Governor’s 2010 Operating Supplemental budget

On December 9, Gov. Chris Gregoire proposed a 2010 supplemental state budget, which would fill a $2.6 billion hole in the budget for 2009–11 through service eliminations, reductions or suspensions and use of $900 million of the state rainy day fund and other reserves. As required by law, she submitted a budget based on currently available revenue.

The Governor was very clear. She does not like or support this budget but was meeting her obligations. She indicated we would see another budget from her in mid January or so that would "buy back" a number of cuts. Her initial indication was that she would like to "buy back" approximately $700 million of the cuts. This would be done with new money. No indication was given on how this new money would be obtained. She and the Legislature could close tax "loopholes", raise taxes or maybe receive some federal assistance. To date, we have not seen a new budget although the Governor has provided some information regarding the programs she would like to "buy back" including:

Basic Health and Apple Health plans;
General assistance program for the most needy;
Levy equalization funds for public schools;
State financial aid to allow more students to attend higher education;
Early childhood education money;
Adult medical, dental, vision and hospice programs; and
Developmental disability and long-term care provider funds.

Among the programs targeted for elimination in her first budget are the state Basic Health Plan, which provides health care coverage to nearly 65,000 individuals ($160 million); Apple Health for children, which provides health care coverage to 16,000 low-income children ($11 million); and the General Assistance Unemployable program, which provides cash grants for 23,000 adults and medical services to nearly 17,000 adults ($188 million).

The Governor preserved state-shared revenues allocated to cities and counties and a number of other key programs for local governments in her first budget. We appreciate her support and will work hard to retain these allocations in future budgets. Other cuts that she has proposed and will be discussed seriously by the Legislature will clearly have significant indirect impacts on cities and counties particularly in our most urban areas.

The Governor also stated that she is supportive of enhanced flexibility for local governments. Specifically, she said we need to help local governments help themselves (please see the following fiscal flexibility article for more details on her proposal). To see more specifics on her initial budget, click here.

The Governor acknowledged that it could be several years before the state regains a solid economic footing. She anticipates that the biennial budget she will propose next year for the 2011-13 biennium will be as difficult, if not more so given no federal assistance, as this year’s supplemental budget.

Fiscal flexibility – AWC priority

The City Flexibility Package is one of AWC’s major legislative priorities for the 2010 session. This includes "flexing" restrictions and requirements in areas such as fiscal health, land use, infrastructure, community safety, public records management, and more. In particular, this includes greater flexibility with existing revenues and local determination of how these revenues are allocated. The state did many of these same things in adopting the 2009-11 biennial budget, AWC maintains that the same latitude should be given to local governments, even if for a limited period of time.

To date, several pieces of legislation have been proposed or are "in the works" to accomplish this important association priority.

Governor Gregoire has indicated she will advance legislation that would eliminate or modify several supplant clauses on the following:

0.1% mental health sales tax for counties - through 2014;
0.1% criminal justice sales tax for cities and counties;
0.3% public safety sales tax for cities and counties.

The proposal would also allow county council authority for the 0.3% public safety sales tax through 2014. Thereafter, voter approval would be required. It would retain the 60/40 split of this revenue between counties and cities.

Introduced last session by Sen. Debbie Regala (D-Tacoma), SB 6164 is still in play. This bill would provide local governments with additional flexibility for a number of different revenues through December 31, 2012. Specifically, the bill would:

Allow the first quarter real estate excise tax to be used for maintenance of capital facilities;
Allow the second quarter real estate excise tax to be used for park maintenance and operation expenditures, maintenance of capital facilities, and increase the type of eligible capital facilities;
Remove non-supplanting requirements for the 0.1% criminal justice sales tax and expand its allowable uses to include human services and services with ancillary benefits to the criminal justice system;
Expand uses of the gambling tax to general public safety; and
Allow the hotel-motel tax to be used for any purpose that maintains or enhances tourism, including public safety.

In addition, city and county staff have been working with Rep. Ross Hunter (D-Medina) to introduce a flexibility proposal that may be broader in scope than both the Governor’s bill and SB 6164. Rep. Hunter’s bill may be introduced as early as January 11. Cities are also working with Rep. Larry Springer (D-Kirkland) on a flexibility bill. This bill may also be introduced on January 11.

AWC is truly appreciative of the Governor’s and legislators’ efforts to advance proposals that demonstrate their understanding of the importance that the state provide local governments with tools and flexibility that allow cities and towns to work with their citizens to provide the services they need and expect.

Public fund deposits (ESHB 1669)

Credit unions may accept all types of public fund deposits (state, county, city or agency funds), and in fact do accept deposits from federal public agencies. However, state law prohibits cities and other local governments from depositing their funds in credit unions. Currently 20 other states—including Oregon, Idaho and California, currently allow public entities to deposit their funds in a credit union.

ESHB 1669, advanced last session, would remove this prohibition, and allow credit unions to apply to the State Treasurer to become qualified public depositaries under the same terms and conditions applicable to other financial institutions.

This bill is schedule for executive session in the House Financial Institutions & Insurance Committee on January 14 at 1:30 pm.

First annualized SST mitigation payments distributed

Sixty-five jurisdictions received $6.4 million on December 31, 2009. The Department of Revenue also released its decision related to the potential for retroactive adjustments to past payments. Unless the Legislature acts, the Department of Revenue does not plan to make any adjustments to past payments. Click here for more information.

SST mitigation resources were included in the Governor’s budget. We will have to work hard to retain these funds and will need help from home. Please remind your legislators of the importance of this assistance.

[ previous article ] [ return to top ] [ next article ]