State finds itself $1 billion short Bad economic news goes beyond Sept. 11

Richard Roesler - Staff writer

OLYMPIA _ Say your bills add up to about $23,300 a year.

But your income's only $21,200.

No credit cards. And your boss isn't likely to give you a raise, not in these tough times.

You wangle $200, just this once, from your rich Uncle Sam. And you tap your fast-shrinking savings account for about $650 more.

But you're still short. A lot.

So you look at your bills, and you start cutting.

Multiply all those numbers by a million, and that's the problem Washington's government faces. The state's two-year budget, built in better times and approved last summer, is likely to be more than a billion dollars short.

"Clearly, we don't have good news this morning," state economist Chang Mook Sohn said Tuesday in Olympia, announcing that the state likely will collect $813 million less revenue -- taxes, fees and interest -- than it expected. Tack on unexpected costs for state-paid medical care, negligence lawsuits, more students in schools and more prisoners, and Sohn projects the budget shortfall at about $1.25 billion.

"As they say in top-40 radio, the hits just keep on coming," sighed Gov. Gary Locke's budget director, Marty Brown.

The bad news wasn't unexpected. Brown weeks ago ordered half a dozen major state agencies to suggest ways to cut up to 15 percent from their budgets.

The state also has frozen the money for scores of construction projects, including $2 million in hoped-for work on Spokane's downtown Fox Theater. Under Tuesday's revenue forecast, the state doesn't have the money to pay for about one-third of those projects.

Brown said the Legislature's probably going to have to decide what to do with the projects. If so, it easily could be January before any of those projects proceed.

"No, we're not going to kill them," he said. "We're going to look at ways to release them, sometime."

There is some room for hope, though, even in the short term. The state pays for those construction projects by selling bonds. Interest rates are lower now, so the state can sell more bonds.

State law limits the amount of money spent on those bonds to 7 percent of the state's income. If lawmakers agree to boost that limit just slightly, to 7.2 percent, Senate Majority Leader Sid Snyder said, the state could afford all of the projects.

Another reason for optimism: simple politics. Lawmakers are eager to protect hard-won projects back in their home districts.

"I think it's going to be a priority for the Legislature to get in there and un-freeze that list," said Rep. Jeff Morris, D-Sedro Woolley.

Locally, folks whose projects hang in the balance can do little but wait.

"I look at this as a speed bump. We need to keep going forward," said Dennis Schuerman, a retired school principal who helped win a $2 million commitment from state lawmakers to help build an environmental education center at Chewelah Peak, north of Spokane. It took six years of lobbying.

A large part, but not all, of Washington's budget woes stem from the Sept. 11 terrorist attacks. State officials expect Boeing to lay off 27,000 workers in Washington, with another 20,000 spinoff jobs lost. And a typical Boeing worker earns $63,000 a year, Sohn said, nearly double the state average.

Even before the attacks, though, the state budget already was about $500 million short, due to those unexpected costs for more school children, prisoners, medical bills and lawsuits. It also balanced the books by taking about $650 million from the state's savings.

"We told them (the Democrats) that this was going to happen," said Sen. Jim West, R-Spokane. "The suggestion that somehow all this happened since Sept. 11 is false. This whole thing was a disaster waiting to happen."

Budget author Sen. Lisa Brown, D-Spokane, couldn't be reached for comment Tuesday.

Part of the budget problem also stems from citizen's initiatives, which stripped away millions of tax dollars and put them back in taxpayers' pockets. Other initiatives are forcing the state to spend hundreds of millions of dollars more to hire teachers and pay them more.

Some lawmakers say voters cast their ballots without knowing the economic impacts they're forcing.

West predicts substantial cuts to state programs once state lawmakers return to Olympia in January.

"There's lots of things that are nice to do but not necessary to do," he said. "People are going to predict the end of the world. But this, too, will pass."

-- Anonymous, November 21, 2001