Gov. Jay Inslee and lawmakers must quickly and transparently cut state spending to get through the virus-induced economic crisis.
The urgency of their task is driven home by a new forecast estimating a $7 billion drop in state revenue through 2023.
Washington’s chief economist, Steve Lerch, emphasized that’s a preliminary, unofficial prediction, but it should still spur budget writers to act fast and think big.
Because the shortfall and its effect on Washingtonians are immense, budget decisions must be done in a more open and collaborative manner. The Legislature usually surfaces budget deals at the last minute, minimizing the opportunity for public input and revisions. Now is the perfect time to overhaul that approach by sharing options under consideration early and often.
A special legislative session is needed to make bolder moves than the modest trims Inslee made in April. Using vetoes, he cut $235 million from the current budget and reduced spending by $210 million in the next biennial budget.
For context, the 2020 state operating and capital budget is $57.9 billion. Lerch projects $3.8 billion will be lost in the current budget cycle because of economic measures taken to slow the coronavirus spread. In the 2021-2023 biennium, revenue would be $3.27 billion less than expected.
Washington’s strong reserves should cover a majority of this year’s hole, but that leaves an enormous shortfall the following year.
Even more unsettling are extended job losses in the forecast. It projects manufacturing and construction employment will remain below 2019 levels through 2025. That reflects Boeing’s struggles and further slowing of tech-fueled growth, which was already expected to ease, before the pandemic.
Overall, nonfarm employment is expected to rebound in 2022, but the state will see smaller annual increases in jobs and personal income for years.
Washington’s recent era of regular state spending increases is now over. This concludes a decade during which the state budget grew 69% (through 2021, based on the budget passed in early 2020) as population grew around 12% (as of November 2019). Recent budget surges include belated and necessary increases in basic-education funding.
Business activity supporting that growth is no longer a given. Residents struggling with high unemployment and reduced opportunities will also expect legislators and governors to be more restrained with their tax dollars.
This sets the tone for state-employee contract negotiations this year, which should also be more transparent. Most state workers are under a two-year contract ending in June 2021 that provided 3% raises this year and last. Increases at that level are likely unsustainable.
While there’s growing consensus that a special legislative session is needed, possibly in August, the scope of its work plan is undecided.
Inslee and legislators cannot limit themselves to patching the current budget. They must also make immediate moves to reduce spending through the 2021-2023 biennium.
This isn’t easy with so much uncertainty and so many needs.
Politicians would likely prefer to have firmer data on revenue declines to provide cover for painful budget decisions. But they don’t have the luxury of being able to wait for a complete picture to emerge; with the shutdown continuing into June, the revenue picture won’t be clear for months.
Delaying inevitably huge budget cuts, and allowing state spending to continue largely unchecked, only makes the problem harder to solve.
A special legislative session should be scheduled as soon as possible. Before it convenes, the public should be informed of options being considered to reduce spending and balance the budget.
Once a tentative agreement is reached, lawmakers must give the public more than the usual amount of time to review and comment.
Washington’s financial challenge is severe and demands an urgent response. But that can’t be an excuse to reduce transparency. If anything, it’s reason to increase public involvement in this difficult process.