Comparison of Budget Agreement to House and Senate Budgets

The overall structure of the 2009-11 budget agreement, the details of which were released today, is similar to previous proposals from the House and Senate, although there are key differences in how the budget cuts are distributed. The table below gives an overview of the total cuts and a comparison with the previous House and Senate budgets.


For more details, click here.

Accessing Federal Stimulus Money for Unemployment Insurance

Like many states in the nation, Washington is facing the problem of growing unemployment. Over the next year, the Economic and Revenue Forecast Council has projected that the state unemployment rate will rise to ten percent, the highest level since 1983.

As the economy falters, the need for a robust state Unemployment Insurance (UI) program grows. In recognition of this need, the American Recovery and Reinvestment Act includes provisions (a.k.a. the UI Modernization Act) to update and improve state UI programs. Here in Washington, the new federal dollars could bring in over $150 million, money that would provide a direct boost to the state economy.

States have to meet certain criteria in their UI policies in order to draw down the extra federal money. Currently, Washington is eligible for one-third of its total allotment. In order to access the rest of the money – nearly $100 million - Washington must make two meaningful improvements to our state policies.

The Legislature is already moving to adopt one reform – allowing unemployment benefits for workers who must leave their job in order to follow a spouse who has obtained new employment. There are two options being considered in the Legislature for the other policy change that would allow us to receive the remaining federal funding. They are:

- Expanding eligibility for people who can only work part-time hours
- Extending benefits to all UI recipients who participate in worker training programs

Part-time
Washington currently allows eligibility for some unemployed workers who are seeking part-time work, but the state’s policies are too restrictive to meet the federal criteria. As it stands, Washington only allows benefits for workers seeking part-time work if they were previously employed for 17 hours or less per week. Laid-off workers that were previously employed for more than 17 hours per week must be available to work full-time hours or lose their UI eligibility.

In order to qualify under the federal criteria, Washington would need to change its part-time eligibility rules to include workers who seek employment of 20 hours per week or more. This change is expected to particularly benefit lower income and women workers.

Worker Training
The extension of UI benefits while recipients are in worker training programs is important because it enables people to develop skills in areas of employment with high demand and it can set them on a path for higher wages in the future. The state has already committed to some policy changes regarding extended benefits for UI recipients in worker training programs. As of September 2009, eligibility will not only include those who work in declining occupations, but also honorably discharged military veterans, people who have been injured and can no longer do their previous work, and lower income workers.

But in order to meet the federal criteria, our program will have to be even more inclusive and easier for UI recipients to navigate. The changes would mean many more unemployed workers would have access to twice the number of weeks of benefits – up to a year as long as they remain in a training program.

The House and Senate Budgets: Different Priorities?

Like the Senate budget, the House budget contains deep cuts to core public investments. Much of the focus of the conversation today has been about the differences between the two. One emphasizes access to workforce training programs. The other, helping maintain a basic standard of living for people who cannot work due to disability. And so on.

But the differences in priorities are less striking than the fact that they both demonstrate one prominent priority: budget cuts over tax increases. On that, they agree.

As the graph below shows, the budgets are essentially identical in terms of the total size of the cuts, the total amount of new resources, and the size of the ending fund balance.*


So maybe the differences between the two budgets is a distraction from the real question: is either one consistent with Washington State's values? Policymakers should offer a third option, one where we agree together to sustain smart investments in education, health, community, and security.


*These graphs show the change in the near-general fund balance sheet. They do not include federal recovery funds. The two budgets use different assumptions about federal money that will have to be ironed out; more on that tomorrow.

House Budget Proposal: Comparison with Governor and Senate

Today, the House released its version of the 2009-2011 budget and supplemental budget for the current biennium.

In their press conference, House budget writers acknowledged that our state’s fiscal problems are too big to be solved with an all-cuts approach. The lasting damage to Washington families and infrastructure by deep cuts will harm our ability to recover when the economy bounces back. In doing so, they noted that they recognized the reasonable approach includes raising revenue.

We are providing this side-by-side (it is an Excel spreadsheet) comparing the three budgets that have been released so far (Governor, Senate and House). It’s not a comprehensive list, but it does point out many of the key differences.

