Much of state windfall likely to backfill budget

OLYMPIA — State officials now expect to get nearly $5 billion in aid from the federal stimulus package passed by Congress on Friday.

Budget writers hope that up to half the money could be used to help offset a multibillion-dollar shortfall in the state budget.

The governor's office said it's good news, but the federal money won't solve the state's problems. It might not even reduce the state's current budget shortfall, projected at nearly $6 billion.

That's because the economy keeps getting worse. In fact, the state may end up using much of the additional federal money just to backfill a continuing decline in tax revenues.

That means state lawmakers would still have to slash billions from the state budget. Or send a tax package to voters for approval, an idea that's been floated but hasn't been discussed seriously in public.

Gov. Chris Gregoire's proposed $33.5 billion, two-year budget would cut about $3.5 billion in funding for public schools, social services and other areas to help close the biggest budget shortfall in state history. She's ruled out tax increases.

Only a part of the federal aid can be used to help balance the state budget because large chunks of money are targeted at specific programs.

Based on one analysis the governor's budget office is using, the state would get more than $230 million in federal aid for special education in public schools. That represents roughly a 14 percent increase in funding at a time when other parts of the budget are getting deep cuts. The money cannot be shifted to other programs.

"We're looking at some of these things saying, 'How can we use it in a way that doesn't create a problem in a couple of years?' " said Victor Moore, the governor's budget director. "So you can buy equipment, or training, or other things that don't create ongoing obligations."

Other pots of federal aid dedicated to specific areas include $512 million for state highways and bridges, $201 million for public transit and $80 million for weatherizing homes.

The biggest chunk of money that can be used to help balance the budget is about $2 billion for Medicaid. Washington also expects to get approximately $835 million in "stabilization funds" for education. The governor's office expects that some of the money can be used to deal with cuts in state funding for education.

Overall, the state expects to get around $4.7 billion from Congress.

The next state revenue forecast is scheduled for Thursday. That will let lawmakers know how much larger the state budget shortfall has grown and whether it will suck up all the federal aid.

Andrew Garber: 360-236-8268