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a day ago
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Washington governor wants agencies to look for deeper cuts
The Washington state Capitol on April 18, 2025. (Photo by Jacquelyn Jimenez Romero/Washington State Standard) Just weeks after signing a budget that relied on spending cuts and new taxes to balance, Washington Gov. Bob Ferguson is telling state agencies to tighten their fiscal belts even more. The warning from the Democratic governor comes amid an increasingly gloomy budget outlook and underscores that the state's financial difficulties are not over. 'We will very likely continue to face a challenging state budget environment in the coming year and anticipate increasing caseloads and ongoing uncertainty in the economy and federal funding,' reads a June 4 memo from Ferguson's budget director to agency leaders and presidents of higher education institutions. The letter penned by K.D. Chapman-See, director of the Office of Financial Management, precedes departments and colleges submitting funding requests that they hope Ferguson will support heading into next year. Those submissions are due by Sept. 15. Ferguson will release his proposed spending plans in December and the Legislature will consider them in the 2026 session. The letter says requests should only be for 'critical and emergent costs' that cannot be covered within their existing budgets. It urges them to look for 'additional options for efficiencies, reform, administrative savings, or reductions in non-essential services and programs.' The tone of Chapman-See's memo echoes a directive issued a year ago by her predecessor in which agency directors were told to focus on maintaining current programs, while not seeking money for new ones or expansions. Five months later came the November memo that, for the first time, identified a projected budget shortfall between $10 billion and $12 billion over the next four years. Once Ferguson settled into office, he started saying the chasm had widened to $16 billion. Democrats used their majorities in the House and Senate to pass a two-year $78 billion budget that was balanced with spending cuts and billions of dollars in new and higher taxes. The tax package Democrats assembled totals around $9.4 billion over four years to fully cover the gap. Ferguson, whose vetoes left the state with a little less savings, warned the fiscal situation could worsen when the next forecast of state tax collections is released on June 24. On Tuesday, Washington chief economist David Reich offered a sense of what to expect when he delivered his quarterly review of the economy to the Economic and Revenue Forecast Council, a bipartisan panel of state lawmakers and agency executives, including Chapman-See. It didn't sound good. Tax collections are coming in lower than predicted in March. Uncertainty surrounding tariffs, trade and federal policies are having a chilling effect on exports, consumer spending, and general activity across many sectors. While there was an uptick in sales of new vehicles, Reich said, it might have been folks rushing to beat new or higher tariffs. Sales of expensive properties generated a few more dollars than anticipated, he said. But new housing starts are behind March projections. Prior to his presentation, the council adopted a new four-year outlook showing Washington will have less money on hand at the end of the next budget cycle than previously estimated. The state will have an ending balance of $80 million in its main operating account at the end of the 2025-27 biennium, down from the $225 million penciled in before lawmakers approved the budget in April. Projections show the operating account will be in the red to the tune of $56 million in the 2028 fiscal year before rebounding to a positive sum by July 1, 2029. Washington isn't in any immediate budget danger and has more than $2 billion in emergency reserves. Still, Chapman-See said the financial situation is why agencies are being pressed to further reduce spending. And, she said, it is anticipated that travel, hiring and contracting freezes imposed this fall will remain in place. Democratic budget writers from the House and Senate who serve on the council said there's nothing for lawmakers to do, yet. 'I'm not sure what we can do before January,' said Sen. June Robinson, D-Everett, the lead budget writer in the Senate. 'There are a lot of pieces of information that will be collected and considered, including what the federal government might do between now and then.'
