How Washington State Balanced Its Budget

Published November 1, 2003

According to the National Association of State Budget Officers, the state of Washington opened its 2003 fiscal year with a $1.6 billion deficit–less than the $2 to $3 billion deficit it was projected to have, but a substantial deficit nevertheless. Among the 50 states, Washington’s budget deficit was 16th highest.

By the end of the legislative session, not only had the governor and state legislature wiped out the 2003 deficit, but a balanced budget was predicted for the 2004 fiscal year. Neither sleight-of-hand nor tax increases accounted for the improvement … but policymakers’ successful implementation of a new approach to budgeting.

Innovative Solution

Conventional thinking says lawmakers planning next year’s budget must look at the existing budget, adjust for inflationary and caseload increases, and find ways to raise taxes or cut services to maintain the status quo. But the new budget model developed by Washington Governor Gary Locke (D) rejected such conventional thinking.

Bob Williams, president of the Olympia-based Evergreen Freedom Foundation (EFF), noted, “The governor’s budget team actually implemented recommendations EFF has offered over the past decade. Serious efforts were finally made to reduce costs, eliminate non-essential services, and prioritize spending. This was a great first step.”

Locke opted to balance the budget within forecasted revenues, an “innovative” approach that addressed the projected budget deficit. The four-step effort has laid the foundation for further budget reforms in the state. Locke’s team:

  • Identified the core functions of government.
  • Identified the outputs desired from the core functions.
  • Evaluated a wide range of purchase strategies to determine which would achieve the desired results.
  • Prioritized all agency programs into “High,” Medium,” or “Low” priority.

Surprising even his own party and past stalwart supporters, Locke remained committed to his new budget model, allowing the state’s Republican Senate to push through a balanced budget without new general taxes. Locke’s relationship with the Speaker of the House, Democrat Frank Chopp, frayed.

But Locke’s commitment to his approach, and his desire to achieve bipartisan support for the effort, won him praise from both sides of the aisle. Olympia lawmaker Gary Alexander, the ranking Republican member of the House Capital Budget Committee, was among Locke’s advocates. “We have the opportunity to make meaningful changes in the way government does business,” Alexander said. “If we don’t work together, accept our responsibility, and rebuild the peoples’ trust, the cycle will just repeat itself.”

Core Functions Established

Locke and his budget team defined the core functions of Washington state government in terms of 10 goals they wanted to achieve. They sought to identify measurable outcomes and prioritized agency programs based on their ability to help achieve the 10 goals. State agency heads were enlisted in the process, asked to articulate their core missions and prioritize their programs and budgets accordingly. A model budget was drafted to allocate forecasted resources according to the priorities identified.

Four key questions guided the governor’s effort:

1. How much money does the state have?

2. What does the state want to accomplish?

3. What is the most effective way to accomplish the state’s goals within existing revenue?

4. How can/will the state measure its progress toward those goals?

The governor and his staff decided the core functions of government could be accomplished by meeting the following 10 goals:

  • Increase student achievement in elementary, middle, and high schools.
  • Improve the quality and productivity of the workforce.
  • Deliver increased value from post-secondary learning.
  • Improve the health of Washingtonians.
  • Improve the condition of vulnerable children and adults.
  • Improve the economic vitality of businesses and individuals.
  • Improve the mobility of people, goods, information, and energy.
  • Improve the safety of people and property.
  • Improve the quality of Washington’s natural resources.
  • Improve cultural and recreational opportunities throughout the state.

While EFF’s Williams doesn’t agree with many of the governor’s 10 goals for government, he is “elated with the sensible process [Locke’s] office used to develop them. They asked the right questions, developed a logical process to determine the answers, and prioritized spending within forecasted revenue accordingly. They created a new set of tools that can and should be used by both political parties.”

According to Williams, “Legislators now have a legitimate place to begin the debate and either ratify or modify these 10 functions. That’s the hard part because, once the legislature has determined the state’s core functions, they will serve as the litmus test for the hundreds of agencies, boards, commissions, and programs currently funded. If an agency or program is not advancing one of the agreed-upon core functions of government, it should be eliminated.

“Now is the time for standing committees to make this review and set the state’s priorities for the next budget,” Williams continued. “It’s time to see if all the programs agencies are currently engaged in can be justified as core functions of the state. Then legislators need to prioritize agency programs and activities using agency mission statements, goals, and objectives.”

According to Locke, that process is already underway. “We [in the administration] have already begun a complete re-examination of the size and scope of state government. We have several of our agency directors working in a multidisciplinary fashion. This is not looking at their own agencies, but really looking at other agencies and just looking at the entire scope of state government.

“Working together–Democrats and Republicans, government and business–I am confident that we can continue to lay a solid foundation for economic vitality and future prosperity for our state,” Locke added.

“The next test is if legislators will institutionalize this process and build on it,” said Williams.

John Skorburg is managing editor of Budget & Tax News. His email address is [email protected].