By Rachel La Corte
The Associated Press
OLYMPIA — Gov. Jay Inslee has canceled raises for some state employees and announced furloughs through the fall as an updated revenue forecast showed the state faces a budget shortfall due to the economic impacts of the COVID-19 pandemic.
The latest update by the Economic and Revenue Forecast Council shows a reduction in projected state revenues of about $8.8 billion over the next three years, exceeding an initial April estimate of a $7 billion reduction through mid-2023.
“We know we have many tough decisions ahead of us as a state as a result of our revenues falling off a cliff,” Inslee said at a news conference Wednesday afternoon.
Lawmakers — who are expected to be called into a special session by Inslee sometime this summer — must first contend with the impact on the approximately $53 billion two-year budget that ends mid-2021.
That initial projected drop of state revenues — nearly $4.5 billion — means that after reserves and the state’s so-called “rainy day” fund are used, lawmakers will be left with a $1.4 billion shortfall that they’ll have to address through either cuts, new revenue or a combination of both.
The projection for the next two-year budget that lawmakers are tasked with writing at the start of the next regular legislative session in January is more than $4.3 billion in reduction in revenues from July 2021 through mid-2023.
Democratic House Speaker Laurie Jinkins said that House and Senate leaders want to come back to deal with the immediate shortfall soon, but she said they want to make sure they have a framework of a plan before they return to the Capitol.
Jinkins said budget teams are already meeting and that lawmakers will be looking at both revenue and reductions as part of the solution.
“We have to take a balanced approach,” she said.
Last month, Inslee issued a directive freezing most hiring and signing of personal services contracts and purchasing of equipment, and the state’s budget office sent a letter to state agencies telling them to find ways to cut 15 percent from their current budgets. Agencies started submitting their budget proposals with suggested cuts this month.
On Wednesday, Inslee ordered cabinet agencies to cancel a scheduled 3 percent raise for agency directors and exempt employees who earn more than $53,000 a year, affecting nearly 5,600 employees. Union-represented and non-represented classified employees will still get the scheduled raise on July 1.
Republican Sen. John Braun said that the move was a “step in the right direction, but it’s not enough.”
Braun and other Republicans have pushed for lawmakers to convene a special session soon in order to stop new spending that is set to take effect July 1, including the state worker raises that are still set to take effect.
Braun said that, given the current situation, the union contracts should be renegotiated.
“The economic facts are pretty clear to everyone that we can’t afford to do this,” he said. “And frankly, I would say it’s unfair when you put it in comparison to what private employees are dealing with right now.”
Inslee said that his plan for more than 40,000 state employees to take furlough days was a way to find savings “that does not create a permanent difficulty for our state employees.”
Starting no later than June 28, those state employees will be required to take one furlough day per week through July 25, and then will be required to take one furlough day per month through at least the fall.
Inslee’s office said that the canceled pay raises and furloughs are expected to save about $55 million over the next year. Inslee urged other agencies not under his authority — including the Legislature, higher education and statewide elected officials — to adopt similar measures, which his office said would save an additional $91 million.
The Legislature has already taken some action, with the Senate Facilities and Operations Committee on Tuesday adopting several reductions, including a 12-month suspension of a 2.5 percent increase for all employees. The House has also frozen salaries effective July 1, according to Bernard Dean, the chief clerk of the House.
Washington’s stay-at-home order was in place from March 23 until the evening of May 31, and the state’s 39 counties are currently in the process of moving through a four-stage phase in for lifting of restrictions. The state’s unemployment rate jumped from 5.1 percent in March to 15.4 percent in April after businesses closed or reduced operations.
As of this week, 12 counties are in Phase 3, which expands group gatherings to 50 or less, including sports activities, and allows restaurants to increase capacity to 75 percent. Gyms and movie theaters can reopen at half capacity during this phase.
The next revenue forecast will be on Sept. 23.
