The state’s budget forecast took another hit last week when a new financial projection indicated Washington is potentially facing a $1.3 billion shortfall.

The Economic and Revenue Forecast Council, the agency that advises state lawmakers on budgetary issues, cited stalled economic growth as the biggest contributor to the worsened forecast.

“I truly wish I could assure you that this nightmare is about to end, but I see no end in sight,” Washington state chief economist Arun Raha said.

The forecast comes on the heels of last year’s budgetary fight, which saw lawmakers pushed to the brink to reach a consensus on how to reduce spending within the state.

At the last hour, Olympia was able to come to an agreement that cut $4.6 billion in spending. One of the biggest areas that state legislators chose to cut in that deal was education, with teachers facing a 1.9 percent to 3 percent cut in salaries in the near future.

Last year’s budget crisis resulted in a $10 million shortfall for Federal Way Public Schools, leading to some job losses and a significant reshuffling of resources.

For Federal Way schools, a large chunk of the budgetary shortfall was met by spending down the district’s savings and the reduction of kindergarten paraeducator positions. District administrators are well aware of the new forecast and its possible impact on the district’s upcoming budget.

“Unfortunately as we’re heading into the school year, we’re already hearing that the revenue forecast for September is not going to be pretty,” said Federal Way Superintendent Rob Neu during an Aug. 23 board meeting. “There’s already talk of a special session of the Legislature…to deal with some across-the-board cuts, and perhaps some cuts that would affect education. The current reality is, the economy continues to struggle, and will have an impact on us.”

Sally McLean, assistant superintendent of business services for the school district, said continued budget problems at the state level will have a continued impact on Federal Way students.

“Another shortfall on top of the other reductions the state has already made is not good news,” she said.

McLean said two areas that Federal Way is concerned about are “local effort assistance” funds and the method with which student enrollment is determined. Local effort assistance funds are used to help school districts as a relief from property tax shortfalls, she said. The enrollment formula may change from counting students once a month to calculating by an average daily attendance.

“There are lots of unknowns,” she said.

For state lawmakers, the issue of education is becoming an increasingly sticky talking point. The Legislature is between the proverbial rock and a hard place, faced with the reality of a floundering economy, while still being held accountable by education supporters because of Article IX of the state constitution, which says funding education is the Legislature’s “paramount duty.”

Earlier this summer, the Washington Educators Association and the League of Education Voters took initiative guru Tim Eyman’s I-1053 to court, in an attempt to make it easier for state lawmakers to fund education through raising taxes. I-1053 requires a two-thirds super-majority in the state Legislature to pass taxes, something the education groups think violates the state constitution’s rule of a 50 percent vote being needed.

The city’s perspective

From the city of Federal Way’s perspective, the continuing budget crunch is nothing new. After a reshuffling of senior positions and adopting an unofficial city policy of “frugal innovation,” Federal Way is also figuring out how to meet the ongoing monetary shortfall experienced statewide. Mayor Skip Priest touched on this briefly during a Sept. 6 special meeting on term limits and special initiatives.

“As most of you know, term limits and initiatives are not a high priority, as we are wrestling with a deficit of $1.2 million among other things,” he said.

A recent move made by Priest and city staff was to recommend the changing of city employees’ health care plan, a move that is projected to save approximately $847,000. The recommendation was for the city to switch from the health care plan provided by the Association of Washington Cities to one overseen by Group Health Cooperative.

City spokesman Chris Carrel said Federal Way is keeping a keen eye on the statewide situation, and is attempting to make its voice heard with lawmakers in Olympia.

“We’re closely monitoring the state budget discussions and as proposals develop, we will be talking with legislators to educate them about the impacts specific budget proposals will have on local services,” he said.

Carrel said the city receives approximately $3 million annually from state-shared revenues, with $2.2 million of that going to the city’s general and street funds. The remaining $800,000 goes toward the city’s arterial streets, paths and trails, and transportation Capital Improvement Plan fund.

Federal Way took a 3.4 percent cut to those revenues during the last legislative session, Carrll said. Grant funding is also being threatened, as the city experienced earlier this summer, when a number of discussions occurred regarding the city’s federal Community Block Development Grant program.

Carrel said that so far, the city has been able to meet the challenges of the well going dry. Any upcoming cuts will put a lot of strain on local and state governments, he said.

“The city has been able to reduce the risk posed by state and federal budget cuts by cutting approximately $1 million in costs this year through management reorganization and frugal innovation. However, the risk to essential programs and services is very real, and we are closely monitoring the discussions in Olympia.”

For more information on the September state budget forecast, visit www.erfc.wa.gov.