On Monday, Governor Gregoire released her proposed 2012 supplemental budget for 2011-13.  This follows alternatives for reductions that she laid out in October (and which I wrote about here). The Budget Highlights document explains the problem:

When Governor Gregoire and the Legislature approved the 2011–13 budget last spring, the state was projected to end the biennium with more than $700 million in reserve. But after three consecutive downward revenue forecasts — including another $122 million drop this month — the state now faces a $1.4 billion revenue shortfall for the current biennium.

Her proposal includes $1.732 billion in net general fund-state (GFS) spending reductions, $73.9 million in reductions in local revenue distributions, and $176 million in fund transfers.  With these actions, the governor expects an ending balance of $602 million. GFS spending, as proposed by the supplemental, would total $29.989 billion in 2011-13.

Her supplemental would reduce 2011-13 GFS spending in these budget areas:

• Public Schools: -$710 million
• Other Human Services: -$443 million
• Department of Social and Health Services: -$338 million
• Higher Education: -$170 million
• Governmental Operations: -$82 million
• Natural Resources: -$15 million
• Other Education: -$7 million
• Transportation: -$4 million

It would increase spending in three budget areas:

• Legislative: $201,000
• Judicial: $1 million
• Special Appropriations: $36 million

The governor’s proposal includes funding for training for long-term care workers pursuant to the passage of I-1163.  Additionally, she proposes reducing liquor profits and excise tax sharing with local governments effective July 1, 2012.  The passage of I-1183 means that some liquor profits are guaranteed to local governments.  According to the Budget Highlights document,

It is estimated that border areas, counties, cities and towns will receive $48 million during fiscal year 2013 due to Section 302 of Initiative 1183. However, any remaining funds in the Liquor Revolving Fund will be deposited into the General Fund.

The proposal estimates that the remaining funds would total $43.8 million.  The Budget Highlights document also states that liquor excise tax revenues “are deposited into the Liquor Excise Tax Account and are not protected by Initiative 1183.”  Consequently, the governor would eliminate all liquor excise tax sharing, to save the state $26.4 million.

Lastly, the governor proposes some options for increasing revenues as a way to avoid some spending reductions.  She would ask voters to approve a half-cent increase in the sales tax, and she would ask the legislature to take other actions (including increasing certain tax rates) to raise revenue.

We’ll have more details on this, but in the meantime, happy Thanksgiving!