House Budget Spares Worst Case Scenario, but Misses Mark on Long-term Stability

Today the House unveiled its version of the 2012 supplemental budget to close a shortfall of $1.05 billion for the remainder of the biennium and leave $500 million in reserves.

The budget released today reflects recent changes in revenue and caseload, allowing many of the most egregious cuts included in the Governor’s budget to be avoided. However, this budget relies most heavily on cuts and one-time measures that do nothing to address our long-term stability (see graph below).

Nearly 40 percent ($405 million) of the budget solution comes from changing the payment date to school districts from the current fiscal year to the next, saving the state money this year, but increasing costs in the next biennium.

The largest portion of the budget solution (45 percent) comes from reductions that further undermine Washington’s health and education systems, and our communities. These include:

• $65 million cut from four-year institutions and community colleges, further eroding our higher education system;
• $10 million cut from student financial aid, reducing the amount of assistance students receive to access higher education;
• $889,000 in medical costs shifted to patients through cost-sharing, making health care less affordable;
• $10 million in cuts to mental health services for crisis, involuntary treatment and other supports for people with low incomes who do not qualify for Medicaid;
• $3.3 million in cuts to respite, therapies, adaptive equipment , clothing, training, and counseling for families who care for someone with a developmental disability;
• $2.1 million cut from child welfare services, including prevention and intervention services, adoption support recruitment, and coordination of investigations and intervention services in cases pertaining to sexual abuse cases;
• $9 million cut from public health services that protect people from infectious disease, respond to emergencies, and help manage chronic disease. Some of the funding may be replaced by a yet-to-be determined amount of local funding; and
• Nearly $1 million in cuts to sexual assault services, domestic violence legal advocacy, and services that support victims of crime in the legal process.

While the budget could have been far worse, revenues still fall short of what we need to maintain our investments in health care and education. The $882 million cut from the House budget is in addition to previous cuts to our core public structures, undermining Washingtonians’ economic security, education opportunities, and health systems.

If policymakers do not take this opportunity to address our long-term deficit, we will continue to face budget shortfalls in years to come. A six-year outlook conducted by the Office of Financial Management estimates that the state will face a $2 billion deficit in the 2015-17 biennium. In addition, the Washington Supreme Court recently ruled that the state is underfunding K-12 education. It is estimated that for the state to meet this duty, education spending would need to increase between $6 and $9 billion per biennium. 

It’s not too late. Policymakers have choices. Smart, systemic change to our revenue structure can be accomplished through a new tax on capital gains, by strengthening our Rainy Day Fund, reducing taxes for lower and middle income families through the Working Families Tax Rebate, and bringing tax breaks in-line with the rest of the budget by requiring regular re-authorization and measurement. Our future prosperity depends on it.