State deficit draws criticism

Finance office says ex-lawmaker misinterpreting statute

PATRICK CONDON, THE OLYMPIAN

Originally published Wednesday, February 27, 2002

OLYMPIA -- The leader of a conservative legal foundation Tuesday said Gov. Gary Locke has broken the law by not ordering across-the-board cuts to state agencies in response to the state's cash deficit.

Bob Williams, the president of the Evergreen Freedom Foundation, sent letters to Locke and State Treasurer Mike Murphy urging immediate compliance with his interpretation of state law.

Williams said the state's $812 million general fund deficit requires Locke to order a 10 percent cut to all state services funded by the general fund, including K-12 education.

"It's kind of like if your bank account was in the hole, but you still had blank checks so you kept writing them," said Williams, a former state legislator.

Officials at Locke's Office of Management and Budget say Williams' interpretation of the law ignores a provision that exempts the temporary cash deficits that regularly result in the cycles of money into and out of state-controlled funds.

"He's selectively choosing which parts of the statutes that help make his case," said Wolfgang Opitz, the deputy director of OFM.

State isn't broke

Opitz said that while the general fund is in deficit, it's part of the state's much larger "concentration account," which incorporates several major funds managed by the state treasurer.

Money in those accounts can be shifted to cover deficits in other accounts, Opitz said, and the account has a total of $2.5 billion in it right now.

OFM officials also have an informal attorney general's opinion that the provision requiring across-the-board cuts is silent on exactly when the governor is required to order the cuts.

That means ordering cuts is left to the discretion of the governor, OFM officials said.

Opitz said Locke and his advisers are confident the Legislature will erase the deficit when it approves a supplemental operating budget in the next few weeks.

"We have the Legislature in town and a budget that the governor proposed to fix it," Opitz said. "That's their job -- to fix it."

Law's purpose

Williams, who as a legislator helped draft the current law in the early 1980s, said it was created so governors would have a way to deal with cash deficits and protect the state's credit rating -- which Williams said he fears will be damaged by the current situation.

Murphy said he is in agreement with the administration's view, expecting pending legislative action to erase the cash deficit.

But Williams wants action and said the Freedom Foundation is considering filing a lawsuit and notifying the Securities and Exchange Commission and bond-rating firms, such as Moody's and Standard & Poor's.

The Olympian Copyright 2002

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