December 16, 2004

Washington state law requires that I must deliver a budget to the legislature that is balanced within our existing means — one that doesn’t involve changes to existing statute or reflect a change to state revenue. After developing such a budget and seeing the consequences to the basic values of Washington residents, I cannot in good conscience recommend that it be adopted. This budget is no less important to the people of our state, or to me, than the one I wrote after first coming into office.

Under a budget that relies solely on existing revenue, deep cuts would be required in education, health care and services for vulnerable people.

Further class size reductions required by Initiative 728 would have to be canceled — again. We would have to freeze enrollments in state colleges and universities at current levels. We’d have to turn away thousands of students seeking to earn a college degree. Enrollment in the state’s Basic Health Plan for lower-income people would be cut by 17,200 adults. Cuts that we are proposing for community clinics — which care for people who have no insurance and no other place to go for medical care — would have to be even deeper. Medicaid no longer would cover routine dental care for seniors. Lower-income families with Medicaid coverage for their children would have to pay more, so their kids could see a doctor when they get sick.

This is not the kind of budget the people of this state want because it does not reflect our basic values.

So, today I also proposed a budget that will pay for the priorities citizens value most — smaller public school classes, higher enrollments at state colleges and universities and a sturdy safety net to rescue Washington’s most vulnerable children, senior citizens and people with disabilities. These are values I hold dear, and the people of this state hold dear — and it was important to me that I find a way to protect them.

The budget is guided by my Priorities of Government approach to spending. It reflects hard work by many people engaged in the budget process to arrive at a clear understanding of the services that people of Washington value most, and a clear grasp of what we must do to pay for those services.

It wasn’t easy. We are facing a budget deficit of more than $1.8 billion for the next two years. Keeping in mind that we already cut “maintenance-level” budgets by more than $4 billion in the last four years, the budget I have proposed relies on new cuts, as well as savings and fund transfers to address $1.3 billion of this deficit.

The rest of the deficit is addressed through new revenue of $504 million that come through a proposed increase in a tax on hard liquor, wine, beer and soda pop, which amounts to about a nickel on a can of beer or pop, a quarter on a good bottle of wine and less than a dollar and a half on a $15 fifth of hard liquor. $94 million would come from a proposed one percent gross receipts tax to be collected from physicians — money that flows right back to the medical community in the form of higher Medicaid reimbursements and other expenditures.

The new revenue addresses a continuing concern of doctors who contend they can’t afford to treat thousands of Medicaid patients because the reimbursement rate for their services is too low. The gross receipts tax also will provide funding to keep 17,200 lower-income adults enrolled in the Basic Health Plan, the state’s insurance program for the working poor.

With higher Medicaid reimbursement rates, doctors — as a group — will get back more money than they pay in new taxes.

Other than an increase in the state gas tax to pay for critical transportation projects, this is the first time since taking office in 1997 that I have proposed a budget containing new general taxes for state-funded services.

The new revenue will be used for:

Public schools: $138 million to continue class-size reductions begun by Initiative 728; $4 million to help struggling students meet new high school graduation requirements; and $34 million to fully fund levy equalization for school districts.

Higher Education: $74 million to increase enrollment slots by 7,100, bringing the total to more than 223,000; and $29 million in increased funding for the State Need Grant and Promise Scholarships to help students from low- and middle-income families afford college.

Social Services Safety Net: $114 million to continue cash grants for unemployable, disabled people; $40 million for WorkFirst programs to move people off welfare and into jobs; $18.5 million to keep day programs for the developmentally disabled; $6.1 million for modern child-welfare management technology to help child-welfare workers better serve clients; and $24 million to keep the Medicaid Personal Care Program for people with disabilities.

Health Care: $49 million to keep about 17,200 lower-income adults in the Basic Health Plan; $5.8 million to continue to help community clinics serve people with no place to go for medical treatment; $128 million in state and federal dollars to increase Medicaid reimbursements, encouraging more doctors to treat Medicaid patients; $26.9 million to continue routine dental care for Medicaid patients, and to avoid charging parents for Medicaid coverage for their children; and $24 million to continue Medicaid Personal Care that helps elderly and disabled people continue to live in their homes.

Even with this new revenue, my budget still makes nearly $300 million in cuts. Examples of reductions include $77.6 million for community based mental health services for non-Medicaid clients, $9.3 million for natural resources needs including funding for some fish hatcheries and timber-management activities, $37.6 million in reduced nursing home reimbursement rates, and $9.3 million that pays for secure residential centers for runaway youth.

