June 12, 2013 at 1:57 PM
Could the state pay its bills if there is a government shutdown?
UPDATE 5:00 P.M. | Adds information on memo from governor
The prospect of a government shutdown has spurred many state agencies to start building a case for why they should remain open — including state treasurer’s office.
This may be more important than you think, considering the treasurer’s office writes all the checks for the state. It also gets its operating funds from the state budget, which will expire on June 30 unless the Legislature passes a new one.
“We are absolutely certain that we are absolutely essential to keeping money moving. That we are absolutely essential to making payments on the obligations created,” Assistant State Treasurer Wolfgang Opitz said.
But that doesn’t necessarily mean the courts would agree. “We are doing a lot of research,” Opitz said.
Democratic Gov. Jay Inslee has scheduled a cabinet meeting for Wednesday afternoon to discuss possible options if there is a shutdown. State Attorney Gen. Bob Ferguson also has convened a legal team to meet with state agencies.
Inslee also sent a letter on Wednesday to agency directors, higher education, boards and commissions, and statewide elected officials asking them to report back by June 17 with information about services that don’t require money from the state operating budget, among other things.
In addition, the governor asked agencies to identify services necessary “for the immediate response to issues of public safety, or to avoid catastrophic loss of state property.”
Budget negotiations have been stalled for weeks, with both parties blaming each other for the lack of progress.
Marty Brown, former Gov. Gary Locke’s budget director, noted the state was in a similar situation back in 2001 when the state house had a 49-49 tie between the parties.
Locke went so far as to draft an executive order that spelled out which state services should continue in the event of a shutdown. The order would have continued operating state prisons, public assistance including Medicaid,and the Washington State Patrol, as well as furlough what were deemed nonessential state workers. However, Brown said he wasn’t sure it would have withstood legal challenge.
One thing seems certain: If there is a government shutdown there will be legal challenges from those who oppose spending money without a budget, and those who want to keep state services running.
Brown said this raises an interesting question, considering the court system runs on money from the state operating budget. “Technically, the question is how do you go to court? They should be closed too,” he said.
While Washington has apparently never had a government shutdown, it came awfully close back in 1951 when the legislature approved a budget containing the corporate franchise tax. There was a legal challenge and the state Supreme Court threw out the budget along with the tax. (See page 148 of this document)
The state was without a budget for several days until the Legislature could pass a new one. Opitz noted it wasn’t as critical back then because all the bills were paid with paper warrants.
“The time scale’s different. Ten days was about as long as you could go before people had spasms over not receiving things. Ten minutes is about as long as you can go now,” he said.
When asked if a government shutdown could have implications for the state’s bond rating, Opitz said, “Oh yes, none of it good.”
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