Schmudget Blog
— filed under:

Final Budget Must Offer Solutions, Not Gimmicks, to Strengthen Economy

Posted by Melinda Young-Flynn at Mar 01, 2016 08:05 PM |
Filed under:

By Andy Nicholas, Associate Director of Fiscal Policy
 

As House and Senate budget writers come together to pass a final 2016 supplemental budget, they must recognize that additional revenue is essential to investing in a strong economy that serves us all. 

While the House budget smartly recommends new sources of revenue, it nevertheless balances its budget in part by drawing down reserves and taking other one-time actions. The Senate budget leaves reserves intact, but it does not include any new sources of revenue. Instead, Senate leaders patch together a nominally balanced budget through one-time gimmicks – including raiding other accounts and eliminating unused funds that will be needed in the future. Such one-time actions and gimmicks are not sustainable and will not strengthen our state economy in the long run.

Ultimately, the House budget bolsters investments in the kinds of public priorities that boost the economy – such as schools, public health, and community development – while the Senate's budget by and large weakens them. [See graph for more details.] And both budgets are still too focused on short-term needs.

 click on graph for a larger version.

2016_budget_proposals


Here’s how the two budgets stack up, across key priority areas:

Education

Leaders in the House take steps to strengthen Washington’s K-12 schools as well as its community colleges and universities by increasing investments by about $227 million.

The House budget includes:

  • Funding to address the teacher retention crisis. Increasing pay among first-year teachers to an average of $40,000 annually from $35,000 would help Washington attract and retain high-quality teachers. Funds would also be allocated to address the faculty shortage at community colleges and public universities. Much of this investment would sensibly be paid for by eliminating six wasteful corporate tax breaks. 
  • A focus on addressing the opportunity gap. By expanding investments in the efforts to ensure that students of color receive equitable disciplinary treatment at school, the House takes a small but meaningful step to advance racial equity. 
  • Directing Supreme Court-imposed fines to schools. The House budget provides funds to pay the fines the State Supreme Court levied against the legislature for failing to develop a plan to fund schools as required by the McCleary decision. About $21 million is provided to K-12 education to account for these fines.

By contrast, Senate leaders take no steps to acknowledge the Supreme Court's fines or to invest in K-12 education. Overall, they propose to reduce public education spending by $26 million and redirect funds from elsewhere in the budget to fund charter schools.

The Senate budget includes:

  • A reallocation of the unspent K-3 class-size reduction funds. The Senate “saves money” in its education budget by reallocating the $62 million in funds intended to help our overcrowded classrooms in kindergarten through third grade. This move partially unfunds multiple laws requiring the state to reduce class sizes, and it removes funding that will likely be needed by school districts in the coming months. 
  • Increased funding for universities. With the exception of The Evergreen State College, which would see a modest reduction, funding for public universities would be slightly increased.
  • Reinstated funding for charter schools. Some $21 million in funding for public charter schools would be moved from elsewhere in the budget. This enables the Senate to fund charter schools while still addressing a recent State Supreme Court ruling requiring the legislature to change the way these schools are financed.   

Healthy People

The House increases investments in programs that serve the physical and mental health of Washingtonians by $90 million.

The House budget includes:

  • New investments in mental health. An additional $14.4 million in funding is provided for more beds at crisis centers around the state and other mental health services.
  • More assistance for runaway youth. To assist homeless youth who have run away from home because of ongoing family problems, $2 million is provided.

Leaders in the Senate propose to reduce funding for investments in the health of Washington’s people by $26 million.

The Senate budget includes:

  • Redirected investments in mental health. Although overall funding for mental health would be reduced in the Senate budget, new funding would be allocated for mental health hospitals and several other mental health services.
  • The implementation of a fee-for-service model of health care for people who are elderly, blind, or disabled. The Senate assumes $26 million in savings can be achieved by transitioning health care funding for these populations to a fee-based model from the current managed-care model.
  • The drawdown of public agency reserve funds. Some local mental health service organizations have accumulated reserve funds (that are separate from the state's rainy day fund), which could be drawn from in the event of an emergency. The Senate budget draws down these savings by $44 million to maintain or expand other investments. 