Yahoo
19-03-2025
- Business
- Yahoo
Economic forecast projects Washington to see nearly a billion less revenue over four years
Mar. 18—OLYMPIA — Strapped for cash and searching for ways to cut spending, the job for budget writers in Washington became that much more challenging Tuesday after an updated economic forecast shows the state will bring in $845 million less over the next four years than it previously projected. During a meeting of the Washington State Economic and Revenue Forecast Council, Dave Reich, forecast council executive director, said that the updated forecast shows the decline in revenue through 2029. "This change reflects lower actual revenues and a generally lower forecast for Washington personal income, employment and building permits that likely mean lower revenues in the future compared to last fall." The drop is split over the next four years , with forecasts showing the state expects to collect $71 billion in revenue between 2025 and 2027, a decrease of $479 million from the last forecast in November, and then collect $76.4 billion between 2027 and 2029, a decrease of $420 million. According to Reich, the drop in revenue is partially due to a drop in sales and business and occupation tax income. "The latest revenue forecast confirms that our financial outlook remains challenging," K.D. Chapman-See, director of the Office of Financial Management, said in a statement. "OFM remains committed to supporting Governor Ferguson's efforts alongside the Legislature to develop sustainable solutions that keep essential services like education, health care, and public safety running effectively and ensure the well-being of all Washingtonians." The updated revenue forecast exacerbates a troubling financial outlook for the state, with the governor recently estimating it faces a $15 billion budget deficit over the next four years. The estimate, which came as Gov. Bob Ferguson announced a plan to cut $4 billion in state spending, came ahead of Tuesday's announcement. Following Tuesday's announcement, Rep. Timm Ormsby, D-Spokane, chair of the House Appropriations Committee, told reporters the new forecast "makes it that much more difficult for us to balance." During his remarks, Ormsby said that lawmakers are still "modeling what it's going to take" to fund state programs while retaining a "healthy enough" reserve to retain the state's bond rating and credit. "We're going to have to find more savings, and we're going to have to fine tune the revenue to balance and have reserves," Ormsby said. Identifying cuts, Ormsby said, has been somewhat of a "crap shoot and a guessing game." "We don't want to cut to the bone, but we also know that we have to make reductions," Ormsby said. "This just further quantified the reductions." In a statement following Tuesday's announcement, Ormsby said "House Democrats are taking a balanced approach to reducing the budget where we can and addressing our regressive tax structure to ask the wealthiest in our state to help us keep people alive." Democratic lawmakers will release their budget proposals Monday, with talk of new revenue streams likely to heat up in the coming days and weeks. During a media availability Tuesday morning, both Speaker of the House Laurie Jinkins, D-Tacoma, and Senate Majority Leader Jamie Pedersen, D-Seattle, said constituents had told them during town halls over the weekend that they desired "progressive revenue." "That was kind of the theme of many of our town halls, if not all of our town halls, in some way, shape or form," Jinkins said. Progressive revenue, Pedersen said, are taxes that try to "rebalance our tax code, so that we're no longer 49th best in the country, where low-income and middle-income people pay a disproportionately high percentage of their income to support state and local government." Sen. June Robinson, D-Everett, who chairs the Ways and Means Committee, said in a statement Tuesday that the updated revenue forecast "reinforces the need for a balanced and sustainable approach as we finalize the 2025-27 operating budget." "Throughout this process, we have been focused on making thoughtful, strategic decisions that protect essential services and put the state on a stronger financial footing," Robinson said. "The proposal we release next week will reflect that commitment, ensuring stability now and in the years ahead." Last week, Republicans in the Senate unveiled a spending plan they say proves the state can adopt a balanced budget without increasing taxes. Following the updated revenue forecast, Sen. Chris Gildon, R-Puyallup, said in a statement that "Legislative budget writers should take heed and show restraint going forward, especially with the uncertainty about actions at the federal level that could affect our situation. "The smart approach is to avoid new and higher taxes, limit new spending to core priorities like K-12 and public safety, preserve social services, and protect the rainy-day fund," Gildon said. Senate Minority Leader John Braun, R-Centralia, said during a media availability Tuesday that Republicans plan to "push back on taxes because they're bad for people across the state." Braun added that "the people of the state of Washington expect the Legislature to live within its means." The forecast did offer a silver lining for lawmakers, with the updated transportation budget showing an increase of $284 million in projected revenues through June 2029. According to the Office of Financial Management, the increase is largely tied to higher projections for the motor vehicle fuel tax and ferry revenue.
