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State budget debate enters the fourth dimension
It costs nothing, contains no calories and is organic to boot. Plus it will solve an impasse in budget negotiations.
In short, it involves using local sales and use taxes. Currently those taxes are passed through the state general fund to a separate account, where they build up before being distributed to local governments at the end of each month. The state estimates that, for various reasons, there are currently two months worth of collections in that account.
Lawmakers instead want to keep the money in the general fund until it's time to send it to local governments.
State officials say the simple act of keeping the money in the general fund would boost the state balance sheet by $238 million.
They also say the money will still be sent out to local governments on time.
The question that keeps coming up is this: If the money is already committed to local governments, can the state really spend it?
Here are excerpts from an interview I had today with Assistant State Treasurer Wolfgang Opitz.
Can they (the Legislature) spend that money?
"What they are doing is writing a budget and creating appropriations. This is an important thing to work through. The state of Washington treats revenue received as cash. So for the biennium, 2011-13, we count only that which is received by June 30th, 2013 for the 24 months. That's the revenue we estimate is available to spend. When we write budgets and create appropriation authority against that resource, we set appropriation authority that includes all the bills that will have to be paid for expenses that are incurred during that biennium. That's the distinction between treating revenue on a cash basis and expenditures on an accrual basis."
But can the state spend that money?
"The state is not spending the local money. The state is creating appropriation authority against available resources that the state has within the biennium. That appropriation authority has to cover the expenditures, the spending out we do in the biennium and all expenses occurred within the biennium."
I'm just asking, is this real money that can be spent.
"It's real money and the state can make real appropriations for the fiscal period based on resources available."
So is that a yes, that this money can be spent?
"You're being very literal, like that exact dollar has to be treated only as a certain fund in a certain fund all the time, and that's not the case. What the Legislature is doing is deciding what level of appropriations it can make in the budget. What spending authority it can give all the agencies in the budget. It's deciding what resources it has available with which to support those appropriations."
I've decided this is all happening in a fourth dimension that cannot be perceived.
"It kind of is, but kind of not. What you are trying to do in working this out is decide how much working capital you have to reserve to allow for liquidating those accruals you are going to create when you appropriate."
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