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Originally published August 8, 2011 at 7:26 PM | Page modified August 9, 2011 at 9:39 AM

Gregoire tells state to get ready for more cuts

Just a couple of months after signing a two-year budget that slashed about $4 billion from state spending plans, Gov. Chris Gregoire has told state agencies to get ready for another round of cuts.

Seattle Times political reporter

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Just a couple months after signing a two-year budget that slashed about $4 billion from state spending plans, Gov. Chris Gregoire has told state agencies to get ready for another round of cuts.

Citing ongoing economic worries, Gregoire on Monday ordered agency directors to prepare for cuts of up to 10 percent — or $1.7 billion.

Gregoire notified state employees in a mass email. "Trust me, I continually wish I had better news to share," she wrote. "But as those on the front line representing our state in these most difficult of circumstances, it is essential that you be informed of the challenges ahead of us."

Marty Brown, Gregoire's budget director, sent a memo to agency directors telling them to prepare a list of how they'd deal with spending cuts of 5 or 10 percent.

"I recognize this is a daunting task," Brown wrote, noting how little time had passed since enactment of the current 2011-13 budget. He said agencies should assume cuts would start no later than January.

The news raises the possibility that a special session of the Legislature will be called later this year to steer the cuts.

Gregoire will decide whether to call a special session after the next state revenue forecast in mid-September, Brown said in an interview.

If a special session is required, key legislative budget writers say they'd prefer to work out a budget framework in advance — much like they did before the one-day special session called last December to plug a $700 million budget shortfall.

"We may need a special session. That's not clear to me," said Senate Ways and Means Chairman Ed Murray, D-Seattle. "But we need a plan and an agreement before we call everyone in, to the extent that is possible."

Murray said the prospect of even more cuts might lead Democrats to weigh putting a tax package of some kind before voters. "This is no longer an issue of spending. This is clearly an issue beyond our control because of the national and international scene," he said.

Sen. Joe Zarelli, R-Ridgefield, the ranking Republican on the budget panel, agreed a special session may be needed, but said he didn't see tax increases as the answer. "What tax can you raise that could make any difference that wouldn't have an impact on job creation and the economy?" he asked.

The new talk of budget cuts comes scant months after the Legislature ostensibly finished writing the $32 billion 2011-13 state budget. Lawmakers approved that budget in May after months of wrangling, including a 30-day special session called to complete work when a deal couldn't be reached in the 105-day regular session.

On June 15, a somber Gregoire signed the budget plan, which closed a budget gap of $5 billion between expected revenue and expenses by cutting more than $4 billion from spending — including pay reductions for teachers and suspension of an initiative aimed at lowering class sizes — and shifting money from various accounts.

State support for colleges and universities was slashed, leading to steep tuition increases.

The 2011-13 budget left more than $730 million in reserves, but that cushion swiftly evaporated when the June 16 revenue forecast projected a further drop in tax collections. The state now has about $160 million in reserves, not enough to absorb any significant downturn in revenues, Brown said.

The national picture has only gotten more uncertain since then — leaving the state with no option but to get ready for more bad news.

"Everything is jittery right now," Brown said.

Jim Brunner: 206-515-5628 or jbrunner@seattletimes.com

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