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Dec 17, 2004

Gov. Locke's Budget Proposal

Governor Locke released his proposed 2005-07 budget this morning as he is required to do by law. Following is a link to the budget in its entirety for your review, including highlights and summaries: http://www.ofm.wa.gov/budget05/.

In summary, Governor Locke proposed a $27.7 billion budget with cuts in the amount of $1.3 billion and new taxes in the amount of $646 million. As you know, our new governor and the legislature will propose budgets during session and it is difficult to know which of Governor Locke's ideas, if any, will be adopted in the final budget.

Following are some highlights from Governor Locke's proposed 2005-07 budget.

New Revenue ($646 million)

  1. $.05 on a 12-ounce can of pop
  2. $.05 on a 12-ounce can of beer
  3. $.27 on a bottle of wine
  4. $1.50 on a fifth of liquor
  5. 1% gross receipts tax on physician services

Cuts ($1.3 billion)

  1. No replacement of federal funds for community mental health programs ($77 million)
  2. Nursing home and vendor rates ($114 million)
  3. Revised sentences for non-violent and drug offenders ($73 million)
  4. Savings from improved purchasing strategies and administrative cuts ($46 million)
  5. Lower priority health programs ($47 million)
  6. Savings from drug purchasing contracts ($50 million)
  7. Shift part of the working capital reserve to Ready Reserve Account ($192 million)
  8. Pension Funding Rate Calculation ($289 million)
  9. Transfers from other funds and budget driven revenue ($312 million)
  10. Surplus in the health benefits administration fund offsets costs ($82 million)
  11. Maintenance and operation costs in higher education moved to capital budget ($53 million)

New Spending

  1. Student Achievement: Class size reductions, expanded early childhood education and other K-12 investments ($202 million)
  2. Higher Education: New enrollments, research, scholarships ($121million)
  3. Safety Net for Vulnerable Children and Adults: community clinics, dental care for adults, Work First, etc. ($222 million)
  4. Health Care for Low-Income People: Basic Health Plan Coverage for 17,200 people and higher Medicaid payments to providers ($101 million)

information provided by the Association of Washington Business

LOAD-DATE: Dec 17, 2004

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