Budget 101: State employee pay raises “financially feasible”?

Under state law, any collectively bargained pay raises and benefit increases for state employees must be declared “financially feasible for the state” by the Office of Financial Management (OFM). While this review sounds like a good idea, it isn’t useful if OFM chooses to willfully ignore reality so that it can give its stamp of approval.

That’s the situation the state currently finds itself in. The Governor’s Office negotiated pay and benefit hikes with state employee unions, and OFM has declared the new costs to be financially feasible “considering the state’s obligations…in combination with the current and forecasted economic and revenue conditions for Washington.”

Apparently OFM considers the McCleary education funding case to be mere detail. Nowhere in its declaration of financial feasibility does it mention the massive looming costs, despite clearly qualifying as “the state’s obligations.”

McCleary costs are at the forefront of the coming budget negotiations, yet they apparently did not merit even a mention by OFM. Curious.

It’s not actually surprising, of course. OFM is part of the governor’s office. It is not about to declare the pay raises the governor just negotiated to be financially unfeasible.

But let’s think through this situation logically. The governor negotiated pay raises, and OFM subsequently declared them to be an expense the state can afford with its rising revenues. Then OFM’s director previewed to reporters Tuesday that the governor will propose $1 billion in new taxes when he releases his budget proposal next week.

If the pay raises are coming out of rising state revenues, but tax increases are needed to cover necessary education spending, doesn’t that mean, by definition, that the governor’s office considers those pay raises a higher priority in the state budget than education funding?

Constitutionally K-12 schools are the state’s “paramount duty,” and the McCleary case is forcing the state to change the way it funds schools. Clearly, in some state leaders’ minds, that still doesn’t mean schools should come first in the budget.
-Rob McKenna

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Rob McKenna
Rob served two terms as Washington’s Attorney General, from 2005 to 2013. He successfully argued three cases before the U.S. Supreme Court and negotiated three of the largest consumer financial protection settlements in national history, all involving mortgage lending and servicing. He is a recognized leader in the development of consumer protections on the internet, in data protection and privacy regulation.