Gregoire orders $260 million more in emergency cuts

OLYMPIA, Wash. — Facing another daunting drop in state tax collections, Gov. Christine Gregoire has ordered an additional $260 million in emergency spending cuts to ensure the current budget ends its year in the black.

Gregoire's latest action, announced Tuesday, comes on top of $330 million in previously planned cuts for the 2009 state fiscal year, which ends June 30.

"Families and businesses across the state are making sacrifices to weather the economic crisis, and state government will have to make sacrifices, too," Gregoire said in a statement.

Last week, state economists said tax collections for the next 2 ½ years will drop about $1.9 billion from previously expected levels.

The bleak forecast, driven by the deeply troubled economy and tight consumer spending, drove the 2009 budget into deficit for the first time and set up a total shortfall of about $5.1 billion through the next two-year state budget.

Gregoire, who will propose her 2009-2011 budget plan next month, is expecting conditions to worsen even further, pushing the eventual deficit to about $6 billion. State legislators convene in January to begin work on plugging the gap.

Gregoire, who won re-election earlier this month, has pledged not to raise taxes to fix the deficit, saying consumers and businesses can't afford it in tough economic times. Majority Democrats in the Legislature also have sounded wary of tax hikes, but have not strictly ruled them out.

The additional cuts announced Tuesday would leave the current budget with a balance of about $130 million, and would leave untouched about $430 million in the new Rainy Day Fund, which will be needed to balance the next state budget.

To reach the new savings, Gregoire's budget office is giving state agencies, including colleges and universities, a targeted dollar amount of cuts. Agencies are being told to scale back new programs, and cut spending on existing programs that have been identified as low priorities.

The new cuts amount to about 6.2 percent of remaining unspent money for the affected state agencies, and up to 3.7 percent for higher education.

Gregoire also said she is joining other governors next week at a meeting in Philadelphia with President-elect Barack Obama to discuss how the national economic crisis has hammered state budgets.

"The fact is, our challenge has only begun," Gregoire said. "The magnitude of this crisis is unprecedented in recent times, forcing us into unchartered territory to develop solutions."