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House budget spends surplus,
ignores pension liability, says Bailey
A $453 million
supplemental operating budget clears the way to spend a sizable portion
of the state’s $1.6 billion revenue surplus on new, costly programs, and
all but completely ignores the state’s growing pension funding
liability,
Rep. Barbara Bailey, R-Oak Harbor, said today.
The House voted Friday, 53-43, to pass the budget document, Senate Bill
6386, with Republicans, including Bailey, voting no.
"The purpose of a supplemental budget is to make small corrections and
to fund emergency situations that have arisen since the passage of the
biennial budget last year. The supplemental budget adopted by the House
goes way beyond that intent. It re-opens the entire budgeting process to
increase spending by more than 17 percent. In fact, it is the largest
spending increase in the history of the state of Washington," said
Bailey, a member of the House Appropriations Committee.
"The surplus that is set aside in this budget is not placed into
protected reserve funds, nor does it address our pension liability.
Instead, it’s put into spending accounts for future spending on new and
ongoing programs. In the end, only $238 million will remain out of a
total general fund budget of more than $27 billion," added Bailey.
Bailey, a member of the Joint Select Committee on Pension Policy, was
most concerned that the budget sidesteps the opportunity to pay down a
$4 billion unfunded liability in the state’s PERS-1 (Public Employee
Retirement System - Plan 1) pension system.
"Over the past four years, the Legislature has skipped $350 million in
payments to the pension system," added Bailey. "Last year, when the
majority party and Governor Gregoire increased state spending by more
than 12 percent, they skipped the payment and failed to meet the state’s
pension obligations. We now have a huge surplus and the majority party
still refuses to catch up those payments."
By pushing off the pension payments, Bailey said it will cost taxpayers
more than $650 million.
"Pensions are like mortgages. If you have a mortgage payment and you
have the money available to pay it, why would you skip it or not pay it
at all? That’s an obligation. Everyone knows they should pay their debt
first," said Bailey. "We shouldn’t be adding new programs to the budget
or expanding other programs in the state budget. We should pay the bill
while we have revenue available."
Bailey noted her bill that would have put the state back on track with
its pension payments was bottled up in the House Appropriations
Committee by the majority party. House Bill 2909 included a three-year
phase-in that would have allowed the state to fully catch up on its
pension payments.
As an alternative, Bailey offered an amendment on the House floor that
would redirect money placed into a yet-to-be established "pension
stabilization fund" toward paying down the state’s pension obligation.
The amendment failed along party lines, 53-43.
"If we really wanted to pay our debt, we would put it in the pension
fund where it would actually do us more good and save us millions upon
millions of dollars into the future," said Bailey.
Bailey noted that by spending the surplus on new programs, it will
result in a $600 million shortfall in the next biennium, and a $4
billion shortfall in the following biennium.
"I’m afraid for our children next biennium. Or even worse in the
biennium after that with such a large projected shortfall," added
Bailey. "We can call this a spending budget, an investment budget, a
savings budget, a forward-thinking budget, and that we are planning for
the future with this budget. But why not call it what it really is? This
is a scary budget, because I am scared for our future."
The measure now goes to a conference committee to work out further
details for final passage.
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For more information, contact:
John
Handy, Assistant Director: (360) 786-5758
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