In mathematical terms, two billion dollars looks like this: $2,000,000,000.00. A friend of mine would say “If that was a pile of peanuts, it would be a helluva big pile of peanuts”. Another way to look at it is to make a pile of 2 billion one-dollar bills. It would reach about 160 miles high. If you were to lay those same bills end to end, they would reach over 7 ½ times around the equator or ¾ of the way to the moon. Obviously, $2 billion ain’t peanuts! But it is the amount of shortfall forecast in the next Washington state biennial budget.
The Problem
The September state revenue forecast indicated a $1.4 billion shortfall and the outlook for the next review is pessimistic. Governor Gregoire has called a special session of the legislature for late November, shortly after the next state revenue forecast is issued. Their charge will be to consider ways this budget shortfall can be accommodated. In the recent several years, similar or larger shortfalls have been met primarily by cutting state spending. Since 2008, the cumulative revenue shortfall has totaled over $7.5 billion. If all factors such as growth in demand for services and inflation are added in, the need for reductions has exceeded $10 billion over the last three years. The Governor has declared everything is on the table for consideration of cuts of up to 10% in the next budget. However, the “low hanging fruit”, so to speak, has already been picked. An “all cuts” budget this time around will be devastating.
Each expenditure proposed for the remainder of the 2011-2013 budget will be considered for cutting such as health, K-12 and higher education programs. Particularly hard hit would be the elements of the state’s safety net painstakingly woven together with both state and Federal funds over decades to provide support to our most vulnerable residents. These programs are basic and provide services to families, seniors, and the developmentally or functionally disabled. They knit together home and community services and supports with a focus of fostering independence and enabling individuals to remain in their own homes for as long as possible. Aside from any altruistic motives, these programs, in general, save money that helps avoid societal (taxpayer) costs that would otherwise be incurred. They attract Federal funds to the state as well by providing matching funds so that in many cases, a dollar cut results in a dollar less from the Feds. Exacerbating this situation is the fact that the currently approved 2011-2013 budget is being spent now in the face of the newly predicted shortfall. An amended budget may not be approved before the Legislature reconvenes in January and the details may not be resolved even then. This means that cuts that get approved will be taken at a higher rate than as if spread over the full 24 months of the biennium. The Washington State Health Care Authority Director has concluded in its budget package that “Whatever legislators decide, it is certain that real people, families, health institutions, and the overall care system in our state will be hurt by some or all of the cuts we are putting into play”. A summary chart in their presentation shows that over 830,000 clients will be affected if all their proposed options are implemented. And this doesn’t include the people affected through reductions in the Department of Social and Health Services budget.
The Potential Impact
Aside from the budget dilemma confronting the state, the Federal budget is under a special bipartisan review presently and due to be completed before the year end. Results of that review, if any agreement is reached, will be subject to an up or down vote in Congress. No amendments will be permitted. If this special review panel is unable to reach agreement for the proposal to congress, an automatic series of pre-agreed cuts will be imposed which will likely affect Medicare, Medicaid, Social Security and many other basic Federal programs. Until resolved, this leaves much uncertainty for the states. One such program that assists the states comes from the Older American’s Act which helps with home and community services such as meals on wheels.
Based on options proposed by the Health Care Authority and the Department of Social and Health Services to achieve an overall 10% spending reduction, an “all-cuts” state budget may cut or eliminate the following programs:
Adult pharmacy benefits.
Medical for Disability Lifeline.
Termination of the state Basic Health Plan.
Termination of Children’s Health Program.
Termination of Maternity Support Services.
Reduction of Certain hospital funding.
All non-emergency adult dental services.
School-based medical services.
Interpreter services.
Reduced number of Regional Support Networks (mental health) and reduced services.
Elimination of Adult Day Health services.
Elimination of Naturalization Services.
Closure of selected state hospital wards.
Elimination of the State Food Assistance Program.
Elimination of grants through the Aged, Blind or Disabled, and Pregnant Women Assistance program.
Reduction of state funding for vocational rehabilitation services.
Major eligibility and program changes for mental health, long term care and developmental disability services.
Elimination of all alcohol and substance abuse services for adults except for pregnant and parenting women.
More reductions to Behavioral Rehabilitation and Domestic Violence Services to children.
These are some highlights of what’s on the table. None are cast in stone yet and there are other programs that may have cuts or be considered for elimination. In addition, eligibility standards for some programs may be raised and fees may be increased for adult family homes or other services.
Are There Other Options ?
Unequivocally yes! An all-cuts budget will undo decades of progress in Washington State affecting much more than the quality of life and security. What is desperately needed is a balanced approach of spending reductions and increased revenue to allow vital services to be maintained at viable levels.
The state is long overdue in considering comprehensive tax reform. This debate needs to be put forth in the legislature and seriously considered. A good starting point would be the Gates Commission report titled Tax Alternatives for Washington State submitted to the Legislature in late 2002. http://dor.wa.gov/content/aboutus/statisticsandreports/wataxstudy/volume1.pdf It concluded that restructuring the Washington tax system would result in a tax system that would be:
-Substantially fairer to lower- and middle-income people
-More equitable in its treatment of business
-More effective in supporting the state’s economy
-Considerably more compatible with the Federal tax system and consistent with the taxing systems of most other states
The report is well worth reading.
Obviously however, undertaking a complete restructure of this sort will take time and the revenue shortfall is immediate. Fortunately, there are near-term actions that can be taken to alleviate (not eliminate) the shortfall the state faces if the political will is there. As one such move, there are a number (literally hundreds) of tax exemptions and loopholes that may have served a useful purpose at one time but which should be eliminated now. What it will take is the intestinal fortitude of state management and the Legislature to face up to the need for additional revenue to lessen the severity of program, particularly safety net, cuts.
What Can You and I Do?
The Washington State Council on Aging has put forth the following priorities:
-We support health care reform initiatives that are cost efficient and are driven by a collaboratively developed statewide philosophy and shared core values.
-Protect the most vulnerable senior citizens. Prioritize funding for those receiving services.
- Prioritize funding that helps senior citizens remain in their homes or a community based setting for as long as possible.
-- No more cuts to the State Senior Citizens Services Act.
-- Support Family Caregiver programs.
- Protect Washington’s investment in home and community services and maintain the current long term care infrastructure.
Supporting and promoting these priorities is vital to our seniors and disabled residents.
Primary revenue sources for the state are sales and property taxes. The key to increasing either in the long run is to develop jobs. Supporting Federal and local initiatives to stimulate job growth will lead, albeit slowly, to improved sales and home values. These, in turn, will help improve the state revenue picture. Near term, plugging the exemptions/loopholes in our current tax structure and /or other revenue enhancement offers partial immediate improvement. Long term, the state needs to carefully examine its complete tax structure and proceed with an overhaul.
You and I can help bring these changes about by speaking up. Our legislators, both Federal and State, need to hear our opinions. They are charged to represent their constituents and, hopefully, will listen and act to support major public opinion. There’s strength in numbers. Finally, be sure to register and vote. It’s our strongest voice.
