May 13, 2020
Today Gov. Inslee directed state agencies to refrain from hiring, signing non-essential personal services contracts, and purchasing equipment. The freeze is effective May 18. (Some exceptions are noted in the directive.) It’s not clear how much the freeze is expected to save.
The governor directed this freeze because “the State’s revenue situation warrants immediate fiscal restraint.” He’s referring to the preliminary, unofficial revenue forecast from the Economic and Revenue Forecast Council that estimates that 2019–21 revenues could be down $3.8 billion.
A similar freeze was the first budgetary measure undertaken in response to the Great Recession in 2008. In the current downturn, Gov. Inslee’s first response was to veto some new spending that had been adopted in the 2020 supplemental. (That was possible due to the nearly simultaneous passage of the 2020 supplemental budget and the beginning of the COVID-19 outbreak and economic downturn.)
Also today, the director of the Office of Financial Management (OFM) asked agencies to identify savings of 15 percent for FY 2021. Altogether, OFM is looking for savings totaling $1.874 billion from funds subject to the outlook (NGFO). (The letter notes that “[s]ome agency savings will be realized by complying with the freeze.”)
The 15 percent savings would not come off total FY 2021 NGFO appropriations ($27.414 billion)—some budget areas are excluded from the calculation, so just 45.6 percent of the annual budget is subject to the request. Overall, the potential $1.874 billion in savings represents 6.8 percent of the FY 2021 budget.
The major areas that are not asked to find savings are:
- K–12 basic education
- Bond retirement and interest
- Contributions to retirement systems
Tags: COVID-19 , COVID-19 & the economy , state action on COVID-19