Economics Washington State Politics

Gregoire Begins to See the Light…Warns of Ten Percent State Budget Cut

Months ago, I stated that, because our State Budget is based on an assumption that State revenue would grow by 14% during the next two years, our State Budget is a House of Cards. I noted that because our economy is not growing, State revenue is not likely to grow at all. See realwashingtonstatebudget.info.
 
Last week, the Federal Reserve admitted that the economy remained flat for the past 6 months. Then today, Governor Gregoire admitted for the first time that the State Budget might have to be cut another 10% – or about $1.7 billion beginning on January 1st 2012. This is on top of the $4 billion in cuts that were made by the 2011 legislature. For the complete list of upcoming budget cuts, go to http://seattletimes.nwsource.com/ABPub/2011/08/08/2015855454.pdf
 
$1.7 BILLION in State cuts converts to firing another 17,000 State workers and costing another 17,000 private workers to also lose their jobs – for a total of 34,000 job losses beginning January 1, 2012.
 
Sadly, as I also noted months ago, this is just going to be the beginning of budget cuts during the next two years. The House of Cards budget for the 2011 – 2013 biennium agreed to in May 2011 is about $34 billion in spending. The problem is that if revenue does not increase, there will only be $28 billion to $29 billion coming in. This is why I predicted that, if the State legislature continues to give billions in tax breaks to wealthy corporations, there will have to be another $5 billion to $6 billion in cuts during the next two years. So $1.7 billion in cuts is just the tip of the iceberg. Instead of ordering the Titanic to change directions, all our Governor did was order our State to hit the iceberg at a slightly slower speed. Unless the legislature sees the light and stops giving away billions in tax breaks to the super rich, total job losses will exceed 100,000 before the end of this biennium.
 
Nevertheless, we will review what the Governor’s 10 Percent Budget cut will mean to families here in Washington State . First, the good news. While Basic Education funding is $13.7 billion for the next two years, or about $6.8 billion per year, the Governor is not yet proposing a massive cut to public schools – only $100 million or $50 million per year. Only 1,000 teachers will lose their jobs in order to protect a billion per year in tax breaks for Microsoft.
 
Now for the bad news.
 
Public Universities which had already taken a $500 million cut, will be asked to take another $100 million cut. This means 1,000 fewer University Instructors, cutting slots or increasing class sizes for about 20,000 University students. Community Colleges will also see their budget cut by 10% – from about $1 billion to about $900 million. Another 1,000 college instructors will lose their jobs and another 20,000 students will be forced either out of college or into much higher class sizes. Thus, expect one in ten college instructors to be fired in the next few months.
 
But by far the biggest hit will be the Department of Social and Health Services (DSHS) which will lose over $573 million. Because these funds are tied directly to federal “matching” funds, the actual hit to DSHS will be over $1 billion – for a loss of 10,000 public sector jobs and another 10,000 private sector jobs.
 

All of these cuts still assume that State Revenue will grow by at least 10 percent during the next two years. But firing 34,000 people is 34,000 fewer people with pay checks and 34,000 people unable to shop at local businesses and pay State taxes. This is the downward spiral that will lead to even lower State revenue and even more budget cuts in the future – until the people of Washington State have decided they have had enough of giving billions in tax breaks to Microsoft and other wealthy corporations – while our economy, our schools and our colleges all go to hell in a hand basket.For information about how to reverse this economic disaster, visit one of my new websites: Coalitiontocreatejobsnow.org and wapublicbankproject.org.

Feel free to email me if you have had enough of wealthy corporations sucking the life blood out of our economy. If you are a parent or a teacher, the clock is ticking on our children and our students. It is time to get involved and take back our Democracy. Together we can restore school funding and rebuild our economy.

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