State of the State: Washington in 2011

This is the last of a ten-part series on the 2011 State of the State (SOTS) speeches in states with the ten worst projected relative budget deficits for FY 2012. Budget data is from the Center on Budget and Policy Prioritiesâ?? (CBPP) recent budget report, and SOTS speech text is from Stateline. CBPPâ??s data on statesâ?? FY 2012 budget deficits as a percentage of their FY 2011 budget is the benchmark for relative budget deficits.

According to CBPP, Washington has the tenth worst relative budget deficit in FY 2012, equaling 18.5 percent of the stateâ??s FY 2011 budget; and the eleventh highest absolute budget deficit in FY 2012, amounting to $2.9 billion.

On January 11, 2011 Washington Governor Christine Gregoire delivered her SOTS address (available here). She begins by comparing the stateâ??s current economic downturn to the conditions during the Great Depression, she also highlights several major companies that have survived and thrived in Washington. Below are the policy highlights from Gov. Gregoireâ??s SOTS:

  • Spending Cuts: Gov. Gregoire suggests cutting future spending by reforming entitlement programs and streamlining government, which is detailed below in the Government Reform section.
  • Economic Development: She advocates for leveraging the Public Works Trust Fund to finance projects to modernize the state’s infrastructure.
  • Government Reform: Gov. Gregoire clearly states that policymakers need to get control of spending in pension and health care costs, saying health care costs have doubled in the past decade while pension costs are projected to double in the next biennium. She proposes repealing a 1995 law that gave automatic benefit increases to retirees in the old PERS 1 and TRS 1 pension plans. She believes this reform will save $2 billion over the next four years and $11 billion over the next 25 years. Gov. Gregoire proposes working with the Center of Innovation (at the U.S. Department of Health and Human Services) to keep health care inflation at 4 percent over the next ten years, which would save $26 billion. Over the past two years she tasked the legislature with reducing the number of state boards and commissions, and this session she wants to consolidate state agencies. Specifically she proposes reducing twenty one agencies to nine, saving more than $20 million per biennium. She also suggests cutting unemployment insurance (a 48 percent reduction for more than 65,000 small businesses) and workers compensation rates by more than $1 billion. Gov. Gregoire expresses her desire to consolidate the stateâ??s eight education agencies into one state-level Department of Education, and recommends adopting the findings of the stateâ??s Higher Education Funding Task Force to establish a $1 billion scholarship program.

    Gov. Gregoire recognizes that Washingtonâ??s ferry system is the largest in the nation with over 23 million passengers each year, and yet it has repeatedly needed bailouts from the legislature. She asks the legislature to create a regional ferry district run by an elected board of directors to manage the ferry system that would be funded by a state subsidy, fares and regional taxing authority. She identifies the stateâ??s successful IT modernization effort and asks the legislature to create a charter agency to operate like a public utility, which she says would save the state $30 million over four years. She also proposes adopting a user fee policy to fund state parks and other services.

Policymakers in the Evergreen State face a daunting task in balancing the budget for FY 2012. Fortunately there are more choices than cutting spending and increasing taxes. States around the country are implementing innovative policy tools that are effectively reducing the cost and increasing the quality of public service delivery. Two valuable policy resources are the American Legislative Exchange Councilâ??s (ALEC) State Budget Reform Toolkit and Reason Foundationâ??s Annual Privatization Report 2010: State Government Privatization section.

For the previous articles in this SOTS series, see: Texas, New Jersey, Louisiana, North Carolina, Wisconsin, California, Illinois, Nevada, Connecticut, Minnesota and Oregon.