Zarelli's Useful Budget Perspective

Talk of an $8 billion budget hole got you down? Feeling defeated by the fiscal crisis? Worried about mammoth tax hikes?

Sen. Joe Zarelli offers another way of looking at the problem. Earlier we wrote about the "yes we can" campaign. Yesterday Zarelli issued another of his useful "budget tidbits," laying out his alternative take on the problem. Download the file and read it.

Here's Zarelli's explanation of the $8 billion hole.

The deficit has been characterized as $8.3 billion. This is composed of:

A $1.3 billion deficit in the current biennium, which ends June 30th;

A $6.5 billion shortfall next biennium if we do not address the current biennium deficit, continue doing everything government currently is doing, plus do new policy enhancements;

An assumption of the need for a $500 million ending fund balance.

But keep in mind about this figure:

$1.4 billion represents proposed policy enhancements and compensation increases, including maintaining employees' health care benefits at 12% and providing COLAs and step-salary increases.

It assumes the current-biennium budget deficit remains unaddressed. Some savings have already in fact been achieved with passage of a mini-supplemental budget (ESHB 1694) last week.

It assumes no federal money is available to reduce the deficit. Likely, there will be around $3.1 billion available to the operating budget.

It assumes the constitutional rainy day fund, which will contain $700 million, is not utilized to address the problem.

The first step in solving the budget problem is a correct diagnosis. The second step is believing that the problem can be solved. Zarelli's views are helpful on both counts.