New budget forecast shows state coming up $2.4B short

OLYMPIA — A new budget forecast shows state lawmakers could face a shortfall of almost $2.4 billion next year under a budget proposed by Gov. Christine Gregoire.

The shortfall, projected by the Senate Ways and Means Committee, is far larger than what budget writers had anticipated earlier this year.

The prospect of a recession and new estimates indicating slower growth in tax revenue are behind the more dismal projection.

Victor Moore, the governor's chief budget writer, said he's not convinced the Ways and Means estimate is accurate. "I'm not giving any credence to that number," he said, noting he has concerns about the methodology.

Moore said his office will come out with its own projection later.

The Senate Ways and Means staff began doing long-term budget forecasts earlier this year at the request of Sen. Joe Zarelli, R-Ridgefield, the committee's ranking Republican.

The projections have quickly become campaign fodder for Republicans who contend Democrats — who control the Legislature and governor's office — have overspent and are driving the state budget toward a deficit.

Zarelli made the same case on Tuesday, and said the committee's new projection shows Democrats need to cut spending now to avoid having to make deep cuts next year when they meet to put together the next two-year budget.

He argues the Legislature should set aside more than $1 billion this session to deal with the projected $2.37 billion deficit at the end of the next two-year budget cycle.

Legislators are in the middle of writing their supplemental budget, which makes adjustments to the $33.4 billion two-year budget passed by the Legislature last year.

The governor came out with her proposal in December when a recession seemed more remote and revenue projections were rosier. Democrats in the House are expected to release their budget today. Democrats in the Senate will write theirs last. Then all three sides will negotiate a compromise.

Democrats earlier in the year were calling for setting aside at least $1 billion in the current budget as a buffer against recession, but backed off that talk when it appeared growth in tax revenue was slowing rapidly.

House Democrats today are expected to release a budget that sets aide roughly $750 million in savings.

Rep. Hans Dunshee, vice chairman of the House Appropriations Committee, said he sees little need for the sharp cuts called for by Republicans.

Revenue forecasts are notoriously quirky and a lot can happen between now and when the Legislature writes its budget next year, he said, adding the deficit "could disappear as easily as it was created."

Democrats say they'll do what it takes to balance the budget next year, even if that means freezing programs to reduce costs.

Sen. Craig Pridemore, vice chairman of the Senate Ways and Means Committee, contends the Legislature shouldn't overreact to a projected deficit. "There's plenty of time to make adjustments," he said.

Andrew Garber: 360-943-9882 or agarber@seattletimes.com