Message from the Governor

Dear Stakeholder:

You likely remember the headlines from a few weeks ago that announced the recession was over. Mathematically that may be accurate, but we know we still have a long way to go to rebuild our economy.

In the wake of reduced spending and hiring, there is still more to be done to balance our state budget. I want to take a moment to explain the need for across-the-board cuts, and what will happen next.

As the economy continues to sag and spending remains at a low level, state revenue continues to decline. At the same time, caseloads are increasing for public education and health care services. It is a cycle that is devastating to the people who rely on state services and difficult for state workers to endure. The supplemental budget passed this year left a $453 million ending fund balance, or surplus, in the state budget. However, the two revenue forecasts since May have been well below expectations. The state lost $203 million in the June forecast and $770 million in September. These reductions turned our $453 million surplus into a $520 million shortfall.

When a shortfall is projected, the law requires that I take action to balance the budget — either through spending reductions referred to as “across-the-board cuts,” or by calling a special session of the Legislature. Legislative leaders could not reach consensus on a special session. Thus, I had to direct agencies to reduce spending by 6.3% starting October 1. Agencies have submitted their reduction plans, which you can view at http://www.ofm.wa.gov/reductions/default.asp.

By law, across-the-board reductions leave no discretion to a governor. They apply to all branches of state government and to all agencies headed by elected officials that receive appropriations from the General Fund.

Though across-the-board cuts do not allow us to pick and choose the reductions we must make, we can use the supplemental budget to address some of the most compelling concerns these cuts raise, but the same level of cuts must be made. That supplemental budget will be presented to the Legislature, and legislators have the opportunity to take swift action when they return to Olympia.

Let me be clear: 1) cuts at this level in a fiscal year are a real challenge, and 2) balancing the budget through across-the-board reductions is difficult. The services we have to reduce are often the very ones we want to protect. These are hard times, and they are hard for me and for the state family I have known for the past 30 years of my career.

For me and my administration, this presents an unprecedented challenge in historic times. We have to do what we could never have imagined.

Simply put, we will emerge from this recession a much different state than when we started. We will still focus on the things we are proud of: protecting our most vulnerable citizens, keeping the public safe, stewarding our natural resources, educating our children, and creating the jobs of the future (lots of them!). But the way state government delivers on our promise will, by necessity, change. We are in that transformation now and I know it has created uncertainty and unfamiliarity.

When the Legislature returns, it will need to pass the supplemental budget and the added challenge of an operating budget that addresses a projected nearly $4.5 billion shortfall for the 2011–13 biennium. We all have a very tough job ahead of us. I welcome ideas from you, and citizens across the state, to transform our budget, prepare for the future and live up to our values.

Even in these hard times, I see hope. This is a time for us to work together and to support one another as we handle these difficult times. As partners, we will make our state an even better place to live and work.

Sincerely, Chris