The total level of spending is roughly the same (more on that later today), but there are different choices made within the budget areas: economic security, healthy people and the environment, thriving communities and education and opportunity. (See our budget analysis in the Progress Index). In particular, the House invests more in the area of economic security, while making much larger cuts to higher education.

Stay tuned for more analysis as the day progresses.

Education and Opportunity in the Senate Budget

Every child, teenager, and adult deserves access to a high quality education that opens doors to new opportunities and prosperity. In recent years the state has made significant investments in ensuring an equitable education system in our state. These investments can be seen in early childhood education, elementary and high schools, and in our institutions of higher learning.

In the area of Education and Opportunity, the Senate budget:

Early learning

• State pre-school program slots (Early Childhood and Assistance Program) are reduced by 2 percent where programs are co-located with Head Start, potentially achieving a no-net reduction in pre-school slots statewide by taking advantage of new federal Head Start funding.
• Other initiatives that improve the quality of care are eliminated including referral for child care, a wage ladder for child care workers, and supports for families, parents and caregivers.

K-12 education

• A 93 percent cut to the voter-approved program that funds school district class size reduction, extended learning, early learning, and professional development.
• A 75 percent cut in the funds that are used to help equalize school funding across wealthier and poorer districts.
• A reduction in instructional staff for students in grades k-4
• A suspension in voter-approved cost of living adjustment for education professionals.

Higher education and workforce development

• Community and technical colleges see a 9% reduction in funding which would require tuition increases of 10% without other revenue
• Public universities see a 19% reduction in funding which would require tuition increases of 14% without other revenue

Eight Point What? Your Guide to the Deficit Numbers

Senate leadership has announced that they will release their budget proposal on Monday morning. There's much confusion over the size of the deficit they will need to close. The slideshow below will hopefully make things easier.



As noted in the slideshow, the total shortfall (the difference between revenue and the maintenance budget) is about $8.1 billion. This does not include additional baseline items often included in deficit estimates.

The legislature has already made about $600 million in cuts.* Assuming they also use the Rainy Day Fund and take the necessary policy steps to access all the available federal funds, the remaining deficit that will need to be closed through spending cuts, revenue increases, or budget gimmicks is roughly $3.9 billion. This estimate does not include leaving a modest account balance.

We will update our numbers once the Senate releases the budget on Monday.

* Immediate cuts from HB 1694 were $635 million. However, federal recovery funds offset $338 million of those cuts, so those cuts are included in the $2.9 in federal funds. The reduction in baseline spending for 2009-11 is estimated to be about $300 million.

Sources: Senate Ways & Means and Office of Policy Research (in particular, see http://www.leg.wa.gov/documents/opr/2009/WAYS_BriefingBook.pdf). Many thanks to Kriss Sjoblom from the Washington Research Council for his help with these numbers.

House Proposal Makes Deep Cuts; Comparison With Governor's Proposal Difficult

The House Ways and Means Committee will hear the House Democrats' supplemental budget proposal (PSHB 1694) this afternoon.

Three important things to note:

• The House proposal does not assume any maintenance level changes, making comparisons with the Governor's proposal potentially misleading.

• The House proposal reduces the current budget by $172 million more than the Governor’s supplemental budget.

• Both budgets assume the same level of federal stimulus money (assumptions that may be too low given recent developments in D.C.); the House proposal assumes less total federal contribution.

The table below summarizes the key big-picture components of the House Democrats' proposal and the Governor’s proposal. Details follow.


The House proposal does not assume any maintenance level changes

Caution should be exercised when comparing the House proposal with the Governor’s supplemental proposal. Here’s why: the Governor’s budget follows the standard maintenance level approach to supplemental budgets while the House proposal does not.

The maintenance budget is intended to account for changes in the cost of doing what we’ve committed to doing in the current budget. The most significant maintenance budget changes are public school enrollment, enrollment in medical assistance programs, and corrections caseloads.

For example, the state now expects over 1,700 more students in the current school year then was expected when the current budget was passed. Because the House proposal does not account for the increased enrollment, it already starts with a reduction in services. The same money has to be spread between more students. So, for example, while neither budget explicitly proposes cuts in the general apportionment (the primary pot of state money for local school districts), the House proposal would actually spend $21 million less than the Governor’s proposal. In total, the House proposal would spend $44 million less on K-12 education than the Governor’s budget.

