Opinion - State’s stop gap budget offers no real solutions

Olympia has decided how it will handle the projected $2.8 billion state deficit. A last-minute and complicated combination of spending cuts, increased taxes and fees, fund transfers and federal funds addresses the shortfall.

The immediate budget problem which kept the state legislature in special session for a month has been addressed, but the question remains if the crisis has been solved.

The new budget is a last ditch solution. It addresses the most immediate needs of the state, but it does not correct the structural problems that brought the state to the deficit.

A large part of the budget fix depends on the federal government. About $618 million must come from the feds for this budget to even get off the ground. Federal handouts neither solve the problem nor are they guaranteed in the future. Another $690 million chunk of the fix is expected to come from inter-fund transfers and reserve money. This, as well, is not a long-term solution and suggests the state may face even bigger problems in the future.

The remainder of the $2.8 million emergency fix comes from taxes and spending cuts.

Roughly a quarter comes from new taxes, resulting from the suspension of I-960 which required a two-thirds majority for approval of higher taxes. Some tax increases have been placed on simple consumer goods, such as cigarettes, pop, bottled water and beer. Other tax increases are more complicated and affect businesses and professionals.

Spending cuts account for about a quarter of the fix, too. A total of $759 million is expected to come from spending cuts. State spending, of course, is where the problem started, coupled with the recessionary decline of revenues. The legislature threatened cuts on certain programs and fooled around with cuts on the basic overhead of the state, but the results are not impressive. They are not solutions in the real sense. They just allow the state to squeak by for the short term.

The promise of the emergency budget is not one of solvency, but one of graver problems yet to be faced.

Gordon Forgey

Publisher