$718 million gap projected for next state budget cycle

Wednesday, April 26, 2006

By DAVID AMMONS
THE ASSOCIATED PRESS

OLYMPIA -- Washington's brief respite from budget woes will end abruptly next year, with state budget officials now projecting a $718 million shortfall.

"I wasn't prepared for a number that big," Senate budget Chairwoman Margarita Prentice, D-Renton, said Tuesday.

"We've been through some very tough years, and we face it again," said House Appropriations Chairwoman Helen Sommers, D-Seattle. "We face some unbelievably high costs in the medical area, and we continue to face initiatives that could cut our revenue."

The Republicans' senior budget writer, Sen. Joe Zarelli of Ridgefield, said the big gap shows that Olympia has a spending problem.

The new projection is part of the six-year outlook just published by the governor's budget office.

Although legislators knew when they left town last month that a shortfall was likely to shape up for the 2007-09 budget cycle, the new report is the first solid projection. Previous guesses were from $500 million to $1 billion.

The forecast, based on current revenue projections for the next biennium, takes into account money for increased school enrollment, prisons and other state caseloads. It factors in inflation, including 12 percent for medical assistance increases over the biennium.

The projection assumes lawmakers will pay the voter-mandated pay raises for teachers and a 2 percent annual cost-of-living raise for state workers and higher education faculty and staff.

It also presumes the Legislature will empty out the $947 million in reserves from this biennium, including $825 million that lawmakers placed in savings for schools, pensions and health care.

The $718 million gap also assumes that legislators will leave $300 million on the table for future emergency needs. In truth, the Legislature could easily pick a much smaller ending fund balance, particularly if the economy is still growing.

The report also projects a $2.5 billion gap in the 2009-11 budget cycle.

State budget chief Victor Moore said the $718 million number can change greatly over the next year. He mentioned quarterly revenue forecasts that can swing by hundreds of millions, big changes in caseload forecasts and initiatives that subtract from the state treasury.

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