Governor Gary Locke’s Remarks
2004 Supplemental Budget News Conference
December 18, 2003

Good morning.

The first thing I want to do today is apologize to your editors – because you will have to go to some other state for a story about a budget crisis. We don’t have one here.

One year ago, I stood at this podium with a plan to deal with the fiscal crisis we faced. I announced the POG process, a totally new way of budgeting and prioritizing all state programs. POG worked. The Priorities of Government budget I proposed funded the services that matter most with the money we had.

The Legislature adopted my approach and we avoided a general tax increase at a critical time for Washington’s economy. We cut programs by $2.6 billion in the current biennium. Yes, it hurt. But we have managed this reduction without a crisis. And without dismantling core services to the people of our state.

The tough decisions are paying off. The economy is turning around. Our children are doing better than ever in school. Our most vulnerable children and adults are getting the help they need. Our state government is on solid footing. Our transportation system is on the mend.

And The Boeing Co. decision to land final assembly of the 7E7 in Everett is proof that Washington State is a great place to do business. We competed nationally against states touted for economic development and business climate and we won!

In short, we’re in pretty good shape.

Look at it this way: Oregon solved its budget crisis with tax increases which voters are about to repeal. In California, the governor is trying to sell $15 billion in bonds to pay off old debts. In Washington, I want to sell some bonds, too. But what I want to do is sell more construction bonds to create more jobs building facilities on our college campuses. This will strengthen our economy and create even more jobs for our children.

Caseload forecasts drive much of supplemental

Most of the General Fund supplemental budget I propose today is the result of revisions by the state’s Caseload Council. The Council makes projections about the numbers of people we have to serve. The Legislature and I are required by law to use those estimates in the budget.

About $130 million in new spending is required just to pay for higher than previous estimates in public-school enrollments and student transportation, social service caseloads and corrections.


Increasing college enrollment

Just like last year – my budget proposal provides the services that people want and need the most.

The discretionary General Fund dollars that are available to us go where they will do the most good – to no surprise – education, our highest priority. The Competitiveness Council and I believe the most important thing we can do is invest in higher education. This will help our state economy. And it will help people lead better lives.

Students and their parents are knocking at the doors of our state colleges and universities. We have to open those doors. Businesses are asking for highly skilled workers in high demand fields. We must provide them. Economic development and our quality lifestyle depend on a highly educated and skilled workforce more than any other single thing.

My budget proposal includes $30 million to increase state-funded enrollment at state colleges and universities by up to 5,200 full-time students. And that includes as many as 2,727 students in high-demand fields.

K-12 schools

In public schools, we’re going to do more to help struggling students meet state standards for academic achievement. We owe this help to our struggling students or else our schools will face federal penalties. We’re adding $7.1 million for our Learning Assistance Program. In addition, we’re spending $1.2 million to ensure that the WASL is fair and equitable. This will provide opportunities for students to retake tests or demonstrate their mastery of state standards in alternative ways.

Promise Scholarships

And those students from middle- to low-income families who do well in school, graduating from high school in the top 15 percent of class, will find the 7,000 Promise Scholarships we award each year are more valuable. We’re spending $7.1 million to double the current value of the scholarships. They will now cover 80 percent of community college tuition.

Economic recovery

To stimulate our economy, I am proposing a supplemental Capital Budget. This Capital Budget finances $168 million in new construction including $92.6 million for new classroom and research facilities at state colleges and universities. Other major improvements are aimed at ensuring we have enough fresh water for people, fish and agriculture. We also include start-up funding for a new prison to house an increasing number of criminals being sentenced to prison.

We also propose to continue to provide tax incentives to stimulate new research and development and encourage growth of manufacturing in rural areas.

These incentives are set to expire next year. We will be foregoing $74 million in new revenue to extend them. But the benefits out-weigh the cost in promoting entrepreneurship and helping businesses to thrive.

Health care

In addition to education and economic recovery, this supplemental budget works to improve the quality of health care in rural areas and keep health care affordable for low-income families.

