Opinion/Editorial

It’s "Budgeting 101" and something most families understand—you can’t keep spending more than you bring in. But for more than a decade, Washington state lawmakers did just that. And when the economy collapsed in 2008 and tax revenues dipped, cries of deep budget cuts were heard in the halls of the state capitol.

In the end, it took a special session to finish work on the 2011-13 budget. But the budget, for the first time in more than a decade, actually spends less than the amount of money taxpayers are expected to send to Olympia over the next two years.  That was certainly a positive step to put the state on a more sustainable budget path. Still, the state’s budget outlook remains tenuous. An inadequate reserve fund, ongoing economic uncertainty and some legislators’ appetite for future spending highlight the need for additional reforms and spending restraint.

Some people say numbers can be deceiving, but here are four facts that paint an indisputable picture of the state’s budget situation:

Total Spending. While much of the media coverage of the budget focused on cuts, taxpayers should know that spending is projected to increase. In fact, total spending in the state has not decreased since the onset of the “great recession.” In the 2005-07 biennium, the state spent a little more than $60 billion. This biennium, the state plans on spending more than $74 billion. In the past decade, spending in our state has increased 66%.

General Fund State Spending. The General Fund covers state programs funded primarily by state sales, property and B&O taxes. It includes a spending increase $1.7 billion over the previous budget – though it doesn’t spend more than the amount of projected tax revenue. Although it dipped in 2009-11, General Fund spending over the past 10 years has increased 43%.

Revenue Forecast.  State tax revenues are projected to increase 12% in the 2011-13 biennium. That will result in an additional $3.5 billion in revenue. While that increase follows a decline of about $1.8 billion in the last biennium, it should be noted that the amount of money citizens have sent to Olympia has increased 41% since 2000.

State Employees.  The 2011-13 budget calls for state government full time employment to decrease by roughly 1,578 positions. That’s down from a peak of 111,984 positions since 2007-09 – and that doesn’t include school teachers, who are not considered state employees. The number of state employees in Washington has increased 6% in the last decade. If full-time state employees were a city, they’d be the sixth largest city in the state. Why is this important? State employee compensation accounts for roughly 23% of total state spending.

Many of the numbers above would have likely increased even more had voters not properly framed the budget debate in 2010, by rejecting I-1098 (a state income tax) and adopting I-1107 (repealing various tax increases) as well as I-1053 (restoring a two-thirds vote for tax increases). Despite the vote for 1053, the 2011-13 budget does rely on $517 million in fee increases.

While lawmakers made some important reforms that saved millions, additional changes are needed to make sure the state’s budget is sustainable. One idea includes requiring state lawmakers to set aside a 5% reserve when adopting the initial biennial budget. This year, lawmakers set aside less than 3%, and much of that reserve has been wiped out by lower revenue forecasts after legislators adjourned.

Lawmakers should also adopt a constitutional tax and spending limit. Voters have adopted a two-thirds supermajority requirement to raise taxes four times. There are 16 other states that require supermajorities to raise taxes, but only in Washington is it not part of the state’s constitution.

Another positive step would be to return state employee compensation decisions to the legislature. Currently, unions negotiate secretly with the governor, and the legislature only gets an up or down vote on the final agreement. Funding personnel costs should be included in the regular public budget process, not determined in secret closed-door meetings.

Serious budget problems remain, but legislators should be congratulated for taking important steps to live within the state’s means this year. The failure to leave an adequate reserve and ongoing economic uncertainty, though, means additional reforms are needed. Now is the time to get the state off of the boom and bust rollercoaster, and onto a budget path that is responsible and sustainable.