| 2005 POLICY HIGHLIGHTER | ||||
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December 21, 2005
Gregoire supplemental ends charade of state spending limit
By Jason Mercier
On December 20, 2005, Governor Christine Gregoire unveiled her 2006 supplemental budget that included $503 million in new spending. Though she claims the budget reflects fiscal restraint, it exceeds the I-601 spending limit (adopted November 21, 2005) by $914 million and forecasted revenue by nearly $120 million (not including $591 million in appropriations to new accounts). If the governor's supplemental is adopted, the Office of Financial Management projects a $1.7 billion deficit by the 2009-11 biennium.2006 Supplemental Budget Outlook
(All dollars in millions)
| 11/21/05 adopted I-601 limit* | $26,133 |
| Gregoire 2005-07 expenditures | $27,047 |
| Difference | $914 |
*Exceeds original 2005-07 limit by more than
$1 billion
| November 2005 revenue forecast | $26,335.7 |
| Gregoire 2005-07 expenditures* | $26,455.4 |
| Difference | $119.7 |
*Does not include $591 million in planned appropriations to new accounts
OFM 2009-11 Budget Outlook Based on Gregoire Supplemental
(All dollars in millions)
| Forecasted revenue* | $31,735 |
| Forecasted expenditures | $33,457 |
| Difference | $1,722 |
*Assumes five percent annual growth after 2007
Not only is the governor's supplemental proposal fiscally unsustainable, some
of her "targeted investments" call into question her commitment to
Priorities of Government (POG) budgeting. POG is based on all potential activities
being weighed against each other to create a buy list of programs to purchase
within forecasted revenue, based on meaningful performance outcomes. This means
that as new priorities are added to the buy list, others fall off. Also, a supplemental
budget is supposed to address unforeseen emergency spending. With that in mind,
consider some of the non-advertised supplemental expenditures:
I-601 Shenanigans
Not withstanding the fact the legislature artificially increased the state's
spending limit by more than $1 billion last session, the governor's budget further
utilizes budget gimmicks to get around the limit adopted this past November.
Instead of placing all the revenue left over following her $503 million spending increase in the state's restricted emergency reserve fund (2/3 legislative vote necessary for use), the governor creates two new accounts. The new accounts—Economic Stability Account (ESA) and the Pension Funding Stabilization Account (PFSA)—then receive appropriations of $464 million (ESA) and $176 million (PFSA) from the General Fund State (GFS). The governor then appropriates $49 million from the new PFSA to pay for pension costs in various agencies.
The governor then uses sections 903 and 904 of her supplemental appropriation bill to amend I-601.
Section 903 specifies that the GFS appropriations to the ESA and PFSA are to be used to calculate the state's fiscal growth factor under I-601 (increase the spending limit). However, Section 904 states that the appropriations from the GFS to these accounts "are not to be included in the calculation of expenditures from the state general fund for the purpose of determining whether expenditures exceed the expenditure limit."
The amendment of I-601 by Section 903 uses the $640 million in appropriations to these new accounts to artificially increase the spending limit. Then, the I-601 changes in Section 904 attempt to prevent these expenditures from counting against the spending limit. This is blatant disregard for the people's desire to limit state spending.
Conclusion
The governor's 2006 supplemental budget is not fiscally sustainable, does not
follow the principles of POG, and exceeds the voter-approved I-601 spending
limit. The state's fiscal health now rests on the legislature's ability to produce
and adopt a responsible, prioritized budget not held together by accounting
gimmicks.
Additional Information
Gregoire’s
budget drives another nail into the coffin of priority-based budgeting
Transparent
and accountable budget within reach
Jason Mercier serves as a voting member on the American Legislative Exchange Council’s Tax and Fiscal Policy Task Force and is often consulted by media outlets and legislative staff for issue briefs and policy analysis. He is the author or co-author of numerous policy highlighters and in-brief reports. His editorials have appeared in newspapers and magazines including The Washington Post and on FoxNews.com. Jason served on the board of the Washington Coalition for Open Government (2005-06) and remains a liaison for the board. He is a contributing editor of Heartland’s Budget & Tax News. Jason served as an advisor to the 2002 Washington State Tax Structure Committee. He received a B.A. in Political Science from Washington State University.
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| Contact: Jason Mercier | | | Director, Economic Policy Center | | | (360) 956-3482 |
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