A $200 million windfall announced Friday provided some good news to lawmakers struggling to close the $1.5 billion state budget shortfall.
OLYMPIA — The Legislature’s job of closing the state’s $1.5 billion budget shortfall got a little easier on Friday with news of at least a $200 million windfall due to reduced demands for state services.
But with 27 days left in the regular session, it remains unclear how lawmakers ultimately will close the budget gap.
The Legislature generally doesn’t come out with a proposed budget until after the state forecast of future tax collections in February. The forecast, to be released Thursday, will tell lawmakers if they have more or less money to spend than expected, or the same amount.
Washington is one of a handful of states, including California and New York, facing a budget shortfall, according to a December report by the National Conference of State Legislatures. A year ago, 15 states reported shortfalls.
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House Democrats are expected to release their budget proposal not long after the forecast, but no date has been set. The Senate is supposed to release its budget after the House this year.
Until then, budget watchers are largely left with rumors. Negotiations are held behind closed doors, and even the participants often have different ideas of where things are really headed.
Democrats, who control the House, Senate and governor’s office, are still talking about sending voters a temporary half-cent sales-tax increase to raise money. But some lawmakers said polling by interest groups suggests that route is risky.
There’s also talk among House Democrats of borrowing money — known as securitization — to help pay for state services, or perhaps doing that along with a ballot measure.
Securitization refers to selling a future revenue stream, such as money that comes in each year from a specific tax, in exchange for a lump-sum cash payment now.
“There are a lot of tensions you’re going to see arise around what’s the best approach. Not going to the ballot, securitizing some here, going to the ballot instead with a larger amount so you don’t end up securitizing,” said Senate Ways and Means Chairman Ed Murray.
And there’s talk by some moderate Democrats of wanting to see changes pushed through — such as consolidating health-insurance plans for public-school teachers — before they’ll consider voting to raise money to help balance the budget.
It’s not clear what impact the extra money announced Friday may have on budget talks.
The Washington State Caseload Forecast Council said some of the biggest drivers behind the drop in demand for state services are fewer students than expected enrolling in public schools and fewer people than expected using state health-care programs for the poor.
There’s some speculation among lawmakers that the extra $200 million or so from the reduced demand for services could sway House Democrats to push for borrowing a few hundred million more and avoiding going to the ballot entirely.
Then again, both Gov. Chris Gregoire and state Treasurer Jim McIntire have advised legislative leaders that borrowing money to pay for government operations is a bad idea. The state usually borrows money to finance capital projects, such as constructing buildings and roads.
“I have grave concerns about securitization,” Gregoire said Friday. “My message to the House and Senate is ‘please do not give me a bill that has securitization in it.’ “
McIntire sent a letter to legislative leaders last week noting that borrowing money in such a fashion could hurt the state’s credit rating.
“Measures that securitize future revenues to provide one-time cash for the operating budget typically get harsh reactions from the markets,” he wrote.
House Majority Leader Pat Sullivan, D-Covington, acknowledged Friday that “we are looking at it” in his caucus, but said no decision has been made.
“There are some people in our caucus who would say, ‘Yes, let’s do this right now,’ ” while others want to do something else, he said.
The budget is clearly the focus of lawmakers now that a bill legalizing gay marriage has cleared the House and Senate. The governor is set to sign the bill Monday.
Still, it’s not clear if the marriage debate slowed things down, given that budgets typically aren’t released until after the February forecast anyway.
“If we would have gotten more done by now (without the marriage debate), it’s hard to say,” said Rep. Bill Hinkle, R-Cle Elum, who sits on the House Ways and Means Committee.
“It’s like that thing we thought could have blown the place up is now gone. Now we can get to the stuff that people want us to do.”
Andrew Garber: 360-236-8266 or firstname.lastname@example.org