The Budget

Short-term savings, long-term costs

The costs of our current economic situation are already huge. In Washington, in little over a year, we’ve gone from record low unemployment to record numbers of people applying for unemployment benefits.

Writing the next two-year budget should seek to stop the bleeding and avoid decisions today that translate into even greater costs tomorrow.

State government spends money chiefly in the delivery of services, not in the purchasing of goods.  In the main, cuts to government result in cuts to services, and the jobs of the people who deliver those services. From an economic perspective, the loss of 1,000 state jobs is the same as the loss of 1,000 Boeing jobs, and contributes to the same downward spiral that is already being felt from widespread layoffs in the private sector.

Economics professor Dick Startz of the University of Washington estimates that every $1 billion reduction in annual state government spending during the recession will cost Washington about 15,000 public and private sector jobs.

Economically speaking, clearly the most effective stimulus is to refrain from cutting existing jobs and accelerating the economic decline. But future jobs losses aren’t the only costs we should be concerned about when writing this budget.

For example, keeping health care funding intact today is essential to avoiding much larger costs in emergency room visits tomorrow. The average cost of a visit to the doctor’s office is between $100 and $150, depending on your age. The average trip to the emergency rooms runs upwards of $800.

If we cut the state’s Basic Health Plan by 40 percent – as has been proposed – 40,000 individuals in our communities would no longer have a viable option for receiving needed medical care. That’s a crowd large enough to sell out Safeco Field.

It’s a mistake to think that the accounting savings realized from cutting this program will translate into actual savings.

After all, it’s not as if these 40,000 of our neighbors will suddenly no longer get sick or need medical attention.

Many will simply wait until their situation becomes an emergency to get the care they need from hospitals – maximizing the toll taken on their health and the costs to our overall system.

Similarly, cutting mental health funding – as has also been proposed – creates more costly effects of not providing mental health treatment to those who need it – such as greater crime, more victims, more children on welfare, and more adults in our jails and prisons.

On paper, cutting these funds might provide you accounting savings - but they don’t provide you real savings because of much bigger financial costs down the road.

And it cannot be forgotten that the state budget is not just a financial document – it’s also a moral document. We have to take into account the real human costs to these types of cuts.

Anyone who views the current economic situation as analogous to an earthquake – in other words, a massive force beyond our control that inflicts destruction on our normal quality of life – would see no sense in cutting services at precisely the moment when we need a coordinated response to help us recover from the crisis.

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