OLYMPIA — Washington state agencies are going through a $1.9 billion budget-trimming drill, anticipating a steep drop in tax collections because of the coronavirus lockdown.
Based on data gathered early during the state’s protracted closure, the actual revenue shortage could be $7 billion or more in this budget cycle.
As an initial precaution, the Office of Financial Management instructed most agencies to submit options for cutting 15% of their share of the general fund for the fiscal year that begins July 1.
The general fund makes up roughly half the state’s $102 billion, two-year operating budget. The state is about to enter the second year of the budget cycle.
Agencies have posted initial impressions for what will need to be cut; these estimates are gathered at tinyurl.com/Initial-WA-covid-cuts.
Washington’s options for slashing its spending during the current crisis are constrained by the state constitution and court decisions protecting K-12 education spending. Some other spending categories, such as Medicare, also are essentially off limits.
Gov. Jay Inslee’s budget director, David Schumacher, ordered the budget-cutting exercise. He said the potential cuts were a “grim list” and that he hoped federal lawmakers would note and approve more aid to the state. Inslee won’t support balancing the budget exclusively through cuts, Schumacher said.
“It’s not something this governor is interested in,” he said. “If we actually had a budget like this, it would be horrifying.”
Based on a revenue forecast in February, before the coronavirus lockdown, state lawmakers had planned to increase general fund spending by $921 million in the upcoming fiscal year that begins July 1. They increased the total budget — which includes federal money and fees the state collects for specific purposes — by $2.37 billion.
A few weeks later, Inslee vetoed $235 million in new spending because of expected drops in revenue brought on by the coronavirus shutdowns.
The current two-year operating budget is more than 19% higher than the previous one passed in 2017.
Washington Policy Center budget analyst Jason Mercier said some programs may be cut, but a 15% reduction won’t make the current budget lower than the previous one.
“Total spending won’t be less, but it might be less in certain programs.” he said.
State lawmakers will receive a new revenue forecast on June 17, telling them the size of the deficit.
The state Department of Fish and Wildlife, instructed to identify $12.8 million in cuts, included spending $162,000 less on removing salmon-eating sea lions from the Lower Columbia River.
General taxes, estates taxes and lottery proceeds go into the general fund. State agencies have other sources of revenue, including user fees.
The Department of Ecology was instructed to identify cuts totaling $4.6 million. Its two-year operating budget after the last legislative session authorized spending of up to $619.3 million.
State Department of Agriculture spokesman Hector Castro said the agency reluctantly included a $993,000 cut to the $6.2 million it will receive from the general fund in the coming year to distribute food to charities.
In all, the department had to outline ways to cut about $3 million from $20.3 million in general funds.
“It’s very difficult to hit a 15% reduction that doesn’t significantly impact all our other programs if we don’t include food assistance,” Castro said. “It’s certainly not a cut we recommend because the need for food assistance is higher than it’s ever been.”
The agriculture department also proposed cutting $995,000 it planned to distribute to state and county fairs this year. The fairs were canceled because of the coronavirus shutdown.
The agriculture department’s two-year budget was $221.1 million and Fish and Wildlife’s two-year budget was $519.7 million.