Gov. Gregoire announces next steps for state budget

For Immediate Release: August 12, 2010

OLYMPIA � Gov. Chris Gregoire today announced steps to address a potential shortfall in the current state budget and directed agencies to prepare for the expected budget gap in the 2011-13 biennium.

�Thanks to the incredible hard work of Washington state�s delegation, especially Sen. Murray, we dodged a bullet and have avoided across the board cuts for now,� said Gregoire. �But our state budget remains under stress. To be fiscally responsible, we must transform the way we provide services and take action now to prepare for potential shortfalls.�

Due to legislation passed by Congress this week to send emergency state aid to states, including Washington, the need for any drastic cuts to be taken immediately was narrowly averted. In addition, agency and department savings from across all of state government implemented last year has yielded $89 million in savings to the state budget. Over the last three years, the state has cut $5.1 billion in state spending. This has come in the form of service reductions, facility closures and the laying off of thousands of public employees.

Over the last two months however, revenue collections have been $125 million below expected amounts and the state today has an ending fund balance of $72 million for the 2009-11 biennium. If the upcoming September forecast or a later revenue report comes in less than expected, the state could be faced with a shortfall that eliminates the ending fund balance, which would necessitate further action, likely across the board cuts.

The state is also currently projected to face a $3 billion deficit for the next two year budget.

To prepare for the upcoming two-year budget and be ready for any immediate action that needs to be taken to correct the current budget, Gregoire today announced that she would direct state agencies to:

� Prepare reductions of 4-7 percent for the possibility of across the board cuts starting October 1st if the next forecast or revenue receipts are lower than expected.

� Prepare budget reductions for a supplemental budget for the last six months of the current biennium equal to $500 million statewide to be passed in January.

� Draft 2011-2013 budgets to prepare for the expected $3 billion shortfall which will require a 10 percent reduction in the expected general fund budget.

�By necessity, government must be smaller. We must make a dramatic shift in what can be expected of state government,� said Gregoire. �Essential services for those most in need must continue, but it must be done as efficiently as possible. As we put together a budget that reflects our values, we will demand performance out of every program. The recovery will be long and bumpy, but we will survive this crisis and we will emerge stronger.�

For more information on the Governor�s budget process, please visit http://governor.wa.gov/priorities/budget/default.asp.


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