Office of Governor Gary Locke
FOR IMMEDIATE RELEASE - December 16, 2004
Contact: Governor's Communications Office, 360-902-4136
Alt Contact: Office of Financial Management, 360-902-0619
Facing a budget problem of more than $1.8 billion in the next biennium, the governor’s proposal relies on cuts, savings and fund transfers to address $1.3 billion of the gap. New revenue from tax increases on hard liquor and other beverages, and on the gross receipts of doctors, covers the rest of the shortfall.
“This budget is guided by my Priorities of Government (POG) approach to spending. It reflects hard work by many people engaged in POG 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,” the governor said.
During the past four years, Locke has cut more than $4 billion from the state budget. Locke pointed out, however, that the purpose of POG never was to cut spending to the point that the state is crippled.
“The purpose of Priorities of Government is to do everything we can with the money we have, and that often means doing without,” Locke said. “But it also means providing enough money to pay for the highest-priority services citizens want and expect,” the governor said.
The governor presented two budget proposals. The first, which is required by law, is a spending plan that relies solely on existing revenue. Under this plan, deep cuts would be required in education, health care and services for vulnerable people.
“This is not the kind of budget I want, and it’s not what the people of this state want,” Locke said. “We cannot turn our backs on basic values – the need to educate our students and to provide health care and safety to abused children, people with disabilities and senior citizens. These are values that the people of this state hold dear.”
Tax increases proposed by the governor to overcome these problems pay for further class size reductions in public schools, higher enrollments in state colleges and universities, preserving the safety net for vulnerable children and adults, maintaining enrollment in the Basic Health Plan for lower-income adults at the current level, and boosting Medicaid reimbursement rates so doctors don’t stop treating low-income people.
With higher Medicaid reimbursement rates, doctors – as a group – get back more money than they pay in new taxes, the governor noted.
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 Locke has proposed a budget containing new general taxes for state-funded services.
Even with new revenue, Locke’s 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.
The governor also proposes a $2.9 billion Capital Construction budget primarily for new space for students at state colleges and universities, new public schools and public safety facilities. He proposes a transportation budget that advances a $4.2 billion improvement package launched two years ago by speeding up $60 million in new projects.
As required by law, Locke includes in his proposal to the Legislature $106 million to pay for state employee cost-of-living pay raises negotiated under the Personnel System Reform Act of 2002. He also includes $118 million to cover similar raises for employees not represented by unions, and $120.1 million for teacher pay raises required by Initiative 732.
“Most state employees, from university professors to snowplow drivers at the Department of Transportation, have gone without cost-of-living raises for four years. I consider these raises to be a fundamental cost of doing business. If you want dedicated workers, you have to treat them fairly,” Locke said.
Locke’s 2005-07 biennial budget proposal, including his revenue package, contains:
§ $11.6 billion – nearly half of General Fund spending – to fund basic education for 1 million students in our public schools, and to help struggling students.
§ $2.9 billion to fund more than 223,000 students at the state’s colleges and universities, providing thousands of new enrollments, including many in high-demand fields.
§ $4.2 billion to keep Washington healthy, including health care for 971,000 vulnerable children and adults.
§ $2 billion for public safety, including confinement of 16,000 prisoners and supervision of more than 17,000 higher-risk adults released from prison.
§ $4.1 billion for the safety net including Child Protective Services, emergency food and housing, nursing homes, foster care and temporary assistance to needy families.
§ $318 million to protect the environment through activities of the departments of Natural Resources, Ecology, Agriculture, Fish and Wildlife, and the Parks and Recreation Commission.
Locke proposes General Fund cuts, savings and transfers totaling $1.3 billion. They include:
§ Transferring surplus funds in several accounts to the General Fund, providing $365 million for services.
§ Reducing the Working Capital Reserve, making $192 million available to fund services.
§ Delaying increases in pension contributions for both the state and its employees, which saves the state $289 million.
§ Reducing $97 million in funding for certain health and human services programs.
§ Sentencing reform to reduce state prison costs by $73 million.
§ Limiting cost-of-living increases for vendors who contract with the state, saving $77 million.
§ Cutting costs for state government administration and for supplies and equipment, saving $46 million.
§ Cutting back nursing home rate increases, saving $38 million.
§ Transferring $53 million in higher education and maintenance costs back to the capital budget.
New taxes
Governor Locke proposes to raise $504 million through new or additional taxes on hard liquor, wine, beer and soda pop – products that contribute to rising health care costs.
He also proposes to raise $94 million through a 1 percent gross receipts tax 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.
New tax revenue in Locke’s budget proposal targets:
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
“This is a practical and realistic budget for the state of Washington,” said Locke. “We put a lot of work into it. I believe that the Legislature and the next governor will come to the same conclusions that I reached.”
For more budget information, visit www.ofm.wa.gov.
