Background: The programs and functions of state government are administered by numerous state agencies and institutions, the costs of which are appropriated by the Legislature. These administrative costs include expenditures for salaries, wages, equipment, personal services contracts, and state employee travel and training.

The salaries and wages of state employees in positions that are classified under the State Civil Service Act are subject to collective bargaining agreements. The salaries and wages of other nonelected employees are determined by their employing agency, the Governor, or the state Department of Personnel.

In September and November 2008, the State Economic and Revenue Forecast Council reported sharp deteriorations in economic conditions in both the nation and the state, resulting in significant downturns in state revenue collections.

In August 2008, the Governor requested that state agencies reduce administrative expenses by freezing the hiring of new employees, nonemergency out-of-state travel, discretionary purchases of new equipment, and the signing of nonemergency personal services contracts, with some exceptions.

Summary of Bill: For the 12 months following the enactment of this legislation, state agencies are prohibited from granting salary or wage increases to any employees who are exempt from classification under the State Civil Service Act.

Until July 1, 2009, state agencies are prohibited from establishing new employee positions or filling existing vacant employee positions. Exceptions are provided for specified functions directly related to public health and safety, law enforcement, and revenue collections.

Until July 1, 2009, state agencies are prohibited from signing new contracts for personal services not related to an emergency.

Until July 1, 2009, state agencies are prohibited from acquiring items of equipment exceeding $1,000.

Until July 1, 2009, state agencies are prohibited from making expenditures for state employee travel or training not related to an emergency or direct service delivery.

Exceptions to the prohibitions relating to hiring, contracts, equipment, travel, and training may be granted by the Director of Financial Management after ten days' notice to the legislative fiscal committees.

To reflect the expenditure reductions in the act, the Office of Financial Management is directed to reduce allotments of appropriations from the state General Fund and related funds to state agencies for the remainder of 2007-09 fiscal biennium by $105,450,000. The allotment reduction for each agency is specified in a document compiled by the Legislative Evaluation and Accountability Program Committee on January 22, 2009, which document is incorporated by reference in the act.

The act applies to all agencies, offices, and institutions of the executive, legislative, and judicial branches of state government.

Staff Summary of Public Testimony: PRO: This bill is a great bill and a good start in addressing the state's fiscal situation. State agencies recognize that budget reductions will need to occur throughout state government.

OTHER: The exception process for judicial agencies needs to respect the constitutional separation of powers; the Office of Financial Management should not be reviewing the hiring decisions of the courts and the Legislature. While this bill adopts a budget strategy that is consistent with the Governor's directives, the Governor provided flexibility to allow agencies to reach reduction targets through a variety of methods without arbitrary controls on objects of expenditure, which have unintended consequences. The 10-day legislative notification process is too long. The bill unnecessarily affects funds and accounts beyond the General Fund and related funds, such as expenditures from private research grants and federal funds. Essential equipment purchases will be affected. Seasonal hiring by natural resource agencies should not be prohibited, nor should hiring by community college programs responding to the economic recession.

Persons Testifying: PRO: Dennis Eagle, Washington Federation of State Employees.

OTHER: Jeff Hall, Administrator for the Courts; Victor Moore, Office of Financial Management; Randy Hodgins, University of Washington and Council of Presidents; Sherry Burkey, Western Washington University and Council of Presidents; Jim King, Citizens for Parks & Recreation; Chris Reykdal, State Board for Community and Technical Colleges.