Gov. Gregoire announces plans for $330 million in budget savings

For Immediate Release: October 7, 2008

OLYMPIA � Gov. Chris Gregoire today announced actions that will save $330 million in the current budget, increasing the budget surplus for the biennium that ends June 30, 2009, to more than $850 million.

In response to a slowing national economy, Gregoire directed the state Office of Financial Management in September to find more savings to add to the $90 million being saved through freezes announced in August on hiring, out-of-state travel, personal service contracts and equipment purchases. Gregoire originally asked OFM for savings of $200 million, but because the national economic turmoil shows no sign of dissipating, the governor felt it prudent to expand those savings to $240 million. These actions will save the state $330 million in the current budget.

In addition to the savings in the current budget, the governor�s actions will save an additional $605 million in the 2009�11 budget. Together with the state�s current $850 million surplus, these steps will almost halve what is projected to be an approximate $3.2 billion shortfall in 2011.

�As a result of the continued slowing of the national economy, I am taking additional action to reduce spending now,� Gregoire said. �These savings, when combined with fiscally responsible initiatives such as the Rainy Day Fund and adjustments to spending over the past few months, leave us with more money in the bank today and cut the projected 2011 shortfall nearly in half.�

Among the items included in savings are:

-Across-the-board cuts in state agencies, exempting certain programs in education, public safety and the protection of vulnerable individuals.
-Lower price for the Washington Assessment of Student Learning contract.
-Savings in Healthy Options premiums for children and adults on Medicaid or receiving TANF (Temporary Assistance for Needy Families).
-Suspending the computer project for the Family Leave program.
-Slowing implementation of the Working Families Tax Exemption.

The governor noted that unlike the 30 states that have deficits, Washington state now has a budget surplus.

�Even though today we have a surplus and are better prepared than other states to weather this storm, we will likely face a deficit in the next two years,� Gregoire said. �The national economy has affected the state�s budget, as well as our cities and counties. We have the tools to manage our way through this national crisis, and to do it without hurting core services.�

�Because of a long history of the state�s thoughtful and responsible financial management of taxpayer money, rating agencies � Fitch, Moody�s and Standard & Poor�s � have given the state high rankings,� said Washington state Treasurer Mike Murphy. �Governor Gregoire�s actions today to increase budget savings now and in the next biennium are further evidence that she is putting the state on a solid footing to weather the current national economic downturn.