Progress reported on state budget process

OLYMPIA – Gov. Jay Inslee and legislative leaders seemed to concur Friday that they are closing in on an agreement on the 2015-17 state budget, something that has eluded them for 155 days.

But they didn’t completely agree on how close, or the components of that agreement.

In a series of news conferences, Inslee and leaders of both chambers from both parties said they are optimistic an operating budget could be passed in time to avoid a partial government shutdown. That prospect exists if the state enters its new fiscal year on July 1 without authorizing spending for many programs and salaries.

“There is no reason – zero – why we can’t have a budget done in one week,” Inslee said. 

Both sides had moved toward a “middle ground,” he said, although he thought Democrats who control the House have made significant movements in reducing spending and dropping proposals for new taxes, including a capital gains tax on high-income residents. Republicans who control the Senate have moved somewhat less, the governor said, but enough that a “framework” is emerging in which both sides could have “big policy wins” in the final budget.

To do that, Inslee said, legislators will have to agree to close some tax exemptions and come up with $300 million or so to close a gap between the levels in the rival spending plans.

House Majority Leader Pat Sullivan, of Covington, said House Democrats have agreed to take the capital gains tax off the table if the Senate Republicans agree to close some tax exemptions or “loopholes.” He wouldn’t specify which ones, but added, “We have a list of potential loophole closures that we’re looking at.”

But Senate Ways and Means Chairman Andy Hill, R-Redmond, wasn’t conceding that any exemptions definitely need to be closed. Any gap that exists might be closed by shifting money from other funds or “redeploying resources to higher priority items” – also known as spending cuts.

“There are a lot of ways to move,” Hill said. 

Legislators have not yet agreed to a level of spending for the coming biennium, although they agreed they’ve moved closer. House Democrats finished the regular session with a budget proposal of about $38.9 billion, while Senate Republicans approved one of about $37.9 billion. After one full special session and 22 days of a second special session, House Democrats say their latest plan is about $38.2 billion, an amount proposed more than a week ago in an effort to break the stalemate; the Senate GOP proposal is just under $38 billion.

House and Senate Democrats said they have moved a lot, while Senate Republicans have moved only a little bit. Senate Republicans said their budget was built on “living within our means,” while the House budget required new taxes, so the House needed to move more.

All sides expressed confidence they could settle on a final spending plan and pass it by next Saturday, the final day of the second special session. But shortly after the round-robin news conferences, signs of agreement began to fray on one of the key points of contention in the two plans: college tuition.

Senate Republicans have proposed tuition reductions as high as 25 percent for state universities. House Democrats have proposed a tuition freeze, coupled with more financial aid.

After the Republican news conference, Hill released a statement that Democrats had agreed to reduce tuition. Not true, Sullivan said in response. At the news conference, he said Democrats still have concerns about the effect the tuition reductions proposed by Republicans would have on the state’s Guaranteed Education Tuition program, which allows for the purchase of future college course hours at the present rate.