Can budget savings be found in changes to sick leave cash out?

With Washington facing a short term $2.6 billion budget deficit, all savings opportunities should be on the table. One possibility is to change the practice of allowing state employees to carry forward and cash out unused sick leave. According to the state's budget transparency website, Washington paid out $65.3 million in unused sick leave during the 2007-09 biennium. The state has already paid out $13 million since the 2009-11 budget started in July . . . READ MORE

Washington's annual financial report released

The Office of Financial Management has released the state's 2009 Comprehensive Annual Financial Report (CAFR). Some of the details of note: "Governmental activities resulted in a decrease in the state of Washington’s net assets of $2.2 billion. A number of factors contributed to the decrease: Tax revenues decreased $893 million in Fiscal Year 2009 as compared to Fiscal Year 2008. While certain tax sources showed moderate increases, sales and use taxes reported a decrease of $1.0 billion . . . READ MORE

States face at least $405 billion unfunded liability for retiree health benefits

While states attempt to deal with their short term budget problems, elected officials must not lose sight of the long term obligations being placed on taxpayers. Highlighting this fact is this report from the U.S. Government Accountability Office (GAO) on state and local government retirement health benefits (OPEB - Other Post Employment Benefits): "We found that the total reported unfunded liabilities for OPEB (which are primarily retiree health benefits) for state and select local governments exceed $530 billion. The $530 billion includes about $405 billion for states and about $129 billion for the 39 local governments we reviewed . . . READ MORE

Can stimulus strings be cut?

Faced with closing a projected $2.6 billion budget deficit, lawmakers have been told that 70% of their budget options are off limits meaning reductions need to occur in only 30% of spending. Here is how Governor Gregoire describes this dilemma: "Parts of our state’s budget, including basic education, debt service and pensions, are considered ‘protected’ because of constitutional mandates require these cost be paid. Other parts are considered protected, too, due to requirements imposed by the federal government when the state accepted funds under the American Recovery and Reinvestment Act, primarily in Medicaid and higher education." A recent federal audit conducted by the Government Accountability Office (GAO), however, noted that states may seek a waiver from the "stimulus strings" for Education State Fiscal Stabilization Funds.
According to GAO . . . READ MORE

State Auditor releases update on performance audit recommendations

State Auditor Brian Sonntag this morning issued a report highlighting the status of performance audit recommendations made to date. According to the report: "From February 2007 through June 30, 2009, performance audits identified nearly $3.6 billion in cost savings, unnecessary expenditures and economic benefits. Some recommendations have a financial impact, such as past costs that were questionable or avoidable, those with future cost savings and recommendations with future revenue opportunities. The figure below is focused on recommendations with future revenue opportunities or future cost savings that can be realized when the recommendations are implemented. We made 214 recommendations with future cost savings or revenue opportunities; 67 percent of those recommendations have been fully or partially implemented or are in progress, as shown below . . . READ MORE

State Auditor: "Opportunities for Washington"

The State Auditor's Office this morning released a report titled "Opportunities for Washington." In a letter to citizens State Auditor Brian Sonntag wrote (in-part): "I am pleased to present to you 'Opportunities for Washington,' our performance review of state government operations. For such a time as this, state government has an opportunity and a need to significantly change how it does business. As Governor Gregoire and the Legislature deal with the state's difficult financial challenges, this review reflects our first such effort to help. It contains ideas and recommendations to save money, to streamline government programs and functions and to provide better service to citizens. The review also identifies areas in which we can direct performance audits in the near future. Those audits are intended to identify actionable efficiencies . . . READ MORE

Newspapers comment on Governor’s budget proposal

Reactions to Governor Gregoire's proposed supplemental budget have been decidedly mixed. Beneficiaries of the programs identified for elimination have warned taxes should be raised instead of making the cuts. The majority of the state's newspaper editorial boards, however, warn that tax increases should be the last resort and state spending must be reformed first. Here are the editorials to date . . . READ MORE

Unemployment Insurance taxes to increase 54% in 2010

The Employment Security Department (ESD) today announced that Unemployment Insurance taxes for the state's employers are going up in 2010. In a release from ESD, Commissioner Karen Lee outlined the plan that will see the average total tax rate increase from 1.55 percent in 2009 to an estimated 2.38 percent in 2010 -- a 54% increase . . . READ MORE

How competitive contracting can help balance the budget

Washington lawmakers again face a multi-billion dollar budget deficit, meaning they will either increase the amount of money they collect from citizens each year, or re-evaluate the way they deliver core services to the public. Increasing taxes during a recession would add economic hardship, while changing the way services are delivered offers part of the solution to closing the deficit without raising taxes. One tool available for improving service delivery is Washington’s competitive contracting law, passed as part of civil service reform and signed by Governor Gary Locke in 2002. In practice, however, state managers rarely exercise their statutory contracting out authority, meaning an important provision of the 2002 civil service law remains largely unused . . . READ MORE

Governor's budget proposal results in $2.8 billion deficit for 2011-13

Governor Gregoire today released her proposal to close a projected $2.6 billion deficit in the current budget. While she is to be commended for starting the conversation on the type of changes needed to reset state spending, she failed to identify the changes necessary for a truly balanced and sustainable budget. The Governor acknowledged that the state is facing at a minimum a three-year problem. In fact, assuming her budget is adopted, a $2.8 billion deficit is projected for the 2011-13 biennium. Here is the 4 year budget outlook provided by the Office of Financial Management . . . READ MORE

Bill introduced to end state liquor monopoly

Senators Tim Sheldon (D-35) and Curtis King (R-14) have introduced a bill to end the state's archaic liquor monopoly. From SB 6204 - Privatizing the sale of liquor: "(1) The legislature intends for privatization of retail and distribution of liquor to result in a system that is more efficient than public sector retail and distribution. The legislature finds that the present system of state control includes a markup amount at distribution that generates revenue for the state and local governments, and that this markup will be eliminated when liquor sales and distribution are privatized. The legislature further intends that the privatization of liquor sales and distribution not result in revenue losses to state or local governments as compared to projected revenues assumed under state control, not including any separate licenses or franchises . . . READ MORE

Budget prologue

Governor Gregoire will release her proposed fix to the state's $2.6 billion budget deficit tomorrow at 9 a.m. As required by law, it should be balanced within existing revenue though the Governor has clearly stated she plans to release a tax increase proposal prior to session. The Everett Herald has posted a list prepared by the Department of Revenue of potential tax increases (click here for list). While everyone will be focusing on the short term $2.6 billion problem for the current budget, solutions debated this coming session must address the long term structural problem and what to do about replacing the billions in one-time fixes being used (such as the federal stimulus funds). If only the current deficit is addressed, elected officials will have this debate to look forward to again in 2011 . . . READ MORE

Reform state's competitive contracting law to realize budget savings

With the current budget crisis, lawmakers and the governor should take full advantage of every opportunity to promote the efficient delivery of routine state services, so tax money can be freed up to fund high-priority core functions of government. State elected leaders should fix weaknesses in the competitive contracting law, and direct agency managers to use competition to reduce the cost of operating state programs. Specifically, state leaders should simplify the operation of the 2002 competitive contracting law and, like other states, create a Government Competition Council to assist managers in identifying public services that could be improved through competitive contracting . . . READ MORE