Yahoo
28-02-2025
- Business
- Yahoo
Ferguson unveils budget cuts plan as lawmakers look to address deficit
Feb. 27—OLYMPIA — Gov. Bob Ferguson unveiled a plan Thursday to save Washington $4 billion over the next four years to address a budget deficit the governor projects to be $15 billion over the next four years. He announced the plan amidst what Ferguson described as a "budget crisis" as he called on the state government to "do a better job of budgeting within our means." "I've said this many times, I do not plan on doing this every two years," Ferguson said. "I also want to emphasize that I understand, that we understand, the decisions that I make, that we make, impact people's lives. And we do not take that lightly." While many of the suggestions still need legislative approval, Ferguson already called on most state agencies to cut their budgets by 6%, though public safety and K-12 education were exempt from the cuts. The $15 billion budget deficit cited by Ferguson is also an uptick from what has been previously reported. In December, the Office of Financial Management projected the deficit at approximately $12.6 billion over the next four years, while Republican lawmakers this week pegged the number closer to $6 billion. "I've seen different numbers, this is what my team has advised. We get that it's fluid, it depends on how you calculate it," Ferguson said. "We think $15 billion is the number, I think the Legislature is largely using that as well. And that's the number that we've worked off of." The savings unveiled Thursday come on top of cuts previously proposed by Gov. Jay Inslee to cut an additional $3 billion. Ferguson said the heads of agencies have identified another billion dollars in potential cuts that he is not yet ready to recommend, though he will forward the suggestions to the Legislature for consideration. "Including the proposal from Gov. Inslee in his proposed budget, we are approximately halfway towards closing the approximately $15 billion budget shortfall," Ferguson said. "Another way to think about it, we are approximately 43% of the way through the session and nearly 50% of the way towards solving the shortfall. So we're on schedule, but we have a lot more work to do." Ferguson's plan includes furloughing most state employees once a month for the next two years, which the Governor said would save more than $300 million. Certain employees would be exempt from the furloughs, including state patrol, prison staff and those at state hospitals. "I believe this is necessary to preserve the funding for the compensation increases they earned and negotiated," Ferguson said. "I continue to support full funding for the collective bargaining increases. Furloughs of course reduce compensation without reducing salaries, so that employees return to the compensation levels they have earned and bargained once we get through this budget crisis." According to staff from the Office of Financial Management, Ferguson also proposed eliminating approximately 1,000 full-time-equivalent state government positions, which includes eliminating open positions, attrition and, in some instances, eliminating current positions. The governor's office noted this figure does not equal the number of eliminated jobs. Since taking office, Ferguson has repeatedly called on state officials to scrub the budget before discussions turn to potentially adopting new tax streams to fund government services. On Thursday, Ferguson was not yet ready to discuss the potential for new revenue. "It's too soon to say right now," Ferguson said. "Our energy's been focused entirely on this process, which has been time-consuming and a lot of decisions being made to get to that $4 billion figure, to put it mildly. And so that's been my focus." Ferguson added that the state is "not going to tax our way out of this thing, not going to happen." The cuts, the Governor's Office said, were based on four principles, including reducing redundancy and ensuring efficiencies, examining proposed or adopted spending that has not yet been implemented, rolling back recently approved spending and reviewing programs and services that were previously funded through one-time federal COVID funds that are now financed through state resources. "Many of these reductions we should be making, even if we we're not facing a budget shortfall," Ferguson said. Ferguson's plan maintains investments in K-12 education and adopts Inslee's proposed investments in public education. According to the governor's office, Ferguson's plan would also increase the percentage of funds devoted to K-12 education. Ferguson called on colleges and universities in the state to propose 3% cuts. According to the plan released by the governor, Washington State University would achieve this by reducing funding for the Native American Scholarship program and targeted reductions in the general fund. The plan does not call on WSU to reduce the number of slots for undergraduate students or reduce the amount of financial aid to students. At Eastern Washington University, the governor's plan suggests the school reduce compensation and central services support and reduce funding for goods and services. The plan would maintain investments to address homelessness and housing assistance as well as cash benefit assistance programs like the Temporary Assistance for Needy Families. Ferguson said his plan also