In medical assistance, the House Democrats propose $160.1 million in cuts, compared to $164.7 in the Governor’s budget. But that difference is misleading. Because of the lack of a maintenance level in the House proposal, it would spend $70 million less than the Governor’s proposal.

The House Democrats propose deeper cuts in total than the Governor's proposal

While there are important differences within certain programs, the 2007-09 state budget would be $172 million lower under the House proposal than under the Governor's budget. The bulk of the difference is in the three areas where the Governor responds to caseload increases and makes significant maintenance changes: medical assistance, public schools, and corrections. (see graph below).


Both budgets assume federal stimulus; the House proposal assumes less total federal contribution

Both budgets assume that $205 million in state Medicaid spending will be replaced by federal funds made available in a federal stimulus package. Prospects for significant federal funding are good and funds may be much more than initially anticipated. We'll be posting more on that soon. See Joe Turner's post in the meantime.

Both budgets also assume that $133 million in federal contingency funding for TANF will be available to allow for an equal reduction in state spending.

While both budgets assume the same new Medicaid and TANF funding, the House proposal assumes $92 million less in total federal funding. This seems to be largely because lower health care spending in that proposal would result in lower federal contribution.

Data comes from the Washington Fiscal Information website. The title of this post has changed since first published.

Five Facts About the Economy and Deficit Fact 5: The Deficit Is Already Here

Most of the focus around the budget deficit has been on the next biennium (the two-year budget cycle that will begin on July 1). It’s easy to overlook the fact that we have a deficit right now, estimated to be about half a billion dollars.

It's time to stop overlooking the current deficit. Despite the fact that the legislature has not yet passed a supplemental budget to deal with the current deficit, the Governor has already been ordering cuts in spending. And legislative leaders are weighing in. Yesterday, Senate Democrats proposed $105 million in cuts for the current biennium and House Democrats have signaled that they are working on $300 million in cuts.

When the Governor released her budget proposal in December, the documents outlining the supplemental budget were light on details, with most cuts being grouped into very large categories. For example, in the budget for the Department of Social and Health Services, there was a $55 million cut labeled only "Governor-Directed November Reduction."

Additional information is becoming available. Not surprisingly, the details are important. Hiding in the "November Reductions" are numerous cuts like the elimination of funding for Adult Day Health and an increase in child care co-pays for lower income working parents.

A good place to find the details on the Governor's supplemental proposal is on my new favorite website: Washington Fiscal Information. It's not for the faint of heart (and doesn't seem to work well in Firefox), but you can create spreadsheets with detailed budget comparisons by accounts, sources, and agencies. We'll keep putting up more information on the supplemental budget as it develops.

Well, that's the end of our first "special series." Let us know what you think and what you'd like to see next.

***

As an aside, Adam Wilson's blog has a video that you won't see in other coverage of the Senate Democrats' press conference.

Climate Change Fairness in the House Ecology Committe

Our executive director Remy Trupin made a presentation today to the House Ecology and Parks Committee work session on ensuring that climate change policy protects lower income consumers.

During the work session, Representative Upthegrove talked about a letter that was sent to the Governor last summer calling for equitable action on climate change. It was signed by a broad coalition of environmental, faith, and social justice organizations.

Alan Durning from Sightline also presented alongside Remy. Alan has written a useful primer on cap and trade policy. Sightline is one of the many organizations we've been working closely with to develop smart policy solutions to the problem of climate change.

Legislative Session Starts, Lawmakers Look to D.C. for Help

The legislative session started today. As we’ve discussed, this session carries with it the challenge of overcoming the largest deficit in decades.

But as Brad Shannon pointed out yesterday in The Olympian, lawmakers also face another enormous challenge: how to "leverage spending to increase jobs, avoid layoffs and spur economic growth."

One strategy of the economy-boosting agenda is to coordinate state plans with programs for economic stimulus that will come from the federal government under President-elect Barack Obama. Shannon's article contains detail on the plans of legislative leaders.

The word from D.C. is that aid to the states is likely to come in the form of block grants and possibly through expanding existing programs that funnel money to transportation or wastewater projects, Shannon says. Gregoire’s list to Congress included $132.9 million for transportation projects and $352.7 million in water and sewer projects.

Federal aid may still be a few months away.