Budget forecast: Funding education without tax hikes unlikely
Gov. Chris Gregoire's financial office released a budget forecast Monday that raises questions of how education funding can be bolstered without raising taxes, a strategy touted by gubernatorial candidates.
Seattle Times Olympia bureau
OLYMPIA — A budget forecast released Monday by Gov. Chris Gregoire's financial office raises questions about gubernatorial-candidate claims that education funding can be boosted without new taxes.
Both Republican Rob McKenna and Democrat Jay Inslee have promised to pump up education spending without tax increases.
Gregoire has said she doesn't believe that's possible, and the message was reinforced Monday by her budget staff, the state Office of Financial Management (OFM).
"I'm thinking of political realities and budget realities and the uncertainties of the economy, and I can't see it today," Marty Brown, the governor's budget director, said of the candidates' promises.
The office released a four-year outlook that projects the state budget would be nearly $1.5 billion in the hole by 2015, assuming the Legislature spends all the money in the state rainy-day fund, which is supposed to be used only during economic downturns.
That figure includes inflation, increased debt payments and pay increases for teachers as well as funding to meet K-12 spending mandated by the state Supreme Court.
The court ruled earlier this year that the state isn't meeting its constitutional obligation to amply pay for basic public education.
OFM projects that just meeting the court requirements would cost about $1 billion more than the state has on hand in the next two-year budget — and that amount would grow to almost $2.6 billion in the following budget cycle. Expenses such as cost-of-living increases for teachers and restoring state-worker pay that had been cut in previous budgets would cost even more.
McKenna last week said that, as governor, he would cap the growth of all non-education state spending at no more than 6 percent per biennium, while state revenue would increase about 9 percent per biennium. His projection for revenue growth roughly matches OFM estimates.
He said the difference between revenue growth and non-education spending increases would fully fund the court mandates for K-12, and more, over time. Plus it would provide additional money for higher education, he said.
Inslee also has promised to increase funding for schools without increasing taxes, but has not gone into as much budget detail as McKenna. Inslee essentially says his administration would boost economic growth, and corresponding tax collections, enough to cover the costs.
There's some wiggle room in the OFM forecast. Some of the costs included by OFM have been delayed or suspended in the past by the Legislature, due to budget shortfalls.
For example, it forecasts Initiative 732, which provides cost-of-living raises to teachers, would cost almost $300 million in the next budget. But lawmakers haven't funded the initiative since the 2008-09 school year.
However, the forecast also shows some large budget items are expected to grow faster than McKenna's proposed 6 percent spending cap. Payments on state debt, for example, are projected to grow 12 percent a biennium, costing the state an additional $180 million in the next two-year budget.
Medical costs, including Medicaid, are expected to increase more than 8 percent every two years, costing an additional $280 million in the next budget.
Holding non-education increases to 6 percent a biennium would mean reducing state services, such as medical assistance, Brown said.
McKenna disagreed with Gregoire and her budget office.
"The old way of doing things just assumes that everything in the budget today deserves to be there next year," he said in a statement. "My approach will be to make real reforms in state government, instead of the halfhearted measures we saw out of the Legislature last session."
McKenna has said he'd push to cut costs in health care for the poor by encouraging more clients to move to health-maintenance organizations and other types of managed care. He's also said he'd intensify efforts to encourage state workers to switch to less-expensive, consumer-directed health-care plans that offer lower premiums with higher deductibles.
His plan also expects savings by reducing the government workforce through attrition and using more competitive state contracting.
Inslee has talked about freeing up money for education in part by making state government more efficient, closing corporate tax breaks that don't create jobs, and reducing the overall cost of health care by emphasizing preventive care.
His campaign released a statement Monday saying OFM's outlook "should serve as a wake-up call to anyone relying on overly rosy revenue projections to fund education. Long-term economic development is the only way to guarantee long-term, stable funding for education and the other priorities of our state."
This story contains material from The Seattle Times archives.
Andrew Garber: 360-236-8266 or email@example.com.