More Cuts Come As Census Data Shows Poverty on the Rise

The new round of devastating cuts announced by Gov. Gregoire comes as new Census Bureau data showed worsening poverty and a rise in the number of uninsured in the state.

Today’s announcements – on the increase in poverty and the continued weakness of our state economy – are testament to the continued impact of the Great Recession on Washington state.

On top of the more than $4.3 billion that’s already been slashed during the recession, the additional 6.3 percent cut will mean less help will be available for our families, neighbors and communities struggling in this economy - just when the number of people in need of help is growing.

According to preliminary state-level Census Bureau data released today, poverty rates in Washington state jumped from an average of 9.1 percent in 2006 and 2007 to 11 percent in 2008 and 2009.1 The figures mirrored the grim effects of the recession nationally.  As of 2009, 43.6 million Americans were in poverty – an increase of 3.7 million from 2008.

Though details of what will be affected by another round of cuts isn’t immediately known, they will come on top of the more than $4.3 billion already cut by the state over the last two years. That does not include an additional $51 million in cuts to Workfirst, announced last month.

The new cuts – which could mean dramatic reductions in essential services like health care, child care, and worker retraining programs -- come in an environment, when according to the new Census data:

• Poverty in Washington has increased dramatically during the recession: The poverty rate in Washington increased from an average of 9.1 percent in 2006-07 to 11 percent in 2008-09.  As of 2009, 781,000 Washingtonians had incomes below the federal poverty line.
• Workers and families are losing health insurance: The number of Washingtonians without any form of health insurance increased by 94,000 from 732,000 in 2006-07 to 826,000 in 2008-09. Much of this increase has occurred as a result of rising unemployment. The share of residents with employer-sponsored health insurance declined by 3.6 percentage points from 66.6 percent to 63 percent during the same period.  Children covered by employer-sponsored health insurance declined by 92,000 (6.8 percentage points).
• Washingtonians faced a heightened need for state-supported health care services: The rapid increase in Washington’s uninsured population has placed great strain on the state budget, as laid off workers turn to Medicaid and other state health programs to receive care.  The number of Washingtonians receiving coverage through Medicaid increased by 151,500 (2.3 percentage points) from 753,000 in 2006-07 to 904,500 in 2008-09.  The number of children accessing Medicaid services climbed by 152,500 during this period – an increase of 9.4 percent.

It will be in this environment of worsening poverty that lawmakers next session will deal with an expected dramatic shortfall in maintaining state priorities like health care and education.

Today’s cuts and the new Census data also illustrate the stakes in November’s election. Voters will also decide on I-1107 and several other ballot measures that could impact state revenue, forcing even deeper cuts as more families need help.

The additional cuts come in response to a new revenue forecast that projects a $770 million decrease in the current budget period, 2009–11. The forecast projects an ending fund deficit for 2009–11 of $516 million.

In addition, revenue for the next budget period, 2011–13, is projected to decrease by $669 million, resulting in total projected General Fund revenue of $33.4 billion for that biennium.

1. Budget & Policy Center calculations of data from the Census Bureau's Current Population Survey (CPS). The data were lumped into two-year averages in order to improve statistical precision. The CPS data state-level poverty data should be considered preliminary. The Census will release more authoritative state-by-state estimates of poverty on September 28th.