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Economic Outlook Favorable For Balanced Budget Legislators Will Draw Up State’s First Spending Plan Under The Monetary Strictness Of Initiative 601

Two winters ago, Washington lawmakers were neck-deep in tax increases, spending cuts and an economic slump - a toxic stew that eventually cost Democrats their political lives in the November election.

But when the conservative new ‘95 Legislature debuts Monday, it will be a far different world. The economy is perking along. The T-word, taxes, will be mentioned only in the context of tax CUTS and the budget will be balanced by downsizing government a bit.

The same billion-dollar tax package of 1993 that helped sink the Democrats also spurred voter approval of a strict spending cap. The new budget will be the first two-year spending plan to be crafted under the enforced discipline of Initiative 601.

For the first time in state history, lawmakers will know precisely how much they can spend - $17.9 billion - and that tax increases aren’t really an option.

The days of tax-and-spend are over, both parties say. Even longtime liberal Gov. Mike Lowry is a convert.

So budgeting-by-formula takes all the fuss, guesswork and tough decisions out of building the budget, right?

Wrong.

In the first place, the very conservative House of Representatives still has to deal with the nominally Democratic Senate and Lowry.

The budget is the single most important vote of any legislative session, encompassing thousands of value judgments and etching campaign promises onto paper. Both parties will want to make points with their key constituencies and with the taxpaying electorate at large.

Secondly, there is a $500 million headache called salaries.

The state has frozen salaries for teachers, college staff and state employees for two years and most lawmakers and the governor say it would be unfair to expect them to go another two years without an inflation adjustment.

Without the increases, lawmakers could skate by.

Under the Initiative 601 spending limit - allowing for inflation plus population growth - the Legislature is allowed to spend $17.9 billion - almost precisely what it would cost to continue providing current level services and pay for sizable, mostly unavoidable, increases in schools, prisons, social and health programs and other big-ticket items.

That doesn’t leave anything for those pay raises. It’s true, there’s a one-time $500 million surplus, but that can’t be spent for ongoing programs since it’s all above the spending limit and lawmakers aren’t about to lift the lid.

The basic calculus, one offered by Lowry last month in his budget proposal, is to trim to payroll and restrain other spending to “save” enough to plug in the salary increase without exceeding the cap.

Even if both houses agree to provide a pay increase - still far from certain at the $500 million level - they will need to find common ground on spending cuts.

The first draft of the budget will be produced by the new Republican majority in the House.

The Senate Democrats, with a scant one-vote majority, will offer a counterproposal.

Three Republicans and three Democrats then will produce a compromise they hope Lowry will sign.



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