FOR IMMEDIATE RELEASE - December 16, 2004
Contact: Governor's Communications Office, 360-902-4136
Alt Contact: Office of Financial Management, 360-902-0619
Gov. Gary Locke Announces Budget that Protects State Services that Citizens Value Most
OLYMPIA – Dec. 16, 2004 – Gov. Gary Locke today proposed a $26 billion General Fund budget to pay for 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.Facing a budget problem of more than $1.8 billion in the next biennium, the governor’s proposal relies on cuts, savings and fund transfers to address $1.3 billion of the gap. New revenue from tax increases on hard liquor and other beverages, and on the gross receipts of doctors, covers the rest of the shortfall.
“This budget is guided by my Priorities of Government (POG) approach to spending. It reflects hard work by many people engaged in POG 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,” the governor said.
During the past four years, Locke has cut more than $4 billion from the state budget. Locke pointed out, however, that the purpose of POG never was to cut spending to the point that the state is crippled.
“The purpose of Priorities of Government is to do everything we can with the money we have, and that often means doing without,” Locke said. “But it also means providing enough money to pay for the highest-priority services citizens want and expect,” the governor said.
The governor presented two budget proposals. The first, which is required by law, is a spending plan that relies solely on existing revenue. Under this plan, deep cuts would be required in education, health care and services for vulnerable people.
“This is not the kind of budget I want, and it’s not what the people of this state want,” Locke said. “We cannot turn our backs on basic values – the need to educate our students and to provide health care and safety to abused children, people with disabilities and senior citizens. These are values that the people of this state hold dear.”
Tax increases proposed by the governor to overcome these problems pay for further class size reductions in public schools, higher enrollments in state colleges and universities, preserving the safety net for vulnerable children and adults, maintaining enrollment in the Basic Health Plan for lower-income adults at the current level, and boosting Medicaid reimbursement rates so doctors don’t stop treating low-income people.
With higher Medicaid reimbursement rates, doctors – as a group – get back more money than they pay in new taxes, the governor noted.
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 Locke has proposed a budget containing new general taxes for state-funded services.
Even with new revenue, Locke’s 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.
The governor also proposes a $2.9 billion Capital Construction budget primarily for new space for students at state colleges and universities, new public schools and public safety facilities. He proposes a transportation budget that advances a $4.2 billion improvement package launched two years ago by speeding up $60 million in new projects.
As required by law, Locke includes in his proposal to the Legislature $106 million to pay for state employee cost-of-living pay raises negotiated under the Personnel System Reform Act of 2002. He also includes $118 million to cover similar raises for employees not represented by unions, and $120.1 million for teacher pay raises required by Initiative 732.
“Most state employees, from university professors to snowplow drivers at the Department of Transportation, have gone without cost-of-living raises for four years. I consider these raises to be a fundamental cost of doing business. If you want dedicated workers, you have to treat them fairly,” Locke said.
Locke’s 2005-07 biennial budget proposal, including his revenue package, contains:
§ $11.6 billion – nearly half of General Fund spending – to fund basic education for 1 million students in our public schools, and to help struggling students.
§ $2.9 billion to fund more than 223,000 students at the state’s colleges and universities, providing thousands of new enrollments, including many in high-demand fields.
§ $4.2 billion to keep Washington healthy, including health care for 971,000 vulnerable children and adults.
§ $2 billion for public safety, including confinement of 16,000 prisoners and supervision of more than 17,000 higher-risk adults released from prison.
§ $4.1 billion for the safety net including Child Protective Services, emergency food and housing, nursing homes, foster care and temporary assistance to needy families.
§ $318 million to protect the environment through activities of the departments of Natural Resources, Ecology, Agriculture, Fish and Wildlife, and the Parks and Recreation Commission.
Locke proposes General Fund cuts, savings and transfers totaling $1.3 billion. They include:
§ Transferring surplus funds in several accounts to the General Fund, providing $365 million for services.
§ Reducing the Working Capital Reserve, making $192 million available to fund services.
§ Delaying increases in pension contributions for both the state and its employees, which saves the state $289 million.
§ Reducing $97 million in funding for certain health and human services programs.
§ Sentencing reform to reduce state prison costs by $73 million.
§ Limiting cost-of-living increases for vendors who contract with the state, saving $77 million.
§ Cutting costs for state government administration and for supplies and equipment, saving $46 million.
§ Cutting back nursing home rate increases, saving $38 million.
§ Transferring $53 million in higher education and maintenance costs back to the capital budget.
New taxes
Governor Locke proposes to raise $504 million through new or additional taxes on hard liquor, wine, beer and soda pop – products that contribute to rising health care costs.
He also proposes to raise $94 million through a 1 percent gross receipts tax 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.
New tax revenue in Locke’s budget proposal targets:
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
“This is a practical and realistic budget for the state of Washington,” said Locke. “We put a lot of work into it. I believe that the Legislature and the next governor will come to the same conclusions that I reached.”
For more budget information, visit www.ofm.wa.gov.
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