Reacting to budget unknowns . . .

Well, it is now official; there is a projected $530 million shortfall in tax collections over the next three years that could result in a $3.2 billion budget gap.  Something must change for the state budget to balance.  With the republicans saying no to a tax increase and with passage of the initiative requiring a two-thirds vote on any tax increase the alternative is more cuts.  We have been down this road before, but as I have shared it will be different for us because we used the fund balance and with enrollment less than we projected we can't count on additional revenue from this source.  See this Seattle Times article for some legislator reaction.

Republicans budget writers said tax increases were not acceptable and that they can block any such proposals because of a voter-approved initiative that requires a two-thirds legislative majority to pass them.

"How do you get more revenue out of people who still don't have work?" asked Republican Rep. Ed Orcutt of Kalama.

Democrats were considering a proposal that would ask voters to approve taxes in order to support education, which has faced much of the cuts. Sen. Ed Murray, D-Seattle, said lawmakers need to work on getting a plan together to pass before January.

This comment from our state's chief economist may be the most disturbing part of this situation.

"I truly wish I could assure you that this nightmare is about to end, but I see no end in sight," said Arun Raha, the state's chief economist.

In this Tacoma News Tribune article Victor Moore, the governor’s budget director, has a slightly different take on the current situation.

Moore said not all is doom and gloom. He noted that the state is still on track to finish the current two-year budget cycle with $87 million in its checking account and $442 million in the “rainy day” savings account. Thirty other states have negative balance sheets, he said.

“We are still positive,” he said. “I’m looking at a slowly recovering economy, and we will balance the budget in November. To say we’re in a deficit doesn’t take into account the work we will do.”

Unfortunately, I'm not as confidant and I am concerned with not knowing what this will mean for schools.  We have an opportunity to establish the levy rate that could influence our revenue for the year, but not knowing if or what revenue may be cut may keep us from using this process to maximize revenue.  The Governor has ordered her budget director to immediately cut $200 million that should not impact us, but probably won't be enough to satisfy the need or the legislators who are scheduled to come together for the next session in January.  We don't want to wait until January and operate as if there are no concerns, but at the same time we do not want to overreact.  What would you recommend?