Editorial: State should use new cash to build reserves. But lost federal money for Western State Hospital adds budget stress

As we wrote in today’s newsletter, the state got a double dose of good revenue news last week. First, the revenue forecast added nearly $600 million to projected tax receipts through the 2019-2021 biennium. Then the U.S. Supreme Court ruled that state governments could require online retailers to collect sales taxes, a decision that could add hundreds of millions in new revenue to state coffers.

Given the state’s skinny budget reserve, this would seem a good time to pad the reserve cushion. So, we agree with the Walla Walla Union-Bulletin editorial board

Put it in savings — and keep it there!

And if tax collections continue to exceed projections, that unanticipated cash should also be banked. The state needs to catch its breath.

The U-B points to the increased spending, supported by an increase in the state property tax, required to comply with the state Supreme Court’s McCleary education funding ruling. And adds,

The bottom line is that taxes are up so the state could balance its budget at $45.3 billion for the two-year budget cycle. That’s a big jump over the $37 billion of the previous two-year budget cycle.

Given that, it seems prudent for the state to stash as much cash as possible so a downturn in the economy sometime in the future can be more easily weathered.

But today’s announcement that Western State Hospital has failed an inspection and, therefore, loses federal funding means there’s a new demand on the state budget. The Seattle Times reports,

Western State Hospital will lose $53 million in annual federal funding, after years of struggling to comply with inspection findings, the state Department of Social and Health Services (DSHS) said Monday.

Located in Lakewood, Pierce County, Western State is Washington’s largest psychiatric facility. It holds about 850 beds for patients who are involuntarily committed due to psychiatric disorders as well as criminal defendants whose competency is in question.

The U.S. Centers for Medicare Medicaid Services notified state officials of their decision Monday. A news release from DSHS said that “although significant improvements at Western State Hospital have been made, it was not enough to pass a recent survey to retain certification for federal funding.”

Beginning July 9, the state will cover the cost of treating new patients, as opposed to the federal dollars.

It’s likely that replacing the lost federal funding will be just the beginning of the state’s efforts to improved mental health services.