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.

Senate Budget Proposes Devastating Cuts to Basic Health

Basic Health is a core component of the state's commitment to ensuring affordable access to health insurance for all Washingtonians. It is more important than ever in this economy.

The Senate budget proposes reducing the number of people receiving health insurance through Basic Health from 100,000 to 60,000 (see graph).


Often, cuts in Basic Health are reached by closing enrollment; when people leave the program, the state does not open that slot for new applicants. By doing so, the state restricts the availability of public health insurance, but does not immediately kick people off the program.

Contrary to some claims, it is unlikely that limiting new enrollments and other measures will be enough to cut enrollment to 60,000. The Senate budget documents acknowledge this by giving the Health Care Authority the ability to "disenroll" members with incomes as low as $18,310 (for a family of three).

Senate Budget Impairs Economic Security

The state is facing a deep recession and state programs that provide economic security are more important than ever.

In the area of Economic Security, the Senate budget proposal:
• Creates new barriers for families that need assistance in moving into the labor market
• Significantly reduces cash assistance to adults with disabilities that are unable to work

One of the key resources for Washingtonians in poverty is the WorkFirst program. This program is intended to provide cash assistance to families while helping them find and maintain employment. However, the obstacles to finding employment are significant in the current economic climate.

The Senate and the Governor both propose a $68 million cut to the WorkFirst program. The Governor reduces the number of families served, including punitive measures that terminate benefits. The measures the Senate is proposing to reduce funding for WorkFirst are not clear, but both proposals do not respond to the increased need for assistance and the increased difficulty of moving into the labor market. In addition, it is unclear whether this policy change will jeopardize additional federal funds that are assumed elsewhere in the budget.

General Assistance financial benefits for adults who are unable to work because of disability were eliminated in the Governor’s proposal. The Senate has a 15 percent smaller cut, and anticipates 6,000 clients will not be able to receive assistance by the end of the biennium.

As the Budget & Policy Center digs further into the Senate budget proposal we will publish short pieces on each of the following budget areas: economic security, healthy people and the environment, thriving communities and education and opportunity. (See our budget analysis in the Progress Index)

Senate Budget: Bold Action Needed

The Senate budget will be released today, three months after the Governor’s proposal. The Senate version is unlikely to offer a new vision for solving our state’s historic budget deficit in a way that is consistent with the state’s values. Rather, it is expected to be a new version of the same all-cuts strategy.

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. The path to a just and equitable society is not paved by dramatic budget cuts that leave hard working Washingtonians with no health insurance, ambitious students with less access to college, and people who are unable to work with few options for financial security.

Instead, we need leadership from our policymakers that includes bold action on raising the revenue necessary to invest in education, community, health, and security. Washington’s households and businesses need these public investments in order to weather the economic storm and prosper as the economy recovers.

We'll be posting analysis on schmudget throughout the day, so stay tuned.

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.

Green Jobs and the Economy

Last year, the State Legislature passed, but did not fund, the Climate Action and Green Jobs law.

Investing in green jobs is an important part of a strategy to strengthen our economy. Coming out of the recession, we will need a trained and qualified workforce earning living wages and participating fully in the economy. Training those workers for growing targeted industries such as renewable energy is smart for the economy and good for the environment.

The green jobs initiative would include the creation of pilot green industry skills panels to ensure that trained workers will be able to meet the needs of local industry. It also calls for an increase in the opportunity grants program for green industry training to provide tuition assistance and support services for lower income students as well as funding for curriculum development in this sector.

Many of these initiatives would not be new programs. Community colleges across the state already have existing wind, solar, and biofuel programs that could be scaled up. Federal money is expected to help states embrace the green energy movement. State investments in this area could be used to leverage money from the federal stimulus package.

The need for investments in community colleges and training is especially great during a recession. The graph below shows what happened to enrollment in workforce training programs during the last recession - it rose sharply along with the state unemployment rate.


Funding the green jobs bill would not be enough to offset the deep cuts in community colleges in the Governor's 2009-11 budget proposal. These cuts would place limits on enrollment, raise tuition, reduce classes and services and diminish the ability of lower income workers to prepare for and find jobs in the new economy.

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.

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

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.