Gregoire budget would slash programs, cut $4 billion

OLYMPIA — Gov. Chris Gregoire had four words to summarize the state spending plan she proposed Wednesday that would dump programs for the poor, slash education, close prisons and reduce ferry runs.

"I hate my budget," she said, her voice shaking with emotion.

"I hate it because in some places I don't even think it's moral," she said. "Who'd have ever thought that I would be doing this."

Just four years ago, when the economy was booming, Gregoire unveiled a proposed budget that poured billions into health care, education, state parks and more. "I love my budget," she said at the time.

Now, after a stock-market crash and deep recession, Gregoire is presiding over the demolition of programs she and other Democratic lawmakers helped create and grow.

The proposed cuts the governor announced Wednesday are unprecedented. No corner of the budget appeared untouched.

State Arts Commission, gone.

State Tourism Office, gone.

The Basic Health Plan, which provides subsidized insurance for the 66,000 working poor, gone.

Also eliminated: Disability Lifeline, a program that provides cash payments to thousands of disabled poor; programs for gifted students in public schools; McNeil Island Corrections Center; and the Maple Lane School for juvenile offenders in Rochester.

Tuition at colleges and universities would continue to increase at a double-digit pace to partially offset across-the-board cuts.

Money for state parks from the operating budget — a major source of overall parks funding — would be nearly eliminated in two years. Park visitors would pick up a larger share of the tab.

Ferry service would be trimmed, while fares would climb 10 percent.

"This is a budget that is meant for the worst economic downturn in eight decades. It uses the word 'eliminate' about 80 times," Gregoire said at a news conference.

The Governor's Office projects the cuts would result in the loss of around 3,800 full-time equivalent job positions in public schools, higher education and state agencies.

Overall, the proposed budget closes a projected $4.6 billion shortfall in the next two-year budget — which runs through June 2013 — with nearly $4 billion in cuts and suspended initiatives, plus about $680 million from reserves and raiding accounts outside the state general fund.

The shortfall is the gap between what the state projects it will collect from taxes and what it would need to spend to maintain existing state services, provide employee pay increases and handle growing demand. The cost of providing services grows, especially during recessions, because more people turn to the state for help.

Gregoire's proposal would spend about $32.4 billion. That's expected to be tens of millions less than the current budget, even after efforts to cuts costs this fiscal year. The governor's budget would leave $881 million in reserves.

State officials say they're not aware of another time in state history, at least since the Great Depression, when state spending dropped from one budget to the next.

What happens next

The governor, under state law, takes the first stab at writing a budget. The House and Senate will follow with their own proposals after they go into session in January. Then all the sides will get together and, presumably, reach a compromise.

They'll have to come to terms with the cuts amid a barrage of protests by the folks who would get hit. Advocates for education, health care and social services were hard at work Wednesday, imploring lawmakers not to cut their programs, but remaining largely silent on what to do instead.

"I don't know what the answer is," Mary Lindquist, president of the Washington Education Association, said when asked how lawmakers should avoid cuts to education. "I'm not an economist, but I know we have to do better. We don't have a choice. Any parent will tell you, when times are tough, you take care of your kids."

State Sen. Joe Zarelli, the ranking Republican on the Senate Ways and Means Committee, said overall "the governor has to be given credit for taking a very tough and delicate situation and actually presenting a list of options ... that get us where we need to be."

Sen. Ed Murray, D-Seattle, the new chairman of the Senate Ways and Means Committee, said the governor's budget proposes the "type of things we're going to have to consider cutting." But making the cuts won't be easy, he said.

"It's going be very hard for members to cut programs they helped to create," he said, noting that "if liberals just walk away from the table and say they won't vote for it, then the Republicans will get to shape those cuts. There are significantly different approaches to how you can cut this budget."

Gregoire said she expects lawmakers will largely end up where she did.

"They will learn what I've learned and they will find ... there aren't any options," she said. "What options there are are ugly."

No new taxes,

no federal bailout

Unlike the last budget, higher taxes are not being considered. A Tim Eyman initiative approved by voters in November requires a two-thirds vote in the Legislature or voter approval to increase taxes. It's hard to imagine a supermajority of Democrats and Republicans agreeing to boost taxes.

In addition, Congress has made it clear that no more bailouts will be coming to prop up state budgets. The federal government helped soften the blow of cuts in the last budget with more than $3 billion in aid.

That leaves state lawmakers with cuts.

Gregoire has proposed eliminating programs that have proved politically untouchable in the past, like the Basic Health Plan and Disability Lifeline.

Funding for K-12 education is largely off-limits because of constitutional protections, but there are still significant cuts.

The governor proposes to continue suspension of the class-size reduction initiative, I-728, to save $860 million. The same is true for I-732, which mandates annual raises for teachers, pegged to inflation. That saves another $253 million.

The K-12 cuts don't stop there. Gregoire's budget would eliminate funding to reduce class sizes in kindergarten through fourth grade, suspend bonuses to teachers who go through national teacher certification, and suspend step increases for teachers.

In higher education, tuition would jump by more than 22 percent over the next two years at the University of Washington, Washington State University and Western Washington University. The other institutions would see double-digit increases as well.

State aid to help lower-income students pay for college would be increased by $92 million to offset costs for low-income students.

Even with the additional tuition dollars, colleges and universities will see more than $220 million in cuts.

State employees

State workers, under an agreement reached with unions Tuesday, would pay more for health care and take a 3 percent cut in pay through unpaid leave.

Under the tentative agreement, which has to be ratified by the unions and approved by the Legislature, state workers would pay 15 percent of their health-care premium costs, with the state picking up the other 85 percent in the next two-year budget. The state currently pays 88 percent of the premium, and state workers pay 12 percent.

The contract would not eliminate step increases, which are bumps in pay based on years of service. About 20,000 state workers would get those increases at a cost of around $26 million. However, that cost is expected to be covered through a hiring freeze and attrition, according the Governor's Budget Office.

As deep as the cuts would go, there are some things the governor said she would not touch, such as a program that helps certain people who can't get on Medicaid, including illegal immigrants, obtain lifesaving medical treatments.

"I'll tell you where I wouldn't cut. I was going to cut a program that was kidney dialysis and cancer treatment. Then I looked into the program and I found out that if I cut kidney dialysis they'll die within 48 hours," she said.

"I can't do that. There's a limit to what I'm willing to do."

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