June 1, 2010 in City

Washington state budget puts laws in limbo

Family leave, sales tax rebates on hold for lack of funding
Rachel La Corte Associated Press
 

OLYMPIA – Cash for new parents. A tax rebate for the poor.

When these programs were passed by the Washington state Legislature a few years ago, Democrats lauded the new laws as opportunities to pump much-needed money into working-class homes.

Both were supposed to start doling out cash last fall. But no one in Washington state has seen a dime, and they likely won’t anytime soon.

As lawmakers have cut programs and raised taxes to patch budget holes over the past few years, programs that haven’t started yet have been easy targets. Both laws have already been pushed out to 2012, and Democratic Gov. Chris Gregoire can’t promise there won’t be more delays.

The paid parental leave measure in particular was one that was passed with much fanfare in 2007 by Democrats, who hold the majority in both the House and the Senate.

The measure grants new parents up to $250 a week for up to five weeks to stay home with a newborn or newly adopted child, and the leave can be taken any time within that first year. What lawmakers didn’t do was pay for the program.

Alexandra Fleming, a 29-year-old social worker from Seattle, should have benefited from the law after the birth of her daughter, Charlotte, almost a year ago. The family was able to scrape by on her husband’s high school teacher income, but the extra cushion would have been welcome.

“When you’re a new parent, you have to stretch the budget,” Fleming said. “For us, $250 would have made a big deal.”

Sen. Karen Keiser, a Kent Democrat who sponsored the measure in the Senate, called the delay “a sharp disappointment.” Keiser’s original proposal, which passed the Senate, included a 2-cent-an-hour tax subtracted from workers’ pay to pay for the benefits. The tax was stripped out by the House.

Keiser and other supporters of the measure say they don’t think that the law is doomed to be on permanent hold.

“Pressure for policies like this have increased,” said Kristin Rowe-Finkbeiner, co-founder of MomsRising.org, a national advocacy group that pushed for the law.

Rowe-Finkbeiner and Keiser both point to broader paid family leave laws that are in effect in California and New Jersey, as well as President Barack Obama’s proposed budget that includes $50 million to help states with laws already on the books with startup costs – though the states would still be on the hook for paying for the actual benefit.

To pay long-term benefits, Democrats would have to adopt some type of tax increase – either on businesses or a payroll tax increase on workers – something the House clearly wasn’t willing to do when the bill passed in 2007, and which may be even tougher now. Even Keiser recognizes the challenge.

“I’m not confident at this point of anything,” she said, but she noted that supporters are having meetings this year to try and come up with a strategy to prevent the law from getting delayed again.

The uncertainty of how to pay for the down-the-road cost is what gives Gregoire pause.

“I don’t deny at all the social benefits of paid family leave; I just don’t think we can afford it,” Gregoire said. Gregoire stopped short of saying the law should be repealed.

Gregoire has higher hopes for the sales tax rebate, which passed in 2008, and she said she has her financial management office crunching numbers on how such a rebate would affect the state’s struggling economy.

Under that law, the state would issue refunds or credits of up to $567 to poor people who qualify for the federal Earned Income Tax Credit.

Just months after the bill was signed into law, development of the program was halted due to budget shortfalls. And this past April, the Legislature authorized money for the development of the program to prepare for refund payments to begin in January 2012.

State officials estimate about 394,000 people would apply for a state rebate in 2012, with a price tag of nearly $105 million in lost sales tax revenue through 2013.

But the catch is that the Legislature will have to authorize money for the refunds next year. And early estimates already point to a deficit of about $2 billion.

Republicans argue that neither bill should have been passed or signed into law without a way to pay for them already in place.

“We’re making promises to do things that we don’t know how we’re going to have the capability of meeting them,” said Sen. Joe Zarelli, R-Ridgefield. “We have billions of dollars of issues to resolve that are higher priority than new programs.”

House Democrats’ main budget writer, Rep. Kelli Linville, of Bellingham, said lawmakers are in a tough position where they’re having to come up with ways to pay for critical core programs like education, as well as pay the bill on voter-approved initiatives on teacher pay raises and class sizes that have been suspended over the years to deal with economic emergencies. Add in programs like paid leave and the tax rebate, and it’s clear that something has to give, she said.

Linville said that while lawmakers could ultimately decide to delay many of these programs even longer, “at a certain point in time, you don’t have much credibility if you don’t follow through on what you said you’re going to do.”

© Copyright 2010 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


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