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House Majority Leader Pat Sullivan predicts half-billion-dollar state budget hit from sequestration

Post by Jordan Schrader / The News Tribune on March 7, 2013 at 5:16 pm with No Comments »
March 7, 2013 5:16 pm

House Majority Leader Pat Sullivan told union activists today he figures the $85 billion in budget cuts brought on by federal-government paralysis could hit Washington’s state budget to the tune of around $500 million.

Rep. Pat Sullivan, D-Covington
Rep. Pat Sullivan, D-Covington

“With the federal sequester, I think we’re likely to see the impacts of that reflected in that revenue forecast,” the Covington Democrat told a Washington State Labor Council conference. “So there’s about, potentially another half-billion. So now you’re at $3 billion (the total budget problem).”

That total assumes state lawmakers patch the existing $1 billion two-year budget shortfall, add another $1 billion to $1.4 billion to move toward compliance with a state Supreme Court mandate to fund schools and throw in a smattering of money for mental health programs and other needs, he said.

Gov. Jay Inslee’s legislative director, Ted Sturdevant,  agreed the budget would suffer. “We are seeing part of our caseload problem and our revenue-forecast problem is going to get hit because of sequestration, which should not be happening. It’s happening because people are not willing to step up and invest at the national level,” he said.

The revenue forecast comes out March 20 and governs what lawmakers will include in their proposed budgets that start emerging shortly thereafter. The figure is always the subject of guessing games – and maybe even some betting pools, as House budget chairman Ross Hunter notes on his blog.

The state also will receive a forecast on “caseloads,” the levels of people using state services. Those numbers are up, Hunter and Sullivan said. From Hunter’s blog:

For example, there will be more children than we had planned for enrolling in our K12 system for reasons that are not yet clear. We have to adjust our budgets to account for this. We think these costs could be $300 to $400 million higher than expected last year – a serious problem.

The revenue forecast is affected by a number of factors and is harder to predict, which is why we hire a PhD economist and a staff of 4 or 5 to do forecasts.

Doing the math is the staff of the Economic and Revenue Forecast Council, which outlined the state of the economy in a report today. The agency is making a big assumption — that Congress will eventually act to cancel the sequester and replace it with a combination of cuts and tax increases. Here’s what the council says:

If these budget cuts are not rescinded by Congressional action, they could reduce federal government spending by $53 billion between March and September of this year. The preliminary forecast assumes that the sequester will remain in effect for two months, to be replaced by a package of budget cuts and tax increases amounting to $9 billion in fiscal tightening through September.

It notes in its list of “downside risks” that could reduce forecasts: “Congress fails to pass a continuing budget resolution, shutting down the federal government on March 27th.”

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