Another $250 million caseload hit to Wash. budget

Higher demand for government services, particularly health programs, is pushing Washington's state budget deeper into the red amid the lingering recession.

Wednesday's update of state caseloads will increase government costs about $250 million more than previously expected through the next two-year state budget cycle.

Combined with a roughly $200 million shortfall recently pegged to a drop in tax collections, the state is now facing a nearly half-billion-dollar hole in a budget that lawmakers balanced just two months ago.

The state's Rainy Day Fund, intended for emergencies, still has a projected balance of about $250 million through the upcoming budget cycle. But tapping the fund requires legislative approval.

Democratic Gov. Chris Gregoire was ordering another round of cost-cutting steps Wednesday to deal with the portion of the shortfall tied to lower tax revenue.

But solutions for the rest of the shortfall may have to wait until January, when the Legislature returns to work, Office of Financial Management Director Victor Moore said.

In Wednesday's report, caseload forecasters said the recession-hammered economy was driving more people to seek public assistance.

For example, the state's high unemployment rate, presently 9.4 percent, drove growth in state medical coverage for families on welfare. The number of people on that program is expected to increase to nearly 52,000 by mid-2011, about 19 percent higher than previously forecast.

Demand also is expected to grow significantly in General Assistance, a state program that offers cash and medical care to aged and disabled people, particularly those who can't find work.

Sen. Joe Zarelli, R-Ridgefield, who leads budget policy for the Senate's GOP minority, said lawmakers must restrict growth in social services programs if they have any hope of keeping costs under control.

Earlier this year, the Democrat-controlled Legislature patched a $9 billion deficit with spending cuts, one-time federal money and assorted accounting gimmicks.

But Zarelli noted that lawmakers still extended subsidized children's health coverage to families making up to three times the federal poverty level - about $66,000 a year for a family of four.

"We're talking about middle-income families," Zarelli said. "Are they as important as more-impoverished families?"

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On the Net:

Caseload Forecast Council: http://www.cfc.wa.gov/default.htm