We can afford to do this because Washington, unlike many other states, chose wisely last spring to put its share of one-time federal funding assistance into savings. Another reason is the recently passed federal Medicare Prescription Drug Bill. This bill provides the state some additional federal money for health care.

Home care workers contract

This budget includes $24 million in state funds, which combined with $23 million in federal dollars, will fund the negotiated contract between the state and home care workers if that contract is approved by the Legislature. Remember that voters approved an initiative mandating collective bargaining with this group of state employees. Now we have an agreement, ratified by the home-care workers, that would give them a wage increase of 50 cents an hour plus workers compensation benefits and limited health care benefits.

Rural health

People who live in Washington’s rural areas shouldn’t have to drive to the big cities to see a doctor or dentist. My supplemental budget provides more doctors and nurses in rural areas in four ways.

First, we are tripling – to a total of 50 – the number of health care professional who get help paying off education loans if they practice in rural areas.

We are tripling to 210 the number of retired physicians in the state program where they volunteer their services to low-income patients in exchange for the state paying all their malpractice insurance costs.

And we are expanding the Nurse Corps in public schools, so there will be an additional 25 school nurses helping under-served sick kids in rural areas.

It also happens that a lot of families starting out need Medicaid health care, and childbirth services are among the more costly ones. This budget increases Medicaid reimbursements for childbirth services – $10 million state and $10 million federal. This will help family doctors continue to serve low-income patients, especially in under-served rural areas.

Health care is a problem that working families struggle with every day. We can’t solve all the problems, but this budget takes some of the bite out of them.

Medicaid premiums for kids

Starting early next year, parents of children receiving state-sponsored Medicaid health coverage will start paying small premiums so we can retain this optional program. But this budget reduces the impact of these fees by lowering the premiums to $10 or $15 a month, depending on family income. And we are eliminating the premium requirement for families with incomes up 150 percent of the poverty level, or $1,900 income a month for a family of three.

Home care workers contract

This budget includes $24 million in state funds, which combined with $23 million in federal dollars, will fund the negotiated contract between the state and home care workers if that contract is approved by the Legislature. Remember that voters approved an initiative mandating collective bargaining with this group of state employees. Now we have an agreement, ratified by the home-care workers, that would give them a wage increase of 50 cents an hour plus workers compensation benefits and limited health care benefits.

Economic recovery

To stimulate our economy, I am proposing a supplemental Capital Budget. This Capital Budget finances $168 million in new construction, including the $92.6 million I mentioned earlier for colleges and universities. These are private sector jobs that will provide needed improvements to campuses and state institutions at super-low interest rates.

Other major improvements are aimed at ensuring we have enough fresh water for people, fish and agriculture. We also include start-up funding for a new prison to house an increasing number of criminals being sentenced to prison.

We also propose to continue to provide tax incentives to stimulate new research and development and encourage growth of manufacturing in rural areas. These incentives are set to expire next year. Continuing them will cost the state treasury $80-90 million a year. But the benefits out-weigh the cost in promoting entrepreneurship and helping businesses to thrive.

Water, driver licenses

There some other items in this budget I want to mention: Water – Reform of our antiquated water laws continues. We must discourage practices that waste water we need for people, fish and agriculture. There’s nearly $16 million in the capital budget both to increase the efficiency of systems that get irrigation water to our crops and to improve wastewater reclamation.

Renewing driver licenses – We’ve already done a lot to put state government services on the Internet. Now, I want to make on-line or mail-in renewal of driver licenses possible.
If we do that, we cut costs and avoid big lines at driver-license offices.

Conclusion

I’m proud of this supplemental budget. It builds on the foundation of hard work we’ve done to prioritize state services. It addresses what this government must do. And it uses the funding that is available while keeping healthy reserves to improve education opportunities for our children and to make sure health care for families is available and affordable.

I want to thank OFM and Marty Brown for their hard work. I especially want to thank Jim Hedrick for his work developing the tax incentive package for Boeing. Thank you for coming.