Gov. Jay Inslee’s 2014 supplemental budget rollout Tuesday showcased a big Republicans-vs-Democrats feud over the fiscal 2015-2017 budget, as well as what could be a shoulder shrug for 2014.
The big dispute: Inslee predicted a budget shortfall of undetermined size will greet the Legislature's 2015 budget deliberations. But Sen. Andy Hill, R-Redmond and chairman of the Senate Ways & Means Committee, countered that the state will actually have a $1 billion budget surplus entering the 2015-2017 talks.
The short-term shoulder shrug: Inslee proposed adding roughly $205 million to the $33.7 billion 2013-2015 biennial budget passed last June. About $150 million is to cover unexpected increases in student numbers and state caseloads, plus other unpredicted expenses in already budgeted programs. Another roughly $55 million would start many scattered new programs. Inslee did not propose any new taxes nor did he propose closing any tax exemption in the 2014 supplemental budget — actions that would have triggered strong Republican opposition.
Inslee said the votes are not available in the Legislature to tackle tax measures in the 60-day short session that begins Jan.13.
Meanwhile, Hill was noncommittal Tuesday about the stance of Senate Majority Coalition Caucus — 24 Republicans and two Democrats — on Inslee's proposed supplemental budget. He said the majority coalition would be happy with no 2014 additions to the $33.7 billion 2015-2017 budget passed in June. But he also said the majority coalition would study Inslee’s' proposed supplemental budget before taking positions on its details.
Normally, the governor unveils a proposed budget prior to a legislative session, while House and Senate proposals are announced during the session. Democrats control the House .The majority coalition controls the Senate. Usually, legislators clash over the Senate and House proposals, with the governor's proposal frequently being just a signal on where he stands on budgetary matters. Inslee's and the House Democrats' priorities will likely be close.
Meanwhile, Inslee began laying groundwork Tuesday on probable future arguments for raising taxes, closing tax breaks and revamping budgets in 2015-2017.
He said Washington's increasing population translates into needing more money to serve those new people, plus the state must face the costs of the state Supreme Court's 2012 ruling to boost education funding and the realities of oft-delayed teachers' cost-of-living raises. Another complicating factor, Inslee said, is that last June's 2013-2015 budget consists of numerous one-time short-term measures to meet the Supreme Court's ruling to boost basic educations. Little has been done to set up permanent funding sources for those added measures, such as significantly improving teacher-student ratios.
The depth of that shortfall has not yet been calculated. "It will be in the billions, not in the millions," Inslee said.
The Supreme Court ruling for basic education — the so-called "McCleary decision" — has led state officials to calculate that $4 billion to $4.5 billion in extra money needs to be raised between 2013 and 2018 to meet the court's mandate. The Legislature appropriated $982 million for McCleary improvements in 2013-2015, meaning $3 billion to $3.5 billion will be needed to be for the 2015-2017 and 2017-2019 budget biennia. That translates to an average of an extra $1.5 billion to $1.75 billion for McCleary work in each biennium.
Also, Inslee said that the Legislature should cease its eliminating of teachers' annual cost-of-living raises -- which are called for by the voter-approved Initiative 732 -- as a budget-balancing measure for 2015-2017. For many years, the Legislature has routinely eliminated teachers' cost-of-living raises to balance each biennium’s budget.
Hill countered that the state will have $1 billion in surplus money entering 2015-2017. So no new taxes are needed and no tax exemptions need to be closed, he said. Washington has at least 650 tax exemptions worth tens of billions of dollars. The Legislature has closed a handful recent years, while adding dozens of new ones.
Hill said the McCleary budget expansions and the teachers’ cost-of-living raises are already factored into the majority coalitions' calculations that say a $1 billion budget surplus will exist for 2015-2017.
"Every year, I hear in January: 'We've got to raise taxes. We've gotta raise taxes. We've gotta raise taxes.' That's the perennial cry," Hill said.
So, the January start of the 2014 legislative session will see the budget posturing begin in earnest.