From the Governor: Declining Revenues Mean 6.3% Across-the-Board Cuts to State Agencies

Impact of recession to be felt strongly in social services

In a letter from Washington State Governor Chris Gregoire to state employees, the Governor explained the current $520 state budget deficit in light of reduced consumer spending, and its impact on state programs:

Dear Fellow State Employee:

You likely remember the headlines from a few weeks ago that announced the recession was over.  Mathematically that may be accurate, but you — more than anyone else — know that we still have a long way to go to continue rebuilding our economy.

Even in the wake of reduced spending and hiring, there is more to be done.  Many of you have heard from your management how your agency will implement reductions in response to across-the-board cuts.  I want to take a moment to explain why we have to take these cuts and what will happen next.

As consumers reduce spending, state revenue declines.  At the same time, caseloads are increasing for public education and health care services.  It is a cycle that is devastating to the people we serve and difficult for state workers to endure.  The supplemental budget passed this year left a $453 million ending fund balance, or surplus, in the state budget.  However, the two revenue forecasts since May have been below expectations.  The state lost $203 million in the June forecast and $770 million in September.  These reductions turned our $453 million surplus into a $520 million shortfall.

When a shortfall is projected, the law requires that I create a balanced budget — either through across-the-board cuts or by calling a special session of the Legislature.  Legislative leaders could not reach consensus on a special session, so across-the-board reductions were our only option.  Thus I directed agencies to reduce spending by 6.3% starting October 1.  Agencies have submitted their reduction plans, which you can view at https://www.ofm.wa.gov/reductions/default.asp.

By law, across-the-board reductions leave no discretion to a governor.  They apply to all branches of state government and to all agencies headed by elected officials that receive appropriations from the General Fund.

Though we can’t pick and choose the reductions we must make, we will use the supplemental budget to address some of the most compelling concerns these cuts raise.  That supplemental budget will be presented to the Legislature, and I hope its members will take swift action when they return to Olympia in January.

Let me be clear:  balancing the budget through across-the-board reductions is a difficult challenge.  The services we have to reduce are often the very ones we want to protect.  I know the continued stress on the workforce is hard on morale and retention.  These are hard times, and they are hard for the state family I have known for the past 30 years of my career.

Simply put, we will emerge from this recession a much different state than when we started.  We will still focus on the things we are proud of: protecting our most vulnerable citizens, keeping the public safe, stewarding our natural resources and creating the jobs of the future (and lots of them!). But the way state government delivers on our promise will by necessity change.  We are in that transformation now and I know it has created uncertainty and unfamiliarity.

When the Legislature returns, it will need to pass a supplemental budget and an operating budget that addresses a nearly $4.5 billion shortfall for the 2011–13 biennium.  You will again be called upon to provide the most essential services in the most efficient ways possible.  I welcome ideas from you, and citizens across the state, to transform our budget, prepare for the future and live up to our values.  I always appreciate suggestions from those with firsthand knowledge.

Even in these hard times, I see hope.  This is a time for us to work together and to support one another as we handle these difficult choices.  As partners, we will make our state an even better place to live and work.

Sincerely, Chris

Your ideas and suggestions are welcome; please click here <https://www.governor.wa.gov/contact/default.asp> to send them.