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State's revenue forecast gets gloomier; LCC anticipates cuts

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Low tax collections and the sluggish economy will cause a new state budget deficits of about $520 million through mid-2011 and $4.5 billion in the following two-year budget, the state's top economic forecaster said Thursday.

The deficits will almost certainly lead to cuts in support for community colleges, social services and the state prison system, state officials said.

For Lower Columbia College, the revenue shortfall means the college must trim $810,000 for this school year, a 6 percent cut in state support that comes as LCC opens an academic year Monday with record enrollment, college President Jim McLaughlin said.

"It's going to be continued cuts. There is no way that we're going to avoid them," McLaughlin said. "We will see some reduction in staffing and service: fewer classes, fewer choices for students."

In releasing the latest revenue forecast Thursday, chief state economist Arun Raha said the state's economic picture is still in "uncharted territory."

"Things will eventually get better, but at a slow and uncertain pace," Raha said. "That cannot be entirely reassuring, but that is the best that I have at this time."

The state is expected to bring in about $770 million less than originally projected during the current budget year, which runs through June 2011. There previously was about $250 million in reserves, leading to an immediate $520 million deficit in a general fund budget of roughly $28.5 million.

Tax collections for the next two-year budget period (July 2011-June 2013) are projected at about $670 million lower than previously expected. That makes the projected deficit for the upcoming budget around $4.5 billion.

Anticipating a gloomy report, Gov. Chris Gregoire Monday ordered state agencies to prepare for across-the-board spending cuts of as much as 7 percent. Details of those cuts are expected to emerge Oct. 1.

Spending cuts won't touch certain areas, such as basic education, pensions and debt service. But Marty Brown, Gregoire's budget director, said social services, corrections and community colleges will clearly face significant losses. Consequences could include larger community college classes and fewer services.

"It's not going to be pretty," Brown said Thursday.

McLaughlin said LCC is "looking at a bit of everything" to make cuts, including not filling some positions that opened up during the summer, offering early retirement packages to employees and converting full-time into part-time positions.

"The good thing is that high enrollment brings in extra tuition revenue. That helps alleviate some of the cuts, but there are going to be impacts," McLaughlin said.

State Sen. Joe Zarelli, a Ridgefield Republican whose district contains Woodland, Kalama, Toutle and Castle Rock, called upon the Democratic leadership, which commands a huge majority in both houses of the Legislature, to put together a budget plan and call a special session.

The governor's orders, he said, are "cuts on paper" because Gergoire can't legally trim many legally mandated programs. The Legislature needs to step in, said Zarelli, the Senate GOP's budget chief.

"The leadership is avoiding the issue," said Zarelli, adding that waiting for the next Legislative session to convene in January is wasting time and opportunity for savings.

However, state Rep. Dan Takko, a Longview Democrat, said a special session would be a waste of time, and that calls for one are politically motivated.

Takko said that even though Democrats command large majorities, it's hard to find enough votes to cut any single program and Republicans would use the haggling to political advantage.

"I can tell you there are 10-15 (legislators) that would not vote to decrease children's health," he said. "But there are 10-15 people who won't vote to end mental health disability (benefits). You go down subject by subject to get votes and we'd be wasting our time."

"I think we need to wait for January and do a thorough job. Our budget hole is so big that I don't think a few months will make that much difference."

In his budget briefing, Raha said consumer confidence, spending and job growth are expected to remain low for the immediate future in Washington. Exports, software and aerospace offer glimmers of positive news, but the poor state job market continues to restrain consumer confidence, Raha said.

"In Washington, the job recovery this time around has been slower than in any of the previous four recessions," he told lawmakers. "If you compound that with the fact that the hole we're in is the largest in living memory, you begin to comprehend the magnitude of the problem."

Advocates for the poor, schools and recipients of social services have called on Gregoire and legislators to preserve programs, particularly education and social services.

Evan Oakes, a community health center doctor, said cuts to medical subsidies for poor people would only lead to higher costs for government and society at large down the road.

"If patients are unable to get the care they need ... the alternative is to seek care in emergency departments and hospitals," Oakes said at a press conference outside the statehouse.

The Associated Press contributed to this report.

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