WSU cuts could ‘Coug’ local economy

Funding cuts at Washington State University have local officials fearing dire impacts to the economy of Whitman County.

The legislature appropriated $108 million less to WSU for the 2011-13 biennium than it did in the last two years. That’s a 26 percent reduction.

While increased enrollment and 16 percent tuition raises will cover about half of the university’s funding shortage, the school will still have to come up with almost $50 million.

Darin Watkins, director of WSU’s external communications, said cutting that funding will mean as many as 700 people could lose their jobs.

“We had to cut around 700 jobs the last time the legislature handed us this big a cut,” said Watkins. “And we may see a similar number this time around.”

For Whitman County, that represents about three percent of the workforce, according to Arum Kone, eastern Washington regional labor economist from the Employment Security Department.

“It’s a pretty small impact compared to the rest of the counties around, particularly those north of you,” said Kone.

Whitman County’s unemployment rate of near 6 percent is well below the 9 or 10 percent rates in many other counties across Washington, said Kone.

Because of its base in agriculture and the expansion of both manufacturing firms like Schweitzer Engineering Laboratories and retail trade, Whitman County had, to this point, basically been immune to the economic slump that followed the financial collapse of 2008.

“I would say Whitman County has probably been one of the best performing in the state during this recession,” said Kone.

But cuts to government payrolls typically lag behind the private sector, he added. With a high percentage of Whitman County’s workforce at the university, the recessionary cuts made by many private firms are finally being seen locally, almost two years after the Great Recession was officially declared over.

“This will be kind of the first real big event of the recession for Whitman County,” said Kone.

Kone added employees laid off from WSU do not usually stay in Whitman County.

“These are typically employees that have been working in a specially-trained area,” said Kone. “There really isn’t much of an alternative option for them if they lose their jobs at the university.”

While that may be good for the county’s unemployment statistic, Whitman County Commissioner Greg Partch worried the cuts would weaken the county’s overall economy.

“We’re kind of a three-legged stool with agriculture, the university and Schweitzer,” said Partch. “You knock out one leg, and the others get a little bit weaker.”

Partch worried the layoffs would dampen the county’s retail economy, booming since WalMart opened its Pullman store last October.

More than $45.8 million worth of retail sales were made in Whitman County between October and December 2010, up 25 percent from the $36.7 million made during the same period of 2009.

Treasurer Robert Lothspeich previously told the Gazette that WalMart had been the primary driver in sales. Since it opened, WalMart has been the top generator of sales taxes in Whitman County.

Whitman County collected $337,916 in sales tax revenues in the fourth quarter of 2010, up from the $323,854 collected in fourth quarter 2009.

An exodus of some 700 people could also hurt the county’s real estate market.

Glenn Crellin, executive director of the Washington Center for Real Estate Research, predicted home sales and prices would cool off because of the cuts.

“That’s what we’ve seen before,” said Crellin.

Home sales through the first three months of this year were up 23 percent from 2010, but the average value of those homes fell from $206,000 to $170,000.

Crellin said that was likely due to a decrease in demand, as WSU employees were reluctant to buy when the legislature was discussing the cuts it finally made.