmakers return Jan. 9 for a regular, 60-day session to close the remainder of the budget gap.^[33]

After the special session, the governor proposed that the state lottery be privatized to generate additional money for education. The lottery brought in roughly $523 million in revenue in fiscal year 2011, and approximately $150 million went to the state, mostly for education, and the remainder went toward operation of the lottery. ^[37]

State budget as initially passed

Gov. Gregoire signed the $32 billion FY2012-13 biennial budget on June 15, 2011.^[38] The budget cuts in the plan add up to $4.5 billion over the next two years. Gregoire did veto many small sections of the budget, including a study that would have examined the feasibility of requiring direct deposit for state employees, a $100,000 plan to create a commission examining whether state agencies were duplicating services.^[1] The budget eliminated $4 billion from spending and shifted money from various accounts.^[31]

Education Cuts

The spending plan reduces salaries for teachers and classified educational staff by 1.9 percent while slashing pay for administrative staff by 3 percent. It suspends programs designed to keep class sizes low.^[1]

In Jan. 2012, the Washington Supreme Court ruled that the state has violated the state Constitution by not properly fund basic K-12 education, and has ordered the Legislature to come up with a new system by 2018.^[39]

The governor and legislators approved double-digit tuition hikes in each of the next two years to offset their $532 million cuts^[38] to higher education.^[1]

Other Cuts

The budget also includes a 3 percent reduction in pay for state employees - something enforced through unpaid leave. Some retired teachers and state employees will no longer get automatic cost-of-living pension increases.

Special Session in May 2011

The governor said that she would call a special session of the legislature in November 2011, after the next revenue forecasts are released. It will be the second special session to deal with budget deficits of the year.^[40]

The legislature did not pass a budget in the 105-day regular session and began a its first, month-long special session of the year to finish the budget on April 26, 2011. On May 23, 2011, two days before the end of the special session, legislative leaders announced a tentative deal to close a $5.1 billion budget shortfall.^[41] The compromise deal includes cuts in nearly every corner of government, s1.9 percent cut for teacher pay and a 3 percent cut for other K-12 employees to save $179 million and cutting 3 percent in state employee salaries through unpaid leave will save an additional $177 million.^[42] Both chambers of the legislature approved the budget on May 25, 2011.^[13]

The the two-year, $32 billion budget makes $4 billion in cuts to higher education, social services and health care programs.^[13]

A tax-amnesty program that permitted companies to pay of back taxes without interest or penalty generated $263 million, $182 million more than expected. The governor and legislative leaders said the tax-amnesty dollars should help lawmakers reach an agreement by the end of the special session. It also means that lawmakers no longer felt they needed to privatize the state's liquor wholesale-distribution system to generate funds for the state budget.^[43]

Legislative Budget

The Senate on April 18, 2011, approved its proposed two-year state budget that reduces spending by $4.8 billion and cuts funding for K-12 education in an attempt to fill the $5.1 billion deficit.^[44]The Senate plan reduced K-12 education funding by $250 million, which budget writers assume would come from a 3% wage cut for teachers. It also cuts $95 million from school districts based on class attendance.^[45] The Senate budget includes more than $450 million in fund transfers.^[46] The Basic Health Plan, the state's health care program for the poor, would lose $122 million.^[46] In addition, the Senate's plan also halts automatic increases to state employee retirement plans to save $361 million.^[46]

The House budget reduces spending by $4.4 billion.^[46] It cuts higher education by $482 million. It also cuts state support for higher education to the amount spent 20 years ago, when there were 32,000 fewer students at the six four-year colleges. The University of Washington would lose $200 million for the 2011-2013 biennium, a 30 percent cut.^[47]

Capital Budget

On April 4, 2011, the Washington House released its $3.13 billion construction budget for the biennium. It includes construction grants of $718.5 million for K-12 schools and $626.7 million for projects at colleges and universities. Approximately a fourth of the capital budget, $831.9 million, is intended for renovation and preservation projects for public agencies. It could generate over 50,000 new construction jobs in the state.^[48]

Governor's Proposed Budget

Gov. Chris Gregoire proposed a state budget. The proposed budget is based on a shortfall of nearly $5 billion. It would would eliminate the arts commission and the state food-assistance program, reduce a host of other health and social-service programs and cut funds for higher education. ^[49] The governor also said she intended to consolidate 21 state agencies down to nine to save $22 million.^[50]

Education

The governor proposed spending $13.8 billion on education over the next biennium, an increase over the prior budget, most of which stems from the fact that the state is expecting more students. Those funds are still about $1 billion short of the level that would keep schools "treading water."

Gregoire's budget includes increasing funds for school-bus transportation, but cutting a bus-replacement fund by an equal amount. She also proposed reducing or eliminating everything from gifted education to bonuses for teachers who earn the prestigious National Board Certification^[51]

Spending

The governor's budget expenditures break down as follows^[52]:

*"Other" includes Other Education, Transportation, Contributions to Retirement Systems and Other Appropriations.

The governor's office released a publication outlining highlights of her proposed budget and that document can be found here.

Budget transparency

• See sample transparency legislation at the Sunshine Standard

The State of Washington now has an official spending database online, thanks to the passage of Washington Senate Bill 6818, Promoting Transparency in State Expenditures, a bill that had mandated the creation of such a database by January 1, 2009.^[53] The Washington State Fiscal Information site is available here. Searchable state employee compensation data was added to the website in September 2011 and can be found here.

