As state lawmakers continue to look for ways to bridge the current $500 million gap between projected revenue (taxes) and proposed spending, they received a bit of good news last week.
It turns out demand for some state services was less than anticipated - fewer students enrolling in public schools and fewer people than expected using state health care for low-income families - has resulted in an additional $340 million being available for this budget ballet. In addition actual sales-tax collection is up, adding another $96 million to the positive side of the ledger.
The extra cash is being described by some as a "windfall." And, as "found" money, some are looking to spend it to keep programs afloat that are being targeted for reduction or elimination.
Allocating every dollar available is exactly the approach that got Washington state into the current financial mess. Starting programs that are essentially paid for paycheck to paycheck - tax collection to tax collection - can be sustained only if income keeps pace with the increased costs of providing those services. So when the economy tanks, as happened when the Great Recession hit, revenue decreases but demand for services keeps going up.
Right now, Washington state government is of a size that it cannot be reasonably sustained unless revenue increases dramatically over the next five to 10 years. That's not likely going to happen.
We see the current fiscal crisis as an opportunity to trim state government to the point that the basics - education and law enforcement, for example - are sufficiently funded and the extras, while nice, are reduced or eliminated. And those programs should be kept or reinstated only if there is a clear, established long-term funding source.
The $200 million is a savings that can help build financial stability. It doesn't need to be spent.
Yet, it's going to be hard to hold some lawmakers back, particularly when a few are itching to borrow money on future revenue such as money from the tobacco settlement or lottery profits. This is known as "securitization," and it is foolish. The state pays a price for this loan, receiving less money than it would get in the future. It's not much better than reaching out to a loan shark (except no legs are likely to be broken).
Gov. Chris Gregoire and state Treasurer Jim McIntre, both Democrats, have advised against taking a loan to pay for the day-to-day operations of state government.
"I have grave concerns about securitization," Gregoire said.
Lawmakers must stop searching for easy solutions or magic solutions. Tough choices have to be made. Spending needs to be cut to the point that future revenue can reasonably sustain state government.
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