Wash. budget shortfall could be worse than thought

Washington's anticipated tax revenues could drop as much as $1.5 billion for the next two-year budget cycle, complicating an already enormous shortfall, a prominent lawmaker says.

The revenue forecast from the state's chief economist isn't due to be released until Thursday. But Middle East unrest and rising gas prices, which factor into state projections along with a host of other variables, have legislators worried.

House Ways and Means Chairman Ross Hunter, D-Medina, told The Seattle Times revenue projections could drop $500 million to $1.5 billion. That's on top of a multibillion shortfall which remains even after even Olympia tapped reserves and suspended two initiatives that mandate annual raises for teachers and extra spending to reduce K-12 class sizes.

There's no clear path to a budget that will get a majority of votes in both chambers, and rumors are circulating about unconventional ways to help close the budget gap if it gets worse, such as borrowing money to pay short-term expenses or taking a less-likely "payday lending" approach by banking an extra month of tax collections from the future.

"I see huge potential for a meltdown," Hunter said of the negotiations ahead. "We'll have a meltdown in the House. We'll have a meltdown in the Senate. ... You can imagine all sorts of end games on this. I don't know how it will work."

There's no expectation of a quick agreement on a two-year spending plan through fiscal year 2013. And although the Legislature is scheduled to wrap up by April 24, there's growing doubt in some quarters that will happen.

"I think it's unlikely," said Senate Ways and Means Chairman Ed Murray, D-Seattle.

The Legislature has made a series of budget-saving moves since December, largely closing a projected $1.1 billion shortfall in the current fiscal year, which ends in June.

Lawmakers cut millions in funding to K-12 schools, colleges and universities, and social services.

"I worry that the (cuts so far) have given some people a false sense that, `Well, the worst is over,' " Murray said. "The problem grows bigger."

That's particularly true if Thursday's forecast proves as bad as some people fear.

The governor's proposed budget, which is based on a shortfall of nearly $5 billion, would get rid of the arts commission and the state food-assistance program, reduce a host of other health and social-service programs, chop education programs and increase college and university tuition at double-digit rates to partially offset cuts.

Some lawmakers, including Sen. Joe Zarelli, the ranking Republican on the Senate Ways and Means Committee, say union contracts should be reopened. He introduced a bill to reject union contracts negotiated by Gov. Chris Gregoire. Her proposal calls for furloughs that would cut pay 3 percent over the next two years and require workers to pay a bit more for health care.

Zarelli, who contends Gregoire's cuts don't go deep enough, said his proposal could pick up momentum after the forecast.

Other options include sending voters a ballot measure asking for a tax increase. But even if the Legislature did that, it still would have to pass an all-cuts budget and hope voters bail out some of the cuts.

But Legislators are extremely unlikely to raise taxes on their own. Tim Eyman's Initiative 1053 requires a nearly impossible two-thirds majority in the House and Senate to do so.