State faces $1 billion shortfall

The Washington State Legislature is facing at least a $1 billion shortfall in the current budget and that is likely to affect programs and services in Oak Harbor as well as throughout the state, said Rep. Barry Sehlin.

And, it could get worse if Initiative 747, which would limit property tax levy increases to one percent per year, passes in the upcoming general election Nov. 6.

School districts, Island Transit, and the Oak Harbor office of Department of Social and Health Services could be affected by budget cuts, although at this point the exact ramifications are unclear.

Sehlin, a Republican from Oak Harbor, said that the budget approved by the legislature, and which went into effect July 1, was faulty from the beginning, as it continued a trend of the state spending more than it takes in. The downturn in the American economy, and the economic effects of the Sept. 11 terrorist attacks, make the state budget picture even more challenging.

“In the last session of the legislature, which put together this budget, the legislature was ultimately unable to make some of the tough decisions that had to be made,” Sehlin said in an interview on Thursday. Funding cuts needed to be made in order to keep spending in line, and they were not.

Sehlin said that he and the caucus with which he is associated did not support the budget nor did they vote to approve it. The caucus, Sehlin said, was made up of all the Republican representatives of the House, which is split 49 Republicans and 49 Democrats.

However, Sen. Mary Margaret Haugen, a Democrat from Camano Island, defended her support of the budget, saying at the time she did not want to cut important programs and services.

“I think most of us felt that the economy was not going to go into the tank like it did,” Haugen said Thursday. Also, no one could possibly predict the horrific events of Sept. 11, which Haugen thinks is having a great negative impact on the economy in the state of Washington.

At the time of the legislature’s passage of the current budget, Haugen realized that the state would be spending far more than it took in.

“I thought the risk was worthwhile,” Haugen said.

Haugen is the chairperson of the Transportation Committee, which she said is facing a $100 million shortfall alone.

“We’re going to have to cut some programs,” Haugen said. Unless, she said, there is a way to generate more revenue for the state.

“I think we do have to go in there and raise the gas tax ... I know that’s not popular with some of my colleagues,” Haugen said.

In order to meet budget expectations and additional expenditures and expenses that come along, the state will need to tap into general fund reserves and emergency fund reserves, Sehlin said.

Therefore, Sehlin said, the “real hole” in the budget equals about $1.4 million. “You can’t go and leave no reserve,” he said.

The state concluded the last budget period, which covered July 1999 through the end of June 2001, with nearly $700 million left in the general reserve fund. The plan for the current budget was to tap into those reserves by spending more than the state takes in, leaving the reserve fund with a balance of $161 million as of June 30, 2003. The problem, Sehlin said, is that everything is costing much more than expected, and the state will take in less money than anticipated.

The bottom line is that a billion dollars has to come from somewhere, Sehlin said, and the two biggest pieces of the state budget pie are K-12 education funding and funding to the various programs and services administered by the Department Social and Health Services.

The nearly $23 billion two-year budget covers the period from July 1, 2001 through June 30, 2003. Since the first year’s money is already spent, the $1 billion cuts will need to come from second year’s spending, or about $11 billion. Of the $11 billion slated to be spent in the fiscal year July 2002 to June 2003, about $8.5 billion is earmarked for public schools and DSHS.

“More and more, human services is medical care,” Sehlin said, noting that the public often perceives the department as only providing “welfare” payments. DSHS is the department that runs nursing homes, low-income senior citizen medical care, long-term care, mental health care, and programs for the developmentally disabled. Additionally, the Department of Corrections is under DSHS as well.

Sehlin said it is too early to tell which programs and services may be affected. The legislature will work on revisions to the budget once it is in session in January.

“I think everyone is going to have to go to Olympia and work together and not play partisan politics,” Haugen said.

You can reach News-Times reporter Christine Smith at or call 675-6611

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