Olympia Countdown: Special session update

With two days left before the special session ends, lawmakers are right back where they started: stalemate.
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Budget talks in Olympia stall over spending and tax loopholes

With two days left before the special session ends, lawmakers are right back where they started: stalemate.

After five-weeks of special-session negotiations, the Washington Senate's Majority Coalition Caucus appears to have arrived at the same position it held back in April.

On Saturday the Senate passed a revised budget proposal, which was close to the one it approved, by a 30-18 vote, in late April. Saturday’s vote was 25-23 along strict caucus lines. Members of the Democratic minority caucus who had supported the April budget for various reasons now oppose it because several items they had wanted to be changed were not.

Sen. Steve Hobbs, D-Lake Stevens, who was absent due to a Washington National Guard obligation, said he would have voted against both the House and Senate budget proposals that have now passed.

With Saturday’s Senate vote and the revised House budget proposal that passed on Thursday, the public can now see the results of the recent closed-door talks.

Spending in the Senate budget proposal has grown from $33.21 billion to $33.278 billion, for a $68 million increase since April. The Senate budget removes one of the tax-exemption closures proposed by the House: the sales tax exemption for non-residents. Closing that loophole should raise an extra $47 million in the 2013-2015 biennium. Originally, the Senate's Majority Coalition Caucus was opposed to eliminating any of Washington’s roughly 640 tax exemptions.

Spending in the House budget proposal shrank from $34.33 billion to $33.541 billion, for a $789 million decrease since April. The House originally wanted to extend the state business-and-occupation tax on service firms, and close 11 tax exemptions. Instead, it dropped the B&O tax extension attempt along with four tax exemptions. The House still hopes to close seven exemptions, including the no-sales-tax-for-non-residents.

Tallying it up, there is a $263 million spending difference between the House and Senate budget proposals, plus several policy and revenue differences like whether to keep six current tax exemptions worth roughly $208 million. One huge discrepancy is that the Senate's Majority Coalition Caucus wants the House to pass several of its reform bills; House Democratic leaders have indicated they are done pursuing any Democratic or Republican policy-related bills.

"We've seen massive movement on the part of the House,” said Senate Minority Leader Ed Murray, D-Seattle. “This [Senate budget] shows no movement on the part of the Senate."

Sen. Andy Hill, R-Redmond and the majority coalition's chief budget writer, disagreed. Hill noted that the Republican-dominated majority coalition made several concessions during the regular legislative session in order to entice five members of the minority Democratic caucus to join the 30-18 budget vote in April. The coalition has since lost those minority member votes.

Looming over the current budget deadlock is Tuesday’s end to the 30-day special session. A second special-session begins Wednesday, with much of state government bracing for a July 1 shutdown date if a 2013-2015 budget is not passed. (The 105-day regular session ended April 28.)

One budget sticking point is the Washington Supreme Court ruling on education. The court wants student-teacher ratios dramatically improved, all-day kindergartens implemented statewide and numerous support measures installed by mid-2019. House and Senate majorities have radically different ideas about how to comply with the court ruling. In fact, apples-to-apples comparisons of the two approaches are almost impossible. The Senate version, for example, postpones dealing with the student ratio component, and tackles items not directly addressed by the Supreme Court ruling.

The House Democrat's most-optimistic interpretation of their own approach puts $881 million toward the Supreme Court requirements in 2013-2015. The Senate's majority estimates its Supreme Court spending for 2013-2015 at roughly $1 billion, while saying the House version actually guarantees only $704 (not $881) million toward those requirements. (The House version of the budget calls for almost $180 million in additional K-12 improvements money and about $25 million in higher education money, all to be raised by closing six tax exemptions.) "I have a hard time when you spend only $700 million on basic education. ... and you still raise taxes," said Republican Sen. Hill.

Sen. Rodney Tom, D-Medina and leader of the 23-Republican-two-Democrat majority coalition, doesn’t want to close tax exemptions to fund education for fear of rousing professional initiative promoter, Tim Eyman. The anti-tax Eyman could send a ballot to the public to restore the tax exemptions. If it passes, there goes the extra education money. Consequently, Tom and Republican leaders would rather fund education without using any new tax-related revenue. They prefer to pay for it with cuts to health and social services. The cuts, they say, could be restored if the Legislature passes new taxes or closes tax exemptions that can survive an Eyman challenge. House and Senate Democrats oppose dramatic cuts to health and social services.

To complicate matters, most estimates put the extra money needed to comply with the Supreme Court's education mandate at $4 billion to $4.5 billion over the next three budget biennia. That means Supreme Court-related appropriations for 2015-2017 and 2017-2019 biennia will have to be significantly more than $1 billion.

Also, the majority coalition wants the Democratic-controlled House to pass some Senate bills on workers compensation, education reform and regulatory measures. Both chambers had largely refused to pass each other's bills, preferring to hold certain measures hostage for horse trading in the Legislature's final days. But House Democrats are no longer interested in swapping policy bills in the legislative endgame.

Senate Republican Caucus Leader Mark Schoesler, R-Ritzville, said the Senate has sent roughly 30 bills to the House, which the Democrats have taken no action on. According to Schoesler, part of the budget deadlock resolution calls for the House to pass some of those hostage bills. The Senate majority has given House Democrats several combinations of different bills, insisting the House pick and pass one of those combinations in order to break the current budget impasse.


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About the Authors & Contributors

John Stang

John Stang

John Stang is a freelance writer who often covers state government and the environment. He can be reached on email at johnstang_8@hotmail.com and on Twitter at @johnstang_8