Before the Great Recession, actual spending in the 2005–07 biennium increased by 17.6 percent over 2003–05 and the original 2007–09 budget increased spending by 10.8 percent. State revenues began to drop in the November 2007 revenue forecast, but as I noted in the first part of this series, it was a slow drip. During the regular 2008 legislative session, the Legislature increased 2007–09 policy level spending by $101.9 million. Appropriations in the 2008 supplemental were $33.655 billion (11.8 percent higher than 2005–07), which turned out to be the state’s pre-recession spending high point.

Meanwhile, the costs of continuing current services (the maintenance level) continued to grow. To address the revenue shortfalls, the Legislature made policy level spending reductions totaling $13.194 billion (near general fund–state) from February 2009 through April 2012. Federal stimulus funding provided $926.6 million in 2007–09, $2.825 billion in 2009–11, and $185.1 million in 2011–13.

The Legislature acted to increase revenues in 2009 and 2010. These actions increased revenues by $880.4 million in 2009–11 and by $1.820 billion in 2011–13. Transfers to the general fund from other funds totaled $192.8 million in FY 2009, $1.384 billion in 2009–11, and $595.2 million in 2011–13.

Legislators also tapped the budget stabilization account (BSA, or the rainy day fund). They used $400.0 million in 2007–09 and $268.3 million in 2009–11. (The rainy day fund had just been established effective July 1, 2008, so it hadn’t had time to accumulate much.)

(Future posts in this series will have more details on the spending cuts and resource increases.)

Given the revenue declines, the Legislature often had a difficult time coming to agreement on budgets. Over the period, six special sessions were required. Following is a timeline of events.

Aug. 4, 2008: After 2007–09 revenues declined by $584 million (1.8 percent), Gov. Gregoire freezes state hiring, out-of-state travel, personal service contracts, and equipment purchases.

Oct. 7, 2008: After another $273 million decline, Gov. Gregoire announces savings of $240 million in 2007–09 from across-the-board cuts and other items.

Nov. 25, 2008: After another $503 million decline (in total, a 4.2 percent decline since Sept. 2007), Gov. Gregoire announces $260 million in FY 2009 spending reductions.

Dec. 17, 2008: The Office of Financial Management (OFM) determines that collective bargaining agreements with state employees signed that fall for 2009–11 are not financially feasible.

Feb. 18, 2009: Legislature passes early action spending reductions for 2007–09 (ESHB 1694). Policy reductions total $628.6 million. Additionally, the Legislature passes SB 5460, which freezes salaries, hiring, personal services contracts, equipment purchases, and out-of-state travel until July 1, 2009 (this codifies the actions Gov. Gregoire took in August 2008).

April 26, 2009: After the March revenue forecast reduced revenues by $670 million in 2007–09 and by $2.124 billion in 2009–11, Legislature passes a 2009 supplemental and 2009–11 operating budget. The 2009 supplemental reduces 2007–09 policy spending by $581.6 million. The 2009–11 operating budget reduces policy spending by $5.611 billion.

Feb. 11, 2010: After additional 2009–11 revenue losses of $1.468 billion, the Legislature passes early action spending reductions of $45.4 million for 2009–11.

March 15, 2010: Special session begins; called by Gov. Gregoire to finish work on the budget.

April 12, 2010: Legislature passes 2010 supplemental budget, with policy reductions of $918.4 million. Special session adjourns.

Sept. 13, 2010: Gov. Gregoire issues executive order making across-the-board reductions of 6.287 percent to avoid a projected cash deficit. (Since the 2010 supplemental was adopted, 2009–11 revenues had dropped by $245 million.)

Nov. 17, 2010: Gov. Gregoire suspends non-critical rulemaking through Dec. 31, 2011 due to the recession. (The suspension was later extended through Dec. 31, 2012.)

Dec. 11, 2010: Special session begins; called by Gov. Gregoire in order to reduce the GFS deficit after revenues dropped by $1.087 billion. Legislature passes a second supplemental budget making policy reductions of $490.4 million. Special session adjourns later that day.

Dec. 14, 2010. Gov. Gregoire announces an agreement with state employees to cut salaries by 3 percent.

Feb. 18, 2011: Legislature passes early action savings bill making policy reductions of $235.8 million.

April 26, 2011: Special session begins; called by Gov. Gregoire to finish the 2011–13 budget.

May 25, 2011: Legislature passes a 2011 supplemental budget making policy reductions of $108.0 million. The Legislature also passes the 2011–13 operating budget, which makes policy reductions of $4.053 billion. Special session adjourns.

Nov. 28, 2011: Special session begins; called by Gov. Gregoire to address the 2011–13 operating budget and the September revenue forecast, which had reduced 2011–13 revenues by $1.427 billion.

Dec. 14, 2011: Legislature passes early savings bill that reduces policy spending by $226.0 million. Special session adjourns.

March 12, 2012: Special session begins; called by Gov. Gregoire to finish the operating budget. Adjourns April 10, 2012.

April 11, 2012: Second special session begins; called by Gov. Gregoire to finish the operating budget. Legislature passes a 2012 supplemental, reducing policy spending by $295.4 million. Second special session adjourns.