The victory celebrated by Washington state's House and Senate after they separately approved their versions of the operating budget on Monday was short-lived, because Gov. Bob Ferguson sent them back to the drawing board on Tuesday.
"Neither budget is close to one I can sign for two reasons," Ferguson said during a press conference. "First, they each proposed too much in
If the legislature "wants to complete its work on time, they need to immediately take things in a significantly different direction," Ferguson said.
Lawmakers need to approve an operating budget, transportation budget and capital projects budget by the end of their session on April 27.
Lawmakers adopted the $4 billion in cuts Ferguson recommended, and the $3 billion in cuts former Gov. Jay Inslee had included in the budget proposed before he termed out in December, according to the governor.
But he says the projected deficit has soared to $16 billion over the next four years between state economists
"We knew things were rocky, but they have escalated dramatically," Ferguson said. "We have been hearing about our hospitals cutting hundreds of staff all due to federal funding cuts."
He estimated that 28% of Washington's budget is supported by federal dollars to the tune of $43 billion per biennium. The total includes $34 billion for Medicaid, $2.5 billion for education, $1 billion for child welfare and $600 million for disaster response.
"There are no guarantees that federal funding will continue in these and other areas," Ferguson said.
"We must prepare for more cuts from the federal government," Ferguson said. "This is a five-alarm fire and I intend to treat it that way."
Ferguson said he doesn't want to adopt an "all cuts," budget, because it would result in reductions to essential services, but he also will not approve a budget with anywhere near the level of taxes proposed by lawmakers.
Ferguson said his priorities are preserving the rainy-day fund, passing a budget based on realistic revenue projections, limiting new investments to preserve core services and K-12 education and not relying on an untested revenue source, like a wealth tax, that is likely to be overturned by the courts.
"The first and most important thing we can prepare for a storm is preserving the rainy-day fund," Ferguson said. "Draining our reserves will weaken Washington's bond ratings and make it difficult to borrow funds."
Washington's triple-A rating "means borrowing at a lower cost," on the money needed to build more schools, and lower costs enable the state to replace infrastructure faster, he said.
The state holds an Aaa from Moody's Ratings and AA-plus ratings from Fitch Ratings and S&P Global Ratings. Moody's and Fitch assigned stable outlooks, while S&P affirmed a
State Treasurer Mike Pellicciotti said in a statement Tuesday he will continue to advocate for "maintaining sufficient reserves to insulate Washington from economic turbulence, natural disasters, and a chaotic federal government."
He added, the House version of the operations budget protects reserves.
"There are many difficult choices to be made this session, but the priority must be to ensure our state can navigate the crises ahead," Pellicciotti said.
