Lawmakers at budget impasse

OLYMPIA – The Legislature is headed into overtime over its troubled budget, although like most things dealing with spending this year, there are significant disagreements on the whats and whens of a special session.

Gov. Chris Gregoire, who for days pushed for the Legislature to finish today, acknowledged Wednesday afternoon that’s not possible. She shifted the goal to having some kind of agreement on the budget by tonight, then coming back for a day or two to do “technical work” on that spending plan and pass it.

“They can’t procedurally get it done,” Gregoire said, although she refused to use the “S” words. “The minute I say special session, they’ll go to sleep, they’ll stop working.”

Republican leaders said a budget agreement wasn’t possible and suggested everyone take a long weekend for a brief “cooling-off period.”

“Some folks need a few days to ponder,” said Sen. Joe Zarelli, of Ridgefield, the top Republican on the Senate Ways and Means Committee.

Democrats tried to fan the hope that a budget deal was possible by tonight, although they acknowledged the two parties are in a major disagreement over how to bring money into the budget.

Senate Majority Leader Lisa Brown of Spokane tried to emphasize budget work that’s going well: A nearly $9 billion transportation package is ready for a vote, and a $3.7 billion capital projects plan was “just a few small details from getting an agreement.”

“In the House, we still have our eyes on midnight (tonight),” said House Majority Leader Pat Sullivan, D-Covington. “We may not get there, but we sure aren’t quitting.”

“It’s about compromise,” Sen. Ed Murray of Seattle, the Democratic chairman of the Senate Ways and Means Committee, said of the $30 billion operating budget that’s at impasse. “We’re open to compromise.”

Compromise is what Gregoire said she was seeking, too. But it was clear from various press briefings throughout Wednesday that compromise will be difficult on a key difference between the budget passed solely with Democratic votes in the House and one passed in the Senate by minority Republicans and three Democrats. The biggest disagreement isn’t where the state will spend money but where it will get the money to spend.

Neither side is talking about a major tax increase, and any suggestion of a temporary sales tax increase died last month with a slightly improved economic forecast.

But the state still has a hole of about $1.1 billion in its general fund, and Democrats want to plug about $322 million of it with an accounting maneuver: The state is scheduled to make payments totaling that amount to school districts at the end of June 2013, the last day of the two-year budget cycle. Democrats want to delay that “apportionment payment” until July 1, 2013, the first day of the next biennium.

Because of the way the state keeps its books, the Legislature wouldn’t have to cut $322 million from the general fund on the expenditure side under the Democrats’ plan. The school districts budget on a different fiscal year, so the delay doesn’t affect their ability to pay bills if they know it’s coming, Democrats add.

Republicans say that’s not “real money” and goes against one of their core principles of making the budget sustainable – that is, avoiding things that set up shortfalls in future biennia. “We’re still firm on sticking with our principles,” Zarelli said.

But they proposed a shift, too. They want changes to the state’s retirement systems with a set of reforms that will allow them to avoid a pension payment of about $133 million this year. Over time, Republicans say, those reforms will save the state money by changing rules for early retirement and closing one level of plans for new employees.

Depending on various economic factors, however, they may cost the state money in future years, Democrats say.

Gregoire, who has to sign any compromise that passes the Legislature, called for the apportionment delay in her budget last November, but wouldn’t dismiss the pension idea entirely. “I have trouble with skipping a pension payment, but I’m not going to rule anything out.”

That’s creating an impasse, she said, so legislative leaders were asked for other ways to come up with as much as $250 million in revenue, a midway point between the two sides: “If they can get it resolved, they can solve all the (spending) problems inside the budget.”

That’s the big “if” that legislators face today.