Dem's Kick The Can Again

by Jason Mercier


Unless state lawmakers know something we don't about an economic revival on the verge of sweeping Europe, today's quick exit from Olympia without actually balancing the state's budget sets the stage for the legislative budget can-kicking to continue deep into 2012.

Consider the following from Publicola :

Not only did the legislature fail to pass a budget during the special session that tackles the whole $1.5 billion shortfall as the governor asked them to (the house voted 86-8 yesterday for its 'early action' budget which cuts about $320 million and scoops up another $100 million from other funds, but doesn’t go for Gregoire’s full-on $2 billion in cuts and half-penny sales tax increase for buy backs), but Fizz is starting to think there’s actually something to the rumors that the legislature isn’t even going to deal with the budget until mid-February.

The idea, confirmed by budget sources, is this: That’s when the next revenue forecast hits, and some key lawmakers are hoping the economy’s going to turn around—and the shortfall won’t be as bad by then.

There are, of course, two problems with that approach. 1) Time is money: Even if budget optimists are right and February’s forecast shows more revenue coming in than we’re banking on today; giving up three months’ worth of potential savings by enacting cuts now may end up canceling out any financial gain from a February uptick, and 2) What makes anyone think there’s going to be good economic news?

As a reminder, the state's current revenue forecast has a 40% chance that revenues will come in $2 billion lower than expected, doubling the current deficit.

In case anyone thought this warning was growing stale, just this past Monday the state's economist cautioned :

  • "The U.S. economy continues to 'muddle through.' The risk of a renewed financial meltdown stemming from the European sovereign debt crisis remains high."
  • "The risk of yet another setback remains high. The greatest threat to the
    U.S. economy remains the European sovereign debt crisis. If the sovereign debt crisis degenerates into a full blown banking crisis, it will spread to the United States because of our banks' exposure to European banks. A U.S. banking crisis will push the U.S. back into recession. A secondary risk to the recovery is the political gridlock in Washington D.C. that has fiscal policy sitting it out on the sidelines. This has led to a steady erosion of both consumer and business confidence."

The state's opinion pages appear to be as disappointed in the Legislature's response to the budget crisis as we are.

From the Seattle Times :

'We're kind of disappointed,' said Marty Brown, the governor's budget director, at the deficit-reduction package being chewed on this week in the Legislature. Brown's disappointment comes with good reason. Legislators have been in Olympia two and a half weeks, and have made only those decisions that came with no pain.

Their package is $480 million. On the surface, it solves one-quarter of the budget problem. But about half of it is one-time fixes, leaving the same mess or worse a year from now.

From the Tacoma News Tribune :

Don’t be impressed by the $480 million lawmakers have come up with. That’s all low-hanging fruit; it includes shell games with state funds and faster grabs for the unclaimed property left behind by dead people. It includes pretending that a month of this biennium’s spending actually belongs to the next biennium’s revenues . . .

Just can’t work that quickly, some of them said. 'Quickly' consists of three months, if you include the time they’ve known the magnitude of the crisis – months when caucus leaders and committee chairs could have been hard at it, conferring, swapping ideas and taking public comment. And sometimes, big decisions just have to be made quickly.

Republicans, with some notable exceptions in leadership, weren’t helpful. The GOP’s political talking point was, 'What shortfall?'

Like it or not, though, minority parties tend to make annoying and irresponsible cracks about the party in charge. It’s kind of their job. Ultimately, the people in charge must act like they’re in charge. As a group, the Legislature’s Democrats this month have acted as if the government of Washington was somebody else’s problem.

If it took 16 days to raid dedicated accounts and push payments off into the future, how long is it going to take for lawmakers to actually balance the budget when they return in January?

Since the current situation did not provide enough urgency for lawmakers to enact meaningful and sustainable changes to state spending, the Governor should provide extra incentive by issuing an executive order with date-certain across-the-board cuts absent legislative action to help ensure this problem does not drag out till the last possible moment for action.

Short of this type of consequence hanging over lawmakers' heads, the only thing that may save us from multiple special sessions next year is the prospect of the state's fundraising freeze while the Legislature is in session and the impact that would have on lawmakers' 2012 election plans.

If nothing else, the less than stellar budget response of the Legislature to-date epitomizes the need for the Governor to have discretionary budget cutting authority so that surgical reductions can be made to enact timely savings.