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Dear Friends and Neighbors,

Operating budget

The special session ended yesterday, after state lawmakers finally reached an agreement on $479 million in spending reductions. The newspapers will call these reductions, “cuts.” In actuality, once fund transfers and payments being pushed into other pay periods are accounted for, the sum total of reductions are only $323 million.

The road has been acrimonious at times, with Republicans advocating to solve the budget problem with a priorities of government approach, government reform and other general spending reductions. As I pointed out in my legislative brief on Dec. 2, our state government has not actually made $10.5 billion in cuts since 2008. Rather, the Legislature has simply prevented many automatic spending increases from happening.

Budget reductions in more detail

Fundamentally, the reductions made were primarily in fund transfers and use of federal funds. With a $2 billion budget shortfall, the first $400 to $500 million in savings represent easier decisions for the Legislature. The more challenging decisions will take place in the regular, 60-day legislative session that begins Jan. 9. The depth of these reductions will largely be predicated on the February state revenue forecast.

Examples of the reductions made during the special session include:

  • $300,000 from TVW
  • $500,000 from the state library
  • $242,000 from the Puget Sound Partnership
  • $50 million in school bus depreciation payments
  • $23 million in delayed implementation of the Involuntary Treatment Act

How does Washington state compare to other states on tax revenues?

A recent column in The News Tribune stated, “Are lawmakers from the other 49 states sharing the pain? Apparently not. Since the Great Recession turned legislating into a seemingly continuous set of crises, Washington state this time is alone.” The piece points out that overall state tax revenues across the country in the April-June quarter of 2011 increased by 10.8 percent from the same quarter the previous year. However, Washington state has only increased approximately 7 percent, according to our state's chief economist.

The national economy

November was a good month for our nation's economy, with strong retail sales being reported for “Black Friday.” Our economy looks to be finally growing at about 2.5 percent, which is its estimated long-term trend average. According to the Economist Magazine, “this is fast enough to create jobs for a growing population, but not fast enough to reduce unemployment.”

The state economy

Uncertainty and the European sovereign debt crisis still plague consumers and employers in Washington state. Consumers are still looking for direction and their mood changes by the day depending on state and national news. Our country's financial sector may be exposed by $2 trillion because of its close relations with Greece, Italy, Ireland, Portugal, and Spain. This will have ramifications for our state, including additional home foreclosures in the near future, according to our state's chief economist.

To close on a more positive note, please remember that three out of the four major industries in Washington state are growing, with two growing in double digits! Our economy is improving and consumers, for the most part, are feeling more positive. Washington state's real personal income is expected to recover faster than the national average, as well. Negative signs will persist in the upcoming year, but each month the economy becomes a little stronger and healthier.

Sincerely,


Kevin Parker

State Representative Kevin Parker, 6th Legislative District
421 John L. O'Brien Building | P.O. Box 40600 | Olympia, WA 98504-0600
kevin.parker@leg.wa.gov
360-786-7922 | Toll-free: (800) 562-6000