NCPA - National Center for Policy Analysis


October 21, 2009

Last April, Washington state legislators hobbled together nearly $5 billion in one-time funds to balance the budget-including about $3 billion in federal stimulus funds ($4.1 billion total if you count the 2007-09 supplemental).  In their eagerness to gobble up as many dollars as the feds would offer, legislators (and Governor Gregoire) forgot two of the most fundamental life lessons in a world of scarce resources.  First, there's no such thing as a free lunch.  Second, if it seems too good to be true, it probably is.  The stimulus money is no exception, says Amber Gunn, Director of the Economic Policy Center for the Evergreen Freedom Foundation. 

The stimulus strings that were practically invisible from the budget debate during the 2009 legislative session are finally making a public appearance as legislators begin discussing next year's expected billion dollar-plus budget hole, says Gunn.  Now that the revenue forecast is lower than they expected, the state is in a bit of a pickle.  Add to that the fact that legislators cannot make cuts to certain areas of the budget due to their acceptance of stimulus dollars and the problem is compounded.

For example:

  • Due to what are called "maintenance of effort" requirements, the acceptance of over $800 million of education stimulus dollars means only about $80 million would be available for cuts-this according to Senate Ways & Means staff documents.
  • Also, the state cannot adopt Medicaid eligibility standards that are more restrictive than those that were in effect in July 2008 until the current biennium expires (Dec. 31, 2010).
  • Of $3.4 billion in low-income health care and disability spending allocated for 2011, only about $400 million can be cut without getting tangled in those pesky stimulus strings.

Still, of the $400 million that is eligible for cuts, a couple of items are noteworthy:

  • $68 million for "non-citizen pregnant women."
  • $32 million for "undocumented kids to 300 percent the Federal Poverty Level (FPL)."
  • $13 million "SCHIP kids 200-300 percent FPL."

Source: Amber Gunn, "Stimulus Strings Will Hobble Budget Options in 2010," Heritage Foundation, October 19, 2009.

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