This is a practical and realistic budget for the state of Washington. We put a lot of work into it. I believe that the Legislature and the next governor will come to the same conclusion that I reached.

We’ve got to keep investing in education — and we can’t turn our backs on the less fortunate among us.

State’s First Regional Salmon Recovery Plan Presented to Federal Government
Governor Locke, together with the Lower Columbia Fish Recovery Board (LCFRB) and the Washington Department of Fish and Wildlife (WDFW), presented to the federal government the first locally developed regional salmon recovery plan for Washington state in Vancouver on December 15.

The plan is aimed at restoring five species of salmon as well as other fish to healthy, harvestable levels during the next 25 years. It also addresses other fish and wildlife that are important to the region as well as providing a foundation for healthy watersheds for people.

During the past several years, Locke has worked with the state Legislature on efforts to reverse the trend, including renegotiating international treaties to protect the most endangered fish and more fairly distribute the catch for fishers in the United States and Canada; establishing conservation goals in rivers shared with Idaho and Oregon; studying hatcheries to determine how to improve them; and providing more than $165 million through the state Salmon Recovery Funding Board for salmon restoration and protection projects.

“We have made a lot of progress in salmon recovery during the past few years,” he said. “We have returned more than 300,000-acre feet of water to streams where salmon need it, removed more than 1480 barriers and opened more than 1600 miles of habitat to salmon for spawning and rearing. We have funded more than 480 projects to restore and protect salmon habitat and have completed more than 560 water quality cleanup plans.”

$26.7 Million in Grants Awarded to Protect and Restore Salmon
On December 9, Governor Locke announced the award of $26.7 million in grants to local communities across the state to protect and restore salmon habitat in Washington state. The grants ranged from $26,000 to more than $1 million, and were given to organizations within 27 counties for work ranging from planting trees along streams to cool the water for salmon, to replacing crushed culverts that prevent salmon from migrating, to changing stream channels to create better places for salmon to spawn and grow. The state Salmon Recovery Funding Board oversees the investment of state and federal funds for salmon recovery. Washington’s approach to funding these projects is a national model.

Strategy to Combat Global Warming Announced
Governor Locke announced a series of recommendations to combat global warming on December 8. He proposed a package of executive request legislation that includes adopting the California vehicle emissions standards for new cars beginning with the 2009 model year to not only reduce greenhouse-gas emissions, but also other harmful pollutants; an energy portfolio bill that will include both renewable and energy-efficiency portfolio requirements for utilities; adopting greenhouse-gas reduction goals for our state and establishing a greenhouse-gas emission registry and market development strategies; and establishing state energy efficiency standards for 13 products. The governor also directed the state Department of Ecology to amend current rules to exempt vehicles from emissions testing that meet the ultra-clean emission standards under Environmental Protection Agency (EPA) and California law.

Summer Reading Challenge Grand Prize Awarded
Eleven-year-old Brian Hughes of Seattle was selected at random to win the grand prize trip for four to Disneyland for participating in the 2004 Governor’s Summer Reading Challenge. Governor Locke presented the award to Brian, a 7th grader at Mercer Middle School in Seattle, in a ceremony at the Seattle Public Library on December 8. Brian participated in the challenge through the Rainer Scholars and the Seattle Public Library. More than 16,000 Washington children participated in the 2004 Governor’s Summer Reading Challenge — an increase of nearly three times the total number of participants from the previous two years. The governor started the challenge in 2002 to encourage Washington students to continue reading during summer vacation and add to the reading gains they made during the school year.

Governor’s Scholarship Applications Now Available
Applications for the fourth year of the Washington State Governor’s Scholarship for Foster Youth are now available. Governor Locke established the program in 2001 to help children in state or federally recognized foster, group and kinship care enroll in and complete college in Washington state. The scholarship program is funded by proceeds from the annual Governor’s Cup Golf Tournament and is managed by the Washington Education Foundation. Additional applicant eligibility criteria can be found on the Washington Education Foundation’s Web site — www.waedfoundation.org (click on the Governor’s Scholarship link) or by calling 1-877-655-4097. Applications must be postmarked by Wednesday, March 1, 2005.

12/17: Columbia River Initiative Rollout, Kennewick
12/21: Judicial Announcement, Kitsap County
12/21: Governor’s Award for Excellence in Energy Management, Olympia