maintains Medicaid eligibility for Washington residents. "To put it another way, if you are a Washingtonian on Medicaid, you will not lose your state coverage," Ferguson said. Ferguson said his goal was to identify redundant or otherwise unnecessary expenses that would not impact the direct services that residents receive. Ferguson said the state plans to cancel the lease for a warehouse operated by the Department of Health that was previously used to store COVID-19 supplies. The closure, Ferguson's office said, would save approximately $4.4 million over four years. Ferguson said the state could save approximately $90 million by closing unused wards at Western State Hospital, a psychiatric hospital located in Lakewood that's operated by the Department of Social and Health Services. The closure would be a "warm closure", meaning the space could be utilized at a later date if needed. Ferguson also called on the Department of Social and Health Services to save nearly $4 million to close a 24-bed ward at the state's Special Commitment Center that houses sex offenders on McNeil Island in the Puget Sound. The facility had a declining population, Ferguson said. Under the governor's plan, travel for state employees would be reduced , including a 50% decline in out-of-state travel, a 25% reduction in in-state travel, and a 10% cut in state agency spending on equipment and other services. The potential for new spending this session appears uncertain, including a plan to expand access to free school meals to all students. Ahead of a Friday deadline for the proposal to advance in the House of Representatives, Democratic leadership said this week that the legislation was unlikely to pass this session. Ferguson said Thursday that lawmakers could look to phase in an expansion of the program in the coming years. "We're still pursuing what options we have to help families get the benefit of their kids getting lunches and breakfasts," Ferguson said. "So, we're not ruling that one out, but again, we have a lot of time still ahead in the session." Ferguson said Thursday that the proposals do not represent final decisions and should be viewed as recommendations for the Legislature to consider. "We were mindful that a number of these do require legislative action," Ferguson said. Budget leaders from both sides of the aisle said Thursday that they were receptive to many of the governor's proposals. In a statement, Sen. Chris Gildon, R-Puyallup, the Republican budget leader in the Senate, said he was appreciative of the plan to cut the budget and noted that Ferguson's proposal came a month before the proposal put forward by Inslee when he took office. "Overall, if Republicans were to write a new operating budget, we would likely incorporate many of the governor's cost-savings suggestions," Ferguson said. "However, we believe there are additional opportunities beyond what he offered today, and we would be glad to share those with the governor as we identify them. He knows, as Republicans do, that new taxes should be a last resort. We will do what we can to help him stand by that belief." Gildon added that the estimate of a $15 billion deficit was "surprising" and that the budget "really boils down to priorities." "Some of the cost-saving ideas, particularly the proposal for state-employee furloughs, are concerning. This plan sends a message to taxpayers: public servants will receive higher pay using $4 billion more of your tax dollars, and in return, you will receive 12 fewer days of service from them each year for two years," Gildon said. "I doubt the people of our state will see this as a fair deal." Sen. June Robinson, D-Everett, who chairs the Ways and Means Committee, said in a statement Thursday she was appreciative of the work of the governor and the heads of state agencies. "Like them, we recognize that budget reductions are necessary and will carefully consider all the options that have been identified. But we have also reached the conclusion that reductions alone will not allow us to sustain the services Washingtonians rely on," Robinson said. "People expect a government that remains functional and responsive, especially in times of federal instability." Robinson added that to "truly meet the needs of the people we serve, we must make thoughtful reductions and consider progressive revenue options that ensure fairness and long-term stability." Likewise, House Majority Leader Rep. Joe Fitzgibbon, D-Seattle, said in a statement Thursday said many of the recommendations are currently under consideration by the Legislature. "Earlier this week, House Democrats underscored the devastating impacts an all-cuts budget would have for our state's people and families. We are focused on trying to reduce that devastating impact." In the coming weeks, the Office of Financial Management will release an updated revenue forecast in the coming weeks, which Ferguson said could either increase or decrease the shortfall the state is facing. Ferguson said his goal remains to adopt a budget during the regular session. "We will remain committed throughout this process to our values as a state. Our proposals reinforce those values and help put us on a path to a sustainable and balanced budget," Ferguson said. "Together, I believe we can build a more sustainable future for Washingtonians, one that is both fiscally responsible and remains true to our values."
