The Washington State Legislature is guilty of check-kiting on a grand scale.
Today is Day 84 of a 105-day 2011 Washington Legislative session. We anxiously await this week’s Democrat budget proposals on the $5.7 billion biennial shortfall.
The vast amount of Legislative energy thus far has been passing a supplemental budget (2010) and treating bills of varying worth.
Attention now turns to the biennial budget.
Washington state’s short-term and long-term fiscal sustainability require radical changes to the way the state conducts business.
Democrats and Republicans, one hopes, agree on this critical point.
However, balancing the $5.7 billion budget shortfall is only one of two Herculean tasks facing the governor and Legislature.
Funding unfunded government obligations is Task No. 2.
Washington State Auditor’s Office 2010 annual audit of the state’s financial statement (Comprehensive Annual Financial Report) defines the second Herculean task that hamstrings economic sustainability for Washington State.
A few of the very troubling findings from the CAFR and the Auditor’s Summary:
• Tax revenues decreased $1 billion in Fiscal Year (FY) 2010 over FY2009.
• Human Services expenses increased $510 million (4 percent over FY 2009).
• At the end of 2010 State general-obligation debt of $16.6 billion was 18 percent over FY2009.
• State’s Budget Stabilization Account (Rainy-Day Fund) had June 30, 2010 balance of $21.4 million compared to fund balance of $302.7 million in 2008.
CAFR Serious Challenges Ahead:
• Serious growing obligations that are not adequately funded:State closed-pension plan PER1 (retired state employees) and TRS1 (retired teachers) have serious unfunded liabilities.
As of June 30, 2009, PERS1 unfunded liability was $4.2 billion and for TRS1 was $2.7 billion.
• State administered post-employer benefit plan to former state employees has an unfunded liability of $3.8 billion as of Jan. 1, 2009.
• Workers Compensation Plan has an unfunded liability of $12.8 billion for supplemental pension cost-of-living (COLA) as of June 30, 2010.
Yes, as with all sleight-of-hand maneuvers, your attention is called away from where the trick is happening.
While taxpayers, businesses, employers, employees, unions and retirees watch carefully the work of the legislature on the $5.7 billion budget-shortfall, little or no public-Legislative attention is called to these very serious state-unfunded liabilities.
Beware of the the Washington legislators’ all-too-obvious calls for accounting gimmicks and borrowing schemes to sustain the unsustainable for another year or two.
This is not what is demanded. Washington state is in dire fiscal crisis and Olympia will not see another President Obama Stimulus (TARP) $2 billion life-line forthcoming this year.
Citizens, watch your legislators carefully. These fiscal imbalances in budget and unfunded liabilities are a very serious threat to our future economic health.
“The check is in the mail” won’t work.
JAMES M. OLSEN
Bainbridge Island
