WA budget-balancing plan spreads deficit pain

State lawmakers barreled toward the end of their special session Monday, unveiling a fresh plan to balance the $2.8 billion budget deficit with spending cuts, accounting maneuvers, a gusher of federal money and a long list of tax hikes.

The budget solution, settled by House and Senate negotiators just a day earlier, finally sketched a path home for the Democrat-controlled Legislature. Lawmakers were unable to reach an agreement during their regular two-month work session and have been in special session since early March.

Democratic leaders said they took pains to spread the budget-balancing work between cuts, taxes and other sources, such as federal bailouts and transfers from off-budget accounts.

"We believe that the approach we've taken is balanced - that we did cut, that we did some reforms and we did have to raise some revenue," said House Ways and Means Chairwoman Kelli Linville, D-Bellingham.

The budget agreement was so new that House and Senate officials still didn't quite agree on some of its basic math Monday afternoon.

Analysts in the House, which would be first to vote on the new budget, pegged reductions in general state spending at $840 million through June 2011. That includes the effect of shifting some education spending to a separate account tied to lottery revenues.

The budget also relies on about $630 million in federal aid, mostly through the Medicaid program, and about $585 million in transfers from other funds and use of reserves, House officials said.

Overall, state government's main checking account would be about $31 billion. Some $480 million would be left in reserves to guard against higher-than-expected state costs or drops in anticipated tax collections.

The current budget is a midstream tune-up of the two-year spending plan that lawmakers approved in 2009.

Democrats were unable to raise taxes last year because of Initiative 960, which required a higher two-thirds majority for tax increases. But this year, the Legislature suspended that requirement, citing the need to avoid the deepest budget cuts following the Great Recession.

Majority Democrats stressed that the roughly $800 million in tax hikes employed to help balance the budget were just a sliver of the overall deficit, which is around $12 billion for the entire 2009-2011 budget cycle.

"We've cut more than we have raised revenue," said Sen. Ed Murray, D-Seattle. "If we continued to cut, it would have devastated key government responsibilities, like education, that the citizens expect to be there. It wasn't easy."

The biggest overall cuts were seen in education. K-12 spending would be reduced by about $100 million under the proposed budget, mostly through cuts to programs meant to reduce class size.

Higher education would see a net reduction of about $68 million, while early learning and child care programs would be reduced by about $11.5 million from expected spending levels.

Some areas of government would actually see more money: Assorted long-term care, mental health and developmentally disabled programs would get a net increase of about $26.5 million in spending.

A large part of that was driven by additional spending on nursing home reimbursements, prompted by a lawsuit over cuts that lawmakers tried to implement last year.

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AP Writer Rachel La Corte contributed to this report.

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The operating budget is Senate Bill 6444.

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On the Net:

Legislature: http://www.leg.wa.gov

Governor: http://www.governor.wa.gov