The AP's David Ammons reports today that Gov. Chris Gregoire has opened the door to a smaller reserve fund for the state as the economy worsens.
For the first time, she indicated she might accept a savings account smaller than $1 billion, but said she's still demanding a frugal state budget this winter.
Even before the national and international slowdown and the swoon on Wall Street, Gregoire proposed saving most of the state's projected reserve of $1.4 billion. The governor proposed a $1.2 billion savings account and legislative leaders were talking about a $1 billion level.
Friday, the Economic and Revenue Forecast Council releases its new estimate of state revenues. As Ammons reports, expectations are grim.
Senate Majority Leader Lisa Brown, D-Spokane, an economist, is predicting a hit of between $150 million and $200 million. The council chairman, Rep. Jim McIntire, D-Seattle, has the same guess. Senate budget Chairwoman Margarita Prentice, D-Renton, said it could be even worse.
Jason Mercier at the Washington Policy Center makes a good point in this post:
If anything, a downturn in the revenue forecast illustrates the need for the state to save MORE than $1 billion, not LESS.
There's no need to rehearse the alarms sounded last year when state spending increased at twice the rate of revenue growth. Even in the unlikely event that the revenue forecast shows no change, the state still faces a serious shortfall in the next biennium. Trim spending, not savings.
