June 18, 2009


TO:        Statewide Elected Officials
Agency Directors
        Presidents of Higher Education Institutions
        State Boards and Commissions

FROM:    Christine O. Gregoire, Governor

SUBJECT:        Additional Budget Savings


On June 18th, the Washington State Economic and Revenue Forecast Council announced an additional reduction to the General Fund State revenue forecast.  Although there are encouraging signs in the national and state economy, the size of the revenue reduction necessitates quick action to curb spending in the 2009-11 biennial budget.  Therefore, I am imposing a hiring cap on executive agencies equal to a 2 percent reduction in their 2009-11 General Fund, budgeted, full time equivalent (FTE) levels and I ask agencies to take additional spending reductions.  Implementation instructions will be communicated by the Office of Financial Management before July 1.  

I recognize that the 2009-11 biennial budget challenges all of us to deliver services with reduced resources.  I have asked cabinet agencies to confront this challenge with bold action.  This is an opportunity for executive agencies to reform the way it conducts business to make our government more nimble and effective.  This will require great creativity and resourcefulness on the part of executive agencies, and therefore, you need flexibility to manage within your agency’s budget.

Although Engrossed Substitute Senate Bill 5460, the spending freeze, expires on June 30, based on the current revenue forecast, I expect that agencies will continue to be disciplined on spending decisions.  You must manage within your hiring cap.  This may necessitate furloughs, reductions in force, or reductions in overtime.  While each agency may determine how best to achieve reduced FTE levels, civil service law and rules, and collective bargaining agreements must be appropriately recognized.  

If agencies are in a position to hire, I want to reiterate my direction that agencies should not hire from outside state government until efforts to consider qualified candidates from among those affected by layoffs are exhausted.  At a time when more will be asked of state employees, we cannot underestimate the value of trained and experienced state employees.  

Additionally, I expect executive agencies will continue to achieve General Fund savings in areas no longer subject to the legislatively directed freeze on out of state travel and training, personal service contracts, and equipment purchases, as well as any additional reductions needed to achieve savings to balance the budget.  Given the uncertain economic and revenue outlook, we must act prudently and continue to restrict our spending to critically necessary activities.  Executive agency directors are expected to exercise good judgment to determine when these expenditures are necessary, and therefore, agencies do not need to seek approval from the Office of Financial Management.  

Over the past year many agencies adopted best practices to ensure that such costs are controlled.   Examples include increasing our use of technology to avoid travel costs, using training offered by the Department of Personnel over training available from other vendors--questioning whether our own staff can perform an activity before personal service contracts are sought.

I ask the presidents of higher education institutions, and separately elected officials to take similar action in light of the new revenue forecast.  All of us in state government must use good judgment to respond to the recent revenue forecast.  I appreciate all that you and our employees do to provide the best service possible to the citizens of the state of Washington.

---

---