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Highlights of the Governor's

1997-99 Budget Recommendations

W ASHINGTON STATE'S population is currently projected to grow by more than one million people during the decade of the 1990s and reach a total of 5,930,000 by the year 2000. Increasing at the fastest rate since the war years of the 1940s, this new population boom is already putting heavy pressure on the state's public education system, its prisons, and its natural resources. Budget proposals introduced by Governor Lowry for the 1997-99 Biennium provide the means to meet this challenge and lay a solid foundation for Washington's future.

1997-99 Operating Budget

Governor Lowry is recommending a $19.531 billion General Fund-State (GF-S) operating budget for the 1997-99 Biennium, with a proposed appropriation of $9.575 billion for Fiscal Year (FY) 1998 and $9.956 billion for FY 1999. As illustrated below, approximately 57 percent of all expenditures proposed by the Governor would be used to help finance public schools, colleges, and universities. When all funds are considered, including federal funds and dedicated revenues, the Governor's total proposed operating budget is $36.6 billion.

General Fund-State
All Funds
Proposed Operating Budget for 1997-99 Proposed Operating Budget for 1997-99
Category $$ in millions Category $$ in millions
______________________________________ ______________________________________
K-12 Schools $9,017.5 K-12 Schools $9,676.8
Higher Education 2,197.9 Higher Education 5,322.3
Children & Family Services 497.9 Children & Family Services 789.7
Medical Assistance, L/T Care 2,250.5 Medical Assistance, L/T Care 5,747.3
Economic Services 1,107.9 Economic Services 2,038.6
Corrections 844.3 Corrections 851.9
Other Human Services 1,466.2 Other Human Services 4,765.1
General Government 582.9 General Government 2579.1
Natural Resources 237.4 Natural Resources 920.3
Transportation* 24.7 Transportation*** 1713.1
All Other** 1,304.0 All Other** 2,182.1
______________________________________ ______________________________________
TOTAL $19,531.2 TOTAL $36,586.3

* Transportation equals one-tenth of 1 percent.
** Other includes debt service, pensions, other education, and special appropriations.
*** Transportation does not include capital transportation costs.

The Governor's proposal calls for increasing GF-S expenditures by $1.761 billion above the $17.770 billion budget plan for the 1995-97 Biennium, an annual average of 5 percent over the next two years. This is nearly identical to the combined rates of inflation and population growth anticipated in the 1997-99 Biennium, but $235.6 million higher than the applicable expenditure limit as currently defined by Initiative 601. As discussed in Part II of this document, the Governor is proposing two changes in the formula used to calculate the spending limit so that the state can at least keep pace with population growth and inflation. With these modifications, the GF-S spending limit applicable to the Governor's budget proposal is $19.545 billion, approximately $14.0 million higher than his proposed level of expenditures.

Below is a brief summary of the key elements of the Governor's operating budget proposal for the 1997-99 Biennium, which addresses major issues facing the state, provides targeted tax relief for homeowners, and leaves $303.4 million in reserve to address any unanticipated costs.

1997-99 Capital Budget

The Capital Budget for 1997-99 proposes new projects totaling $1.8 billion, of which $934.2 million is financed by general fund-supported bonds. An additional $1.4 billion is proposed in reappropriations to complete ongoing projects. The Governor's supplemental budget proposal also recommends $112.1 million in general fund appropriations to move forward on four key construction projects, discussed in the next section of this document. Funding these one-time capital projects from available general fund cash allows other critical capital projects to be funded in the 1997-99 Biennium within the 7 percent statutory debt limit.
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Highlights of the Governor's

1997 Supplemental Budget Plan

T HE GOVERNOR'S 1997 SUPPLEMENTAL BUDGET proposal makes several adjustments in annual expenditures necessary to complete state operations in the 1995-97 Biennium. Most of these revisions respond to changes in caseload and enrollment forecasts, emergency costs for the state's response to forest fires and winter storms, and other unanticipated expenses in individual agencies. The Governor's proposal also responds to federal cutbacks affecting state programs in the current biennium, setting the stage for initiatives recommended in the 1997-99 budget.

In addition, the Governor proposes investing $112.1 million in General Fund-State (GF-S) resources available in the current biennium to address four high-priority construction projects around the state related to education and the arts. These projects include the Harborview Research and Training facility at the University of Washington, a new Health Services Facility at the Joint Center for Higher Education in Spokane, various K-12 school construction projects at sites throughout the state, and the Seattle Symphony hall (Building for the Arts program). Funding these projects through one-time expenditures in the operating budget will ensure their construction at a time of competing demands on the state capital budget.

Components of the Governor's Proposed FY 1997 Supplemental Budget
Dollars in Millions
All Funds
Caseload/Enrollment Adjustments - $ 10.2 - $68.2 -47.8
Emergency Response 8.5 7.0 0
Replacement of Federal Program Losses 32.8 17.9 35.0
Investments in Education Capital 112.1 112.1 0
All Other Adjustments 13.8 34.9 121.2
TOTAL $ 157.0 $ 103.7 108.4


The Governor's supplemental budget proposal accommodates modest changes in public school enrollments, Department of Social and Health Services (DSHS) caseloads, and corrections facilities, netting to an overall savings of $10.2 million GF-S. The major programs with changes are described below.

Public Schools

Revised enrollment forecasts result in a savings of $5.6 million in the supplemental budget. Changes in enrollment forecasts for the 1996-97 school year represent a decline of 161 full-time equivalent (FTE) students in basic K-12 enrollment and 638 students in Special Education. These reductions are partially offset by an increase of 259 FTE students in vocational education and an increase of 383 FTE students in bilingual programs.

Department of Social and Health Services

Various caseload changes in DSHS net to a savings of $7.1 million. These changes are described below.

Department of Corrections

Emergency Response

The Governor's proposed supplemental budget includes several items related to costs for emergency assistance resulting from fires and winter storms.

Replacement of Federal Programs

In the 1996 supplemental budget, the Legislature appropriated funds to replace a limited number of federal funding losses that adversely affected services to state citizens. Federal actions since the last legislative session - specifically welfare legislation and the new budget that began in October 1996 - have made it evident that the state will continue to experience reductions in federal support.

As the federal government reduces funding for the Social Services Block Grant and changes eligibility for such programs as food stamps and Supplemental Security Income, the state has experienced a corresponding increase in demand for budgeted services. These actions, together with a reduced assumption of federal Title IV-A funds for the Juvenile Rehabilitation program and additional expenses for implementing federal programs, result in a net cost to the state of $32.7 million during the 1995-97 Biennium.

Investment in School Construction and the Arts

The Governor is proposing four capital projects that will help promote future access to education and the arts:

Other Expenses

The Governor's supplemental budget also funds the following critical items in 1995-97.
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