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House acts on budget, while Senate leaders limit their comments

Sen. Mark Schoesler, R-Ritzville

Washington Senate Majority Leader Rodney Tom said Thursday that the House Democrats' proposed referendum to close seven tax exemptions to help fund improvements to education is too much of a gamble to risk on upgrading schools.

The problem: The House Democrats never proposed such a move.

Leaders of the Senate's Majority Coalition Caucus held a messy, six-minute-long press conference Thursday that was abruptly ended after reporters challenged the accuracy of statements by Tom, D-Medina, and Senate Republican Caucus Leader Mark Schoesler, R-Ritzville.

The majority coalition leaders called the press conference in response to the unveiling by House Democrats of a new budget proposal Wednesday. The proposal is a compromise measure to break a five-week-long deadlock between the Senate and House over the operating budget proposals for 2013-2015. Tom and Schoesler said their side sent a "comprehensive" counteroffer back to the House, but declined to elaborate.

Then Associated Press reporter Rachel LaCorte asked Tom to explain a written statement that he released on Wednesday, which said: "This House budget proposal is balanced on the backs of Washington's school kids."

Tom said the House's proposal called for a referendum on closing seven tax exemptions, and that the school improvements ordered by the Washington Supreme Court partly depend on the Democrats' plans to put closing those tax exemptions (worth $255 million) to a public referendum in November.

Reporters questioned whether there was anything about a referendum in the Democratic proposal.

Tom countered: The voters might shoot it down. "We're gambling on education."

Amid more questioning, Tom continued to say the voters would shoot down the $255 million proposal to close tax exemptions. 

Six minutes in, the majority coalition called off the press conference.

A few minutes later, the House Democrats' chief budget negotiators, Reps. Ross Hunter of Medina and Reuven Carlyle of Seattle, said Wednesday's House budget proposal did not contain a referendum clause, and there have been no Democratic plans to call for a referendum on the closing the seven tax exemptions.

At the press conference, Tom did appear briefly to raise the possibility that a referendum could come about through a voter-initiated petition. But he, Schoesler and Republican Sen. Linda Evans Parlette broke off the discussion, with Parlette emphasizing that they didn't want to imperil negotiations with Democrats by making detailed public statements.

Meanwhile, the Democratic-controlled House passed bills Thursday to put their revised 2013-2015 operating budget proposal into play.

The House passed the main budget bill 53-35 late Thursday. The vote was mostly along party lines. The bill included one tax exemption. The House then passed the other six tax exemptions in another bill, 52-40, mostly along party lines.

This morning, Gov. Jay Inslee urged the Senate to follow the House lead. "The House approved a budget last night that the Senate should quickly consider and act on," he said. "This is a budget that shows serious compromise, and meets the Senate more than half way. It significantly scales back revenue and takes numerous policy issues off the table while preserving critical human services and moving us forward on education. Senate leaders should recognize that this is a budget that can get the job done in these final days of the special session."

During the House debate, Rep. Hunter said, "It is still a strong investment in public education, but not as strong an investment as I would've liked."

Rep. Matt Manweller, R-Ellensburg, criticized the House budget for depending on closing tax exemptions, while spending less on the education fix-it work than the Senate's proposed budget. "The one budget that raised taxes the most spent the least on education," he said

Democrats have consistently contended that the Senate's proposed proposed budget has some fuzzy assumptions that cannot be counted on to materialize. For the House to raise $1 billion for education without gutting social services is "simply not possible without extra revenue," Carlyle said.

Meanwhile, Rep. Cathy Dahlquist, R- Enumclaw, argued that the state Supreme Court "didn't say go out and raise taxes (referring to closing tax exemptions) to fund education. … You should've funded kids first. You held them hostage to tax increases."  She contended that education should have been fully funded first with health and social services receiving the leftover money.

Carlyle said: "This closes a handful of tax exemptions and preferential rates that are better spent on kids." The seven targeted exemptions involve extracted fuel used at oil refineries, prescription drug warehouses, sale taxes on non-residents, sales taxes on bottled water,  and two tax breaks that address high technology research.

The Republican-dominated Senate and Democratic-controlled House have been deadlocked for more than a month in closed-door negotiations on the 2013-2015 state-operating budget. In late April, the Senate proposal totaled $33.21 billion, extended no taxes, closed no tax exemptions and set aside $1 billion for Supreme Court-mandated education improvements. The Senate has wanted significant cuts in health and human services programs. The Senate plan includes $151 million in undefined cuts in administrative costs that Democrats have criticized as being too vague to be a realistic measure.

The original $34.33 billion House budget would have raised an extra $1.17 billion for the education fix-it work by closing 11 tax exemptions and extending a business-and-occupation tax on service firms. The House has wanted cuts in health and human services to be much smaller than the Senate proposes.

The new Democratic proposal allocates $831 million to $881 million to the education fix-it work mandated by Washington's Supreme Court, Carlyle said. House negotiators agreed to a Senate request to keep a tax break in place for satellite telecommunications firms, with the resulting accounting shifts creating some fuzziness in whether roughly $50 million in education money would go to the court-ordered fix-it work or to other education purposes, he said. Technically, the $255 million tax-exemption-closure-education-funding package is now really a $205 million package — leading to the confusion about the ultimate destination of $50 million education money.

The new Democratic proposal also:

  • Trims its $34.33 billion budget proposal by $789 million — making it now $33.541 billion, or $331 million more than the Senate's last public position from late April.
  • Eliminates an attempt to extend an expiring business-and occupation tax on service from — which would have raised close to $500 million in new revenue for 2013-2015.
  • Trims the House's original attempt to cut 15 tax exemptions to raise $751 million in new revenue to seven tax exemptions to raise $255 million in new revenue mostly for the education fix-it work required by the Supreme Court, with $78 million of that amount routed to higher education.
  • Trims some K-12 education appropriations not related to the Supreme Court-mandated improvements. The new proposal also expands the original proposed cuts in health and human services.
  • Allocates an extra $93 million to higher education. College tuition hikes would be limited to 3 percent.

For exclusive coverage of the state Legislature, check out Crosscut's Olympia 2013 page.

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