Yahoo
24-02-2025
- Politics
- Yahoo
WA lawmakers weigh further delay to early learning expansion
Advocates for the Early Childhood Education and Assistance Program rally at the state capitol on Feb. 6, 2025. (Photo by Laurel Demkovich/Washington State Standard) Nearly 15 years ago, Washington state lawmakers approved a plan to make a state-funded early learning program an entitlement for all low-income families who qualify. Since then, that plan has been delayed three times. As lawmakers face a multibillion-dollar budget hole over the next four years, it's becoming clearer that they will likely need to again push off the expansion — currently set to take effect in the 2026-2027 school year. 'I am not thrilled to bring this to your attention,' House Appropriations Committee Chair Timm Ormsby, D-Spokane, said in a public hearing earlier this month. 'It is a response to the fiscal reality that we are in.' Washington's Early Childhood Education and Assistance Program provides free part-day and full-day preschool and other services related to mental health, nutrition and family support for 3- and 4-year-olds in low-income families. As of last year, the program served more than 16,000 children in more than 480 locations across the state. The Department of Children, Youth and Families estimated that the state would need another 14,000 slots once the entitlement was fully implemented in 2031. To be eligible, families must earn no more than 35% of the state median income. That's $47,179 for a family of four, as of October. Some children whose families are over that limit may also be accepted if they meet other criteria, like being homeless, having parents who are incarcerated, or having developmental delays. 'We are serving our most vulnerable population,' said Michelle Rahl-Lewis, director of early learning for Tacoma Public Schools. 'One of our biggest goals is just really teaching the students how to self regulate and supporting our families in their own growth.' But offering the services for free is expensive, and in a year where lawmakers are looking for ways to fill a budget gap, delaying a further expansion of the program could provide significant savings for the state. A bill sponsored by Ormsby and requested by the Office of Financial Management would delay the entitlement until the 2030-2031 school year. At that point, it would become available to any family with an income at or below 36% of the state median. Starting in the 2034-2035 school year, any family with an income at or below 50% of the state median income would qualify. Ormsby's bill would also delay expansions planned for Working Connections Child Care, the state's subsidy program. The proposed delays align with budget proposals from both former Gov. Jay Inslee and Gov. Bob Ferguson. In Inslee's budget, the delay of the Early Childhood Education and Assistance Program accounted for nearly $146 million in savings through 2027. Delaying the state subsidy expansion would save another nearly $120 million. 'This is a tough time,' Sheri Sawyer, with the Office of Financial Management, told the House Appropriations Committee this month. 'You all are going to grapple with difficult decisions, and this is one more option for you to consider.' Ormsby emphasized that a delay is not a funding cut. 'This is not a step back,' he added. 'We're not taking away benefits that are currently occurring.' Rahl-Lewis said any cuts to current funding would be 'catastrophic' to Tacoma's program and many like it that families depend on. Early Childhood Education and Assistance Programs offer more than child care, said Stephany Contreras Roman, an early learning teacher in Tacoma. She said the program's teachers often wear many hats, like nutrition specialist, family support and interpreter. 'We're not just teachers,' she said. ' This is not just a one-role job.' Some early learning advocates said they were expecting to have to pause the entitlement implementation regardless of the budget situation because there aren't currently enough providers to handle an influx of new children who would be eligible. To recruit and retain more providers, advocates continue to push for higher pay and benefits for early learning and child care workers. Inslee's budget proposed an 18% rate increase for Early Childhood Education and Assistance Program providers, but that too could be undermined by the budget crunch. Budget talks won't fully ramp up until mid-March after lawmakers get updated revenue estimates. Until then, agencies continue to look for ways to cut spending per a request from Gov. Bob Ferguson.
