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Cut of 20,000 government workers could be next big surprise

With the loss of revenue, the impact of inflation and rising population, Washington’s government is providing one-fifth (18 percent) fewer services.

That’s instruction in K-12, colleges and universities, road maintenance, health and welfare agents, building inspectors – you name it.

By the time this economic decline in government services gets ironed out, Washington could shed up to 20,000 government jobs statewide, says Seattle economist Dick Conway, who is also co-publisher of the Puget Sound Economic Forecaster.

“This is an extraordinary problem and has required big cuts to close the budget deficit and the result has been layoffs and that will continue,” Conway said.

Local, state and federal government agencies in Washington have seen roughly 5,000 jobs go already and during the course of this decline, he said, the Puget Sound region alone could see 10,000 fewer government workers.

In a paper, Conway who is also a member of the Governor's Council of Economic Advisors, estimates "that total tax collections in FY 2011, FY 2012 and FY 2012 will fall short of the current projections by at least $1 billion."

There are many politicians and business leaders who say fewer state workers and less state government is what the economy needs. However, Conway argues, the particular structure of this economic decline, which includes the drying up of federal stimulus money, is an “unprecedented occurrence.”

One that will likely result in even more surprises when it comes to the size, effectiveness and economic impact of government employment numbers and the services government provides.

"Recoveries are typically characterized by strong housing markets and rapidly falling unemployment rates, which give a boost to new construction and retail sales. This time around neither of these development is expected to happen, especially in the near term," Conway wrote in the paper he submitted to the governor.