In an impressive display of saving the best for last, Gov. Jay Inslee waited until the end of a press conference today to acknowledge the two most dramatic possibilities so far in the Olympia budget stalemate: a second special session and a state government shutdown.
Inslee's remarks are the latest development in what has been a slow-motion showdown, as rank-and-file Democrats have battled with a coalition of Republicans and Republican-voting Democrats in the state Senate. Inslee said another special session was likely if senators couldn't agree on a budget by Tuesday, the scheduled end of the current special session. If legislators can't reach an agreement by the July 1 end of the current budget year, a government shutdown would be possible, he added.
Although he accused both sides of intransigence, Inslee saved his harshest words for Republicans, saying that they were effectively trying to force a tax cut even as the state struggles to meet a state Supreme Court mandate to find $4 billion for K-12 education over the next two years.
"At a time when we all should be working together to fill that hole," Inslee said, "the Senate majority wants to knock another hole."
At issue was another state Supreme Court decision, where justices have effectively ruled that the state could not collect estate taxes involving a married couple who used a certain type of federal tax shelter. Under the ruling, the state Department of Revenue estimated it would collect about $100 million less per year.
The loss would amount to about 5 percent of the state's additional $2 billion education funding obligation under the court mandate that it provide better financing of schools.
Democrats in the Legislature have proposed re-writing the state estate tax law to keep the tax the same, essentially fixing what was widely termed a loophole. The proposal would not increase taxes, only impose the same taxes when married couples use the federal tax shelter as would occur with an estate involving other married couples or single people.
The Republican-dominated Senate Majority Coalition Caucus responded by saying their differences with Inslee and Democrats are about larger reforms of education and state government. Caucus Leader Sen. Rodney Tom, D-Medina, said the budget proposed by the Senate sharply improves education, but the governor's talk about revenue is focused on protecting non-education programs. Sen. Mark Schoesler, Republican Senate leader from Ritzville, said budget progress has been made but "just not at a pace that I think anybody is satisfied with." Schoesler also said, "We share a lot of common goals."
At his press conference, Inslee refused to give specifics about budget negotiations, but said the Senate coalition was refusing to go along with the Democrats' proposed change to the law. In light of the education-funding mandate, Inslee said, letting taxes drop would be "going in the wrong direction."
While a second special session has been generally predicted in recent days, the possibility of a state government shutdown has not been discussed as widely. Today, Inslee would not firmly predict either a special session or a shutdown, but said that he has been working under the assumption that a special session would be necessary if a budget deal could not be reached.
While preparations aren't underway yet for a shutdown, Inslee acknowledged that he had begun discussions with state agencies about the possibility. He did not offer details. But he said a shutdown is a real possibility if no budget deal is reached by the Legislature by July 1.
Inslee said that, in his discussions, he has inquired about the effects of any shutdown on services, but he offered no description of the effects.