The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:

Criteria for evaluating spending databases

State Database	Searchability	Grants	Contracts	Line Item Expenditures	Dept/Agency Budgets	Public Employee Salary
Washington State Fiscal Information	Y	N	N	Y	Y	Y

See also: Evaluation of Washington state website

Multi-Measure Budget Transparency Profile

The Institute of Government and Public Affairs at the University of Illinois has created a multi-measure transparency profile for Washington, which measures state transparency as of September 2011 using indicators from a range of organizations, including Sunshine Review. These indicators measure both website transparency and other recognized facets of governmental transparency. In addition, IGPA presents four unique indicators of non-transparency based on the observation that transfers or reassignments between general and special funds can obscure the true fiscal condition of a state.

In addition to the individual state profile, IGPA offers a 50-state comparison and profiles for other states.

Budget Background

Washington currently operates on a biennium budget. The biennium includes a 24-month period from July 1st of odd-numbered years to June 30th of odd-numbered years, such as the 2009-11 biennium, which runs from July 1, 2009 to June 30, 2011. According to state law the Governor is required to submit a budget recommendation by December. Although the biennium includes two fiscal years, an approved budget the legislature can modify the budget through changes to the original appropriations. This can be done in any legislative session. Since 1979 the House and the Senate enact revisions annually to the state’s biennial budget. These revisions are referred to as supplemental budgets.^[54]

The Economic and Revenue Forecast Council is composed of representatives from both the legislative and executive branches. Each fiscal quarter, the Council adopts an official forecast of General Fund-State (GF-S) revenues for the current and (at some point) the ensuing biennia. These forecasts, together with any reserves left over from previous biennia, determine the financial resources available to support estimated expenditures.^[55]

Sources of State Revenues − All Governmental Funds 2009-11 Biennium Estimates^[56]

Accounting Principles

Washington State Auditor's Office looks at financial information and compliance with state, federal and local laws on the part of all local governments, including schools, and all state agencies, including institutions of higher education. The State Auditor's Office publishes its audit reports online. The State Auditor's Office is established in the state's Constitution as part of the executive branch of state government. Washington citizens elect the State Auditor to four‑year terms. Brian Sonntag has been State Auditor since first elected in 1992.^[57]

The Institute for Truth in Accounting (IFTA) rates Washington “Timely” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider Washington's CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.^[58] Washington's CAFRs are publications of the Washington Office of Financial Management in accordance with with Revised Code of Washington 43.88.027. Victor A. Moore was appointed Director of OFM in January 2005. The Office of Financial Management:^[59]

• Plays a central role in budget planning, policy development, and fiscal administration for the executive branch.
• Prepares the executive budget proposal and monitors budget implementation.
• Maintains state government's statewide accounting systems, central books of accounts, and financial databases while also providing accounting services to state agencies.
• Oversees statewide personal service contracting activities.
• Conducts executive policy research and develops legislation to support the Governor's policy goals.
• Provides estimates of state and local population, monitors changes in the state economy and labor force, and conducts research on a variety of issues affecting the state budget and public policy.
• Provides a comprehensive risk management program for all state agencies.

Bond Rating

Moody's Investors Service lowered its outlook on the state of Washington to negative from stable on Jan. 30, 2012, citing the magnitude of the state's revenue shortfall.^[60] A few days before that, Fitch Ratings warned that it could lower its rating on the state's general obligation bonds.^[61]

Stimulus

Washington has received $4.7 billion in federal funding.^[63]

Public Employees

According to 2008 Census data, the state of Washington and local governments in the state employed a total of 427,078 people.^[64] Of those employees, 287,439 were full-time employees receiving a net pay of $1,403,475,485 per month and 139,639 were part-time employees paid $212,257,148 per month.^[64] More than 49% of those employees, or 212,659 employees, were in education or higher education.^[64]

External links

• Transforming Washington's Budget, where citizens can contribute their ideas.

Additional reading

• Gov. Gregoire's 2009-2011 budget proposal

References

v t e State Budgets Cost of state transparency websites • State budget issues • Pubic employee salaries • Public pensions • States with spending online • Glossary of state budget terms Alabama • Alaska • Arizona • Arkansas • California • Colorado • Connecticut • Delaware • Florida • Georgia • Hawaii • Idaho • Illinois • Indiana • Iowa • Kansas • Kentucky • Louisiana • Maine • Maryland • Massachusetts • Michigan • Minnesota • Mississippi • Missouri • Montana • Nebraska • Nevada • New Hampshire • New Jersey • New Mexico • New York • North Carolina • North Dakota • Ohio • Oklahoma • Oregon • Pennsylvania • Rhode Island • South Carolina • South Dakota • Tennessee • Texas • Utah • Vermont • Virginia • Washington • West Virginia • Wisconsin • Wyoming •

	v • d • e State of Washington Olympia (capital)
Transparency	Public Records Act | Transparency Checklist | Government corruption reports | Transparency Legislation | Open Records procedures | Transparency Advocates | Transparency blogs | State budget | Taxpayer-funded lobbying associations |
Divisions	State | List of Counties | List of Cities | List of Towns | List of School Districts | Evaluation of county websites | Evaluation of city websites | Evaluation of township websites | Evaluation of school district websites |
Government	Washington State Constitution | Executive | House of Representatives | Senate |
Judiciary	Washington Supreme Court | Superior Court | Court of Appeals | District Court | Municipal Court | Judicial nomination process | Judicial news | Judicial activist organizations |
Ballot Measures	Ballot measures | Ballot measures listed by year | List of local ballot measures | Procedures for qualifying an initiative | Laws governing the initiative process | Signature requirements | Recall law | Ballow access law litigation | History of direct democracy | Campaign finance requirements |