Politics & Government

State Budget Forecast for 2011-13 Drops by $698 Million, Which Could Mean Harder Times for Public Schools

Social services that rely on state money also might feel the budget sting.

The state's budget hole sunk deeper Thursday with officials announcing that Washington could expect $698 million less in 2011-13 than what was forecast in November.

The amount reflects a "fragile" economic recovery held back by slow job growth, a sluggish housing market and now the effects of Middle East unrest and the earthquake and tsunami disaster in Japan, the state Economic and Revenue Forecast Council reported.

For the current 2009-2011 budget, revenue is expected to be $28 billion, which is $80 million less than the state's previous projection in November. Looking ahead to the next two-year budget, which lawmakers are grappling with now, revenues are expected to be $31.9 billion, which is $698 million less than the previous forecast.

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Those two budget cycles total $778 million less than what was expected in November.

Just exactly how this larger revenue shortfall will affect Sammamish residents remains to be seen because state lawmakers have yet to outline all of their specific proposals on where cuts will take place, officials said.

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Groups that provide "safety net services" are likely to get hit the hardest, state Rep. Larry Springer (D-Kirkland) said, noting that covers social service organizations.

But impacts could be felt in the Issaquah and Lake Washington school districts, which rely heavily on state dollars.

The revised forecast could freeze or cut pay for public school teachers or suspend cost-of-living-adjustments to their pensions, Springer said Thursday.

It also might lead to job cuts for teachers, he added, though that remains up to each school district. "I think you’re going to see a lot more districts than in the last few years or so lay off teachers," said Springer, who represents Sammamish.

Issaquah and Lake Washington school district officials said Thursday they were waiting to see proposals from state lawmakers before making full comments.

"The expanding deficit is certainly not good news for public education," Sara Niegowski, Issaquah School District spokeswoman, said in an email.

"This adds to the Legislature's already daunting task of balancing the budget for the coming biennium and we know all government services will be significantly impacted."

Lake Washington School District spokeswoman Kathryn Reith had a similar response. "Once the proposals come out, then we will be able to figure out what it means for us," she wrote in an email.

Late last year, some district officials for schools serving Sammamish were blunt in discussing how dollar cuts announced then would affect education.

Sammamish city officials have been "most watchful" of revenue projections and the way taxpayer money has been invested, Deputy City Manager Pete Butkus said in an email.

"The state revenue forecast and future budget may have some negative effect on service delivery for state-supported activities in Sammamish," he wrote. "I do not expect the state revenue forecast to negatively affect services provided through the city." 

He added that the forecast saddened him but it was not unexpected.

Deputy Mayor Tom Odell pointed out that Sammamish residents might feel the impact of education cuts should community groups step in to fill the budget gap through fundraising. "There will be more pressure on PTSAs and school foundations," he said.

If it's any indication of support for education, Sammamish voters in the Lake Washington School District recently helped approve a $65.4 million levy, which will go to capital improvements. Eastlake High School could stand to get $20 million of that for more classroom and cafeteria space.

Sammamish residents who are planning on attending the University of Washington might face higher tuition than what was already expected for the upcoming academic year and 2012, The Seattle Times reported.

The Times quoted Paul Jenny, UW budget director, as saying state budget cuts could lead to lower in-state enrollment and job losses.

But even this latest projection is uncertain because of what’s happening around the globe.

“First, we had the volatility in oil prices because of political unrest in the Middle East,” said Arun Raha, the state’s chief economist, in a statement.

“Now we have the tragedy in Japan, the world’s third largest economy, and one of the state’s leading trade partners."

He ticked off economic categories that he called "headwinds." They include slow job growth, a sluggish housing market, tight credit for small businesses, consumer retrenchment after the holidays and a fiscal drag from the federal stimulus efforts, as it winds down.

Also noted in the economic mix: State and local government spending cuts.

"Boeing's tanker win will provide an important economic and psychological boost to Washington state," he wrote. "However the recovery in Washington, as in the nation, is being held back by a weak housing market and sluggish job growth."

Sammamish Chamber of Commerce Executive Director Deborah Sogge encouraged residents to keep local businesses in mind when shopping, given the state forecast numbers and economic report.

"As we're seeing everyone tighten up with government spending, it's a good idea for our local consumers to invest in their local economy, meaning that they need to concentrate in buying local," she said. "That money will trickle down to the community."

Local businesses – which she said includes ones in the Sammamish area – have given contributions to school groups and community organizations.

State Sen. Andy Hill (R-Redmond), who represents the northern part of Sammamish, took a more optimistic take on the revenue shortfall.

"While short, the forecast still has us bringing in $3.9 billion more in revenue than the previous biennium," Hill said in an email to Woodinville Patch. "This is also well above the high-water mark for revenues set in 07-09. In fact, the headline could read 'State predicts record revenue!'." 

The state does not have a revenue problem, Hill said. The problem, he added, is spending promises during the past four years that were unsustainable.

"This means there will be painful cuts that hurt real people," he said. "The real challenge will be to make reforms that will ensure that we don't find ourselves in this same position two years from now. I think that with a bipartisan effort, we can work to forge a solution that does as little damage as possible while setting the state on a track for success in the coming years."

State lawmakers will have to figure out where to make cuts as they deal with the lowered projections.

Springer said lawmakers in the state House might have their budget ready by next week. But they'll have to revise some programs based on the new revenue projections.

The legislative session is set to run through April 24. Some question whether it will wrap up in time.

Editor's note: Information from Woodinville Patch was used in this report. A one-page summary of the state forecast report is available, as well as the full document. Disclosure: Sammamish Patch is a member of the Sammamish Chamber of Commerce.

State forecast officials on Thursday noted these statewide trends, which are included because they are important in Sammamish.

Housing

"Housing is now in neutral - no longer subtracting from growth, but not adding to it either. We anticipate another year of muddle-through as the market sheds excess inventory, some of which is still on the sidelines. A meaningful recovery will not happen until 2012, and only after home prices start to rise again."

New Home Construction

"New home construction in Washington, as measured by building permit data, did somewhat better in the fourth quarter of 2010 than we had expected. However, much of the strength was due to a December spike in the volatile multi-family segment. Permits for single family units improved to 14,500 in the fourth quarter from 13,700 in the second quarter while multi-family units increased to 7,600 from 6,000. While new home construction is now increasing, the level of activity is still far below normal."

 


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