One day into a special session of the legislature, Democratic negotiators for the state House and state Senate have agreed on a tax package of $800 million to help close the $2.8 billion state budget deficit, according to legislators. The House and Senate have not agreed on what specific taxes should be raised, however.
Many liberals in the House Democratic caucus continue to be opposed to the Senate's proposal to increase the sales tax by 0.3 percent to raise $300 million. Moderates in the Senate's Democratic caucus are reluctant to embrace a number of smaller measures passed by the House, including: ending a 'êfirst mortgage'ê tax exemption for large banks ($67 million), no longer giving out-of-state residents a break on sales tax ($41 million), and extending the sales tax to candy and gum ($30 million).
State House Speaker Frank Chopp, D-Seattle, state Senate Majority Leader Lisa Brown, D-Spokane, and Governor Chris Gregoire have been holding face-to-face negotiations. While Gov. Gregoire continues to oppose a sales-tax increase, she has told Majority Leader Brown that she will not veto a budget agreement that contains a sales tax increase, according to state Senator Ken Jacobsen, D-Seattle.
The Senate has a budget and revenue team of Majority Leader Brown, Senate Ways and Means Chair Margarita Prentice, D-Renton, state Senator Ed Murray and state Senator Rodney Tom. The House has separate negotiating teams for spending and taxes: The spending or budget team is House Ways and Means Chair Kelli Linville, D-Bellingham, and state Rep. Pat Sullivan, D-Covington. The tax negotiators are Speaker Chopp and House Finance Chair Ross Hunter, D-Medina.
Sen. Tom says the negotiating teams are not yet conducting face-to-face negotiations, but rather having staff members send paper offers back-and-forth. That's how the agreement on an $800 million tax package was reached. Tom, however, cautions that this is not a major breakthrough. "It's very interesting how you get to 25 votes in the Senate and 50 votes in the House when you have a House that says, 'No sales tax' and a Senate that says, 'No first mortgage and no candy-and-gum,' 'ê says Tom. 'êThere's only about $300 million in agreement. Where are they going to find $500 million?"
Tom outlined Majority Leader Brown's approach to negotiations: "What are the big six items where we have differences?" He mentioned differences between the House and Senate on spending for the Basic Health Plan (insurance for low-income people), money for General Assistance Unemployable (cash grants for disabled people), the ending fund balance (how much money should the Legislature keep in reserve in case the economy gets worse), contributions to public employees benefits, and the specific makeup of the tax packages. "You need to list them and say, 'We are willing to give on these three and you need to give on those three,' 'ê says Tom.
Tom is not optimistic about the House adopting this approach. 'êFrank Chopp doesn'êt negotiate that way," Tom says. "He'll give you his three that are worth $3 million and take your three that are worth $300 million."
Jacobsen says many senators are wary of negotiations with the House. "There has been a long-term pattern where the House prevails over the Senate," observes Jacobsen.
Tom says this year may break that pattern. "Lisa [Brown] wants some real movement from the House before she makes concessions," says Tom.