Lawmakers call for cuts, tax hikes to plug $9.3B hole

OLYMPIA -- From kindergarten to the university campus, public schools would be hit hard in a package of massive spending cuts unveiled Monday by the state Senate's majority Democrats.

In the Yakima Valley, all 15 school districts receive levy equalization money, which amounts to about $35 million this year. Under the Senate cuts, the funding would be reduced to $26 million.

In the Yakima district alone, levy equalization funds amount to nearly $11 million. The Senate plan would lower the sum to $8.25 million.

The prospect of cutting levy equalization funds -- which has been floating around for awhile -- prompted Kevin Chase, superintendent of the Grandview School District to think about up to $1.2 million in cuts.

"I think there's a lot of people worried about their jobs," Chase said in a recent interview with the Yakima Herald-Republic. "People are on pins and needles and we don't have a lot of information to share."

Because of lower property values, some districts, like Toppenish, Wapato and Mt. Adams, receive far more in equalization funding from the state than they do from the local tax base.

But teachers and students aren't alone in the cuts. In the Legislature's first run at solving an estimated $9.3 billion deficit, Senate budget writers also slashed spending on health care, social services, prisons and state parks.

If enacted as-is, the Senate plan would add about 7,000 public sector layoffs to Washington's already heavy load of unemployed workers, officials said. A small prison would be shuttered, some disabled people would lose their health care, and parks would rely on a $5 car tab fee to stay open.

"We look forward to a better day as the economy turns around," said Senate Majority Leader Lisa Brown, D-Spokane. "For the time being, we have an honest and responsible budget that does balance our revenues and our expenditures."

Lawmakers would have cut even further without some major one-time patches: About $3 billion in federal bailouts, another $750 million swiped from separate construction accounts and about $400 million in reduced pension payments.

The Senate also assumes a small amount of new money through the proposed closure of some tax loopholes.

That could set up a collision with Initiative 960, which placed limits on the Legislature's taxing powers. Nevertheless, Democrats seemed confident they could woo enough Republicans to get the two-thirds majority required to raise taxes in that way.

Monday's budget announcement capped weeks of closed-door work to patch one of the worst state deficits in many years. House Democrats were scheduled to unveil their budget today, kicking off high-speed negotiations on a final plan as the Legislature races toward a scheduled April 26 adjournment deadline.

In the end, lawmakers are almost certain to send a tax package to voters, seeking streams of money that would pay for specific education, health care and other programs.

The projected $9.3 billion deficit is the difference between how much tax money the state expects to collect over the next two years and the cost of maintaining the state government's expected growth during that time.

The deficit breaks down this way: A $1.3 billion shortfall in the present budget, which runs through June, and another $8 billion shortfall in the two-year budget that runs through June 2011.

Counting the major influx of federal money, Senate Democrats are proposing a roughly $35 billion state budget for the 2009-2011 fiscal years, including some $850 million left in the bank to insulate against further economic troubles. That works out to about $2 billion more than the state spent in the present two-year budget.

Senate GOP budget chief Joe Zarelli, R-Ridgefield, blistered the Democrats' heavy reliance on one-time fixes to plug billions of dollars' worth of budget holes. He also said the majority was wasting the opportunity to remake some programs.

"What we're doing is either not funding things through the biennium, or punting them off for two years. But we're not actually going through the process of changing state government," Zarelli said.

Gov. Chris Gregoire, a Democrat, said she needed more time to examine the budget. But the governor continued her pitch for a temporary tuition hike, or surcharge on top of the current 7 percent cap, to help colleges and universities.

To balance the books, Senate budget writers used just about every tactic in the book.

The biggest single chunk in the two-plus-year budget approach was about $4.5 billion in overall government spending cuts, including skipped pay raises and stingier health care benefits for teachers and other state workers.

Public schools are taking a big hit, with about $877 million less for staffing and levy equalization programs in parts of the K-12 system that are not protected by the state constitution. The cut amounts to about 8 percent.

Federal stimulus spending softened the blow: without it, unprotected K-12 spending could have seen cuts of around $1.4 billion.

Higher education spending is reduced by about $485 million -- about 11 percent less for four-year schools, and 7 percent less for community and technical colleges.

Higher tuition for resident undergraduate students will act as a cushion, along with stimulus money that halted the need for another tuition hike. Nevertheless, the spending cuts mean the state would pay for about 10,500 fewer students than colleges and universities have on campus now.

Human services also are pared back: About $250 million is saved by making a 42 percent cut in the Basic Health Plan for the poor, stopping enrollments at a time when laid-off people may be hunting for health care. Another $190 million is saved by squeezing a state welfare program for disabled people who can't work.

Rates paid to hospitals and other health providers who serve the poor would be trimmed.

Lawmakers also are expected to put a package of tax increases on the ballot, perhaps valued at $2 billion. That would give voters the chance to buy back some programs that are slated for cuts.

Senate lawmakers denied Monday that they've had formal caucus discussions on the size or scope of a tax package, even though health care groups and some unions are polling voters about the mood for tax hikes and sharing that information with the Legislature.

* Yakima Herald-Republic reporter Leah Beth Ward contributed to this report.

* On the Net:

Senate Budget: http://leap.leg.wa.gov/leap/budget/detail/2009/so0911p.asp

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