Yahoo
21-02-2025
- Business
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Ferguson cancels trip to Governors' conference as budget work continues
Feb. 20—OLYMPIA — Gov. Bob Ferguson canceled his trip to a meeting of the nation's governors in Washington, D.C. this week as work continues to identify cuts to the state's budget. According to a schedule released by the governor's office, Ferguson initially planned to travel to the National Governors Association Winter Meeting on Wednesday after meeting with the Office of Financial Management and was scheduled to return on Saturday. On Wednesday afternoon, Ferguson's office released an updated schedule which said the governor would remain in Washington state "to focus on working with agencies on budget reduction proposals." The National Governors Association, founded in 1908, is the bipartisan collection of governors throughout the country, with more than 45 scheduled to attend this week's meetings. According to the updated schedule, Ferguson will make a budget announcement next week. Ferguson and lawmakers are looking to address a projected $12 billion deficit in the state's budget in the next four years. Days before he took office, Ferguson called on most state agencies to identify an equivalent 6% budget reduction across the board, and for four-year higher education institutions to propose 3% in cuts. As he discussed the plan, Ferguson said K-12 education, community and technical colleges, public safety agencies, and entitlement benefits delivered by state agencies would not be affected. The governor has repeatedly said he would scrub the budget before considering new revenue streams and said his plan could save the state at least $4 billion over the next four years. During a news conference last week, Ferguson said while he was still reviewing the proposals agencies submitted, "for the most part, agencies leaned into it." "Are there a couple of exceptions? Yes, and I've communicated back to those entities that they need to go back and give me something that I can work with," Ferguson said, declining to specify which agencies had failed to initially meet the target. Ferguson met with Rep. Drew Stokesbary, R-Auburn, and Sen. John Braun, R-Centralia, the House and Senate minority leaders, Tuesday, with the state's "broad budget issues" likely to be a main topic, Braun said during a media availability Tuesday morning. "His directive to the agencies to provide 6% reduction opportunities has been delivered, I know that they're vetting those," Braun said. Before his meeting with the governor, Stokesbary said if the Legislature were to adopt a budget with the same spending levels this year as it did in 2023, the state would have a billion-dollar budget surplus. "So it shouldn't take that much to get us back to fiscal sanity and avoid $10 or $15 billion of new taxes," Stokesbary said. First elected in 2014, Stokesbary also drew a contrast between Ferguson's administration and former Gov. Jay Inslee. "For the first time since I've been elected, we have a governor who seems to be living on the same planet as the rest of us, and a governor who wants to engage with the Legislature and improve the delivery of services that his administration is responsible for delivering," Stokesbary said. "So we're certainly not going to agree on everything, but we're going to look for those areas of agreement." During a media availability Tuesday, Senate Majority Leader Jaimie Pedersen, D-Seattle, said he met with the governor last week to discuss "a variety of issues." Speaker of the House Laurie Jinkins, D-Tacoma, said Tuesday she had not met with the governor since the first week of the session, though a meeting had been scheduled "in the next couple of weeks" and staff continue to communicate with the governor's office "quite regularly." Jinkins said Tuesday that staff continues to review the budget proposals submitted by Inslee before leaving office, included a budget plan that would balance the budget only through cuts. "So when we are going through that, it's fairly kind of devastating," Jinkins said. "The things that it cuts, everything from Medicaid dental care to kidney dialysis for people on Medicaid, lots of cuts to long-term care for seniors and folks with developmental disabilities, and huge reductions in terms of higher education and even K-12." Inslee separately proposed a budget balanced through an array of new revenue streams, including a proposal to tax 1% of a resident's net worth above $100 million, which the former governor said would apply to approximately 3,400 Washington residents. Inslee estimated the tax could raise $10.6 billion over the next four years.
