Election worsens state's budget pain

OLYMPIA — Democratic and Republican lawmakers for once sound a lot alike when it comes to the state budget: The only way to solve a projected $4.8 billion shortfall over the next two fiscal years is to cut deep.

"We're going to have to reset government. We can't spend more money than the revenue coming in," said Senate Republican Leader Mike Hewitt, repeating what's become a mantra for his party during the past couple of years.

"We're going to prioritize, and if it doesn't fit, it's not going to be funded," said Rep. Jeff Morris, D-Mount Vernon, who is in the running to become the House majority leader.

That doesn't mean partisan fights over government spending have ended. But with the still-sagging economy and the collective voice of voters shouting "no more taxes," there's now a grim unity of purpose among many lawmakers in both parties.

They have little choice, barring a miracle turnaround in the economy.

Voters last Tuesday laid down the law. In addition to shrinking the Democratic majorities, they overwhelmingly rejected Initiative 1098, which would have generated billions of dollars with an income tax on the rich. They repealed taxes on soda, candy and bottled water approved by the Legislature earlier this year. And they passed another law that essentially prevents any tax increase without a vote of the people.

"They sent a message, which is, they want an all-cuts budget," Gov. Chris Gregoire told reporters Friday. "And they're not willing to look at revenue."

These won't be the usual spending cuts. The governor, for example, recently ordered the suspension of several programs to save money, including adult Medicaid services such as prescriptions, dental care and hospice.

Getting rid of programs

Democrats have made noises like this before.

For the past two years, lawmakers have debated getting rid of programs and sharply reducing state spending. Many cuts were made, resulting in reduced funding for public schools, big jumps in college tuition and fewer services for the poor.

But the blow was softened by using billions of dollars in federal aid, tapping hefty state reserves and raiding accounts — such as money to construct and maintain public buildings — to pay the bills. Plus the Legislature approved tax increases that, before the repeal of some of them Tuesday, were worth more than $1 billion over the next two years.

That's all changed. It's a near certainty no more bailouts will be coming from Congress. The state's reserves are almost exhausted. Most accounts have been raided. Voters have turned off the tax spigot.

Some Democrats in the House and Senate have mentioned putting certain state services on the ballot next year and letting voters decide whether to keep them.

Rep. Ross Hunter, D-Medina, questioned the chances for success, noting King County voters — generally considered more amenable to taxes — just rejected a sales-tax increase to pay for criminal-justice services.

"And you think you're going to put something on the ballot statewide that's going to pass?" said Hunter, chairman of the House Finance Committee.

Even if the Legislature did leave it up to voters, "you still have to write a budget that assumes nothing passes," Hunter said. "You still have to make all the cuts."

And plenty of them.

Lawmakers can substantially reduce the shortfall by continuing cuts they've already made, such as gutting funding for the class-size reduction initiative, I-728, approved by voters in 2000, as well for I-732, which mandates annual raises for teachers, pegged to inflation. Those two moves alone would save more than $1 billion.

Other actions, such as continuing the pay freeze for state workers and adding more furlough days, would whittle away more of the shortfall.

Still, even after taking all the usual cuts — which were bitterly contested themselves in the past — the state would still need to close a gap of more than $2 billion.

Lawmakers in both parties say that's too big to just nibble around the edges. The state will have to stop providing some services.

"We're not going to be able to afford to do what we're doing now," Morris said. "We're going to have to make programmatic cuts and get out of business lines we just can't afford to do anymore."

Gregoire's office says that about 70 percent of the budget, including K-12 education, certain Medicaid programs, debt service and the courts system, is largely off-limits to cuts because of constitutional and federal restrictions. Even so, the governor is looking for ways to get around some of those barriers.

That leaves lawmakers with a relatively narrow slice of the budget to go after, Gregoire said.

It's hard to say what will be cut at this point. The Legislature is reorganizing after the elections and the governor has not written her proposed two-year budget yet.

But across-the-board cuts ordered by Gregoire in September because of lower-than-expected tax collections may give a hint of what's to come.

If those cuts take effect as planned, they'll include hospice care, dental care and prescriptions — all for adults on Medicaid. Hospice provides end-of-life care for around 2,600 adults annually. Cutting it would save the state $4.6 million in the current fiscal year. The program is expected to stop accepting new clients on Jan. 1, based on cuts Gregoire ordered in September.

The adult dental-care program serves 105,000. That program is due to end Jan. 1, saving the state $8.3 million this fiscal year. Emergency care for pain and infection would still be provided.

The prescription program pays for medications for 277,000 adults. That service is to end March 1 and resume in April 2012, unless the Legislature decides to stop the program. The cut would save $39.4 million in state dollars this year.

Those are all optional Medicaid programs, meaning the state can eliminate them without federal interference, but would also lose federal matching dollars.

Efforts to reduce impact

There will undoubtedly be efforts to reduce the impact of those and other cuts when the Legislature meets in January. Most of the money the state spends has constituencies that will fight to protect their share of state spending.

And yet the Legislature will have no choice but to cut anyway.

"It will be the most painful thing that people who now serve in the Legislature have ever gone through," said Sen. Ed Murray, D-Seattle, chairman of the Senate Democratic caucus.

Andrew Garber: 360-236-8266 or agarber@seattletimes.com