Economic Security

Under the House budget proposal, overall funding for investments in the economic security of Washington’s kids and families would be increased by $36 million. But the budget does keep in place restrictions in access to a program that helps families struggling to make ends meet.

The House budget includes:

  • Salary increases for early learning teachers. To fund previously negotiated salary increases for early learning professionals that serve families with lower incomes, an additional $12.7 million would be allocated.
  • Maintained restrictions for access to Temporary Assistance for Needy Families (TANF) funds. Because of harsh restrictions to the TANF program enacted during the recession, the use of TANF's crucial services has been lower than projected, and thousands of families have been unable to access these services. The House budget would keep those restrictions in place and reallocate $21 million in unspent funding. 

The Senate budget proposal would reduce funding for investments in economic security by $57 million.

The Senate budget includes:

  • Maintained restrictions in TANF funds. Like the House, the Senate would reallocate unspent TANF funds, but to a larger degree – $33 million for the remainder of this budget cycle.
  • A replacement of ongoing unemployment funds with a one-time source of funding. About $17 million in general funds for unemployment services would be cut and replaced via a one-time sweep of funds from a separate account. Replacing an ongoing source of funds with a temporary one could jeopardize policymakers’ ability to maintain these critical services in the long run.

Community Development & Trust

Leaders in the House would increase investments in building stronger, safer communities by $318 million. They would do this in part by dipping into the state Budget Stabilization Account or “rainy day fund.”

The House budget includes:

  • New investments to address youth homelessness. Additional funding will go toward a range of services for homeless youth – from helping them succeed in school to creating additional beds at shelters.
  • Additional investments to address wildfires. To help address the costs associated with 2015’s unusually bad fire season, $190 million in funds would be allocated from the state rainy day fund.

Although it does address a few short-term needs, the Senate would overall reduce funding in community development by $174 million.

The Senate budget includes:

  • A shift in funds to pay for the supervision of offenders. A little over $6 million in funds would be removed from other accounts to pay for higher costs within the Department of Corrections to supervise some offenders.
  • Funding to address wildfires. The Senate budget would move $156 million from elsewhere in the budget to help the Department of Natural Resources pay for the costs associated with last summer’s wildfires.

Even in a supplemental budget year, legislators have the opportunity to propose a budget that takes the long view. Unfortunately, these budgets merely scrape by in the short-term, relying on fiscal gimmicks that put our state economy at risk. 

To create a more sustainable budget, policymakers should at the very least increase revenue by eliminating wasteful corporate tax breaks, as the House suggests. They should also consider other new forms of revenue, like the capital gains tax. Without considering such revenue reforms, legislators are missing an opportunity to invest in the future progress of all Washingtonians.  

 

Document Actions
HIGHLIGHTS

We're Seeking Board Members

Want to engage more deeply with the work of the Budget & Policy Center? Then consider joining our Board of Directors! We are looking for three new board members this year. Click here for details.

Watch Our Budget Beat Webinars

We host regular Budget Beat webinars throughout legislative session to bring you updates and breaking news from Olympia and timely policy analysis. Visit our YouTube channel to watch our previous Budget Beats. 

Testimonies in Olympia

To advance our legislative priorities, the Budget & Policy Center team is in the state capitol throughout session testifying on a wide range of bills. Watch our recent testimonies on TVW:
Misha TVW

View Our School Funding Plenary 

Roxana_BMC_plenary_2016View the Budget Matters 2016 conference plenary, "What's at Stake in the 2017-2019 Budget: Funding McCleary and Beyond." Moderated by Ann Dornfeld of KUOW, the plenary features Nathan Gibbs-Bowling, the 2016 Washington State Teacher of the Year; Lew Moore of the Washington Research Council; Roxana Norouzi of OneAmerica; and Sen. Christine Rolfes. The plenary starts after an intro by Executive Director Misha Werschkul and an intro video by Gov. Inslee.