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Legislature passes $43.7 billion budget, and taxes to pay for it; Inslee signs before midnight

UPDATED: Sat., July 1, 2017, 1:50 a.m.

This story is developing and will be updated throughout the day

1:15 a.m. Update: The Senate approved the establishment of a new state agency, the Department of Children, Youth and Families over the objections of some who said it was merely “rearranging the deck chairs.”

Some offices that handle child services from the Department of Social and Health Services and some juvenile justice agencies will be added to the Department of Early Learning as a way of better addressing the needs of at-risk children and families.

The 2017-19 budget sets aside money for the new department, but separate legislation was needed to establish it and a group of lawmakers worked out a compromise plan that passed the House Thursday.

In the Senate, however, Sen. Mike Padden, R-Spokane Valley, introduced 13 amendments to change the makeup and authority of the new department. His frequent ally, Sen. Steve O’Ban, R-Pierce County, argued against each one saying that some had merit but all were untimely. A deal had been struck and making changes now would force the bill back to the House and possibly derail the agreement.

Padden replied that many of the bills over the course of the day had been negotiated in secret by small groups and the rest of the Senate wasn’t allowed to offer amendments.

“The rest of us are potted plants?” he asked. “I think that’s fundamentally flawed.”

Padden withdrew several of his amendments and the rest failed on voice votes. The bill setting up the new department passed on a 42-7 vote and was sent to Gov. Jay Inslee for his signature.

12:05 a.m. Update: High school seniors of the class of 2017 who couldn’t pass the biology assessment test despite repeated efforts should get their diplomas, the Legislature decided early Saturday morning.

A unanimous Senate approved legislation that also sets up a process for seniors who were unsuccessful on their math and English language assessment tests.

The bill passed the House unanimously on Tuesday and breezed through the Senate during a period between votes on bills needed to make the 2017-19 operating budget work.

11:55 p.m Update: Count Zombies in Spokane as well as public school students who come out ahead in the 2017-19 operating budget and the bills attached to it.

One of those bills is a series of tax preferences that are either being adjusted or extended.

One such tax incentive is the tax credit motion picture companies get for productions in Washington. It was about to expire, and producers of Z Nation, have said this summer would be the series’ last in Spokane without an extension.

The Senate and House both approved a package of 12 tax incentives, one of which was the motion picture credit.

11:15 p.m. Update: Gov. Jay Inslee signed the 2017-16 general operating budget, calling it a historic and transformative plan that will meet the state’s constitutional obligation to its school children.

He praised the budget’s support for smaller class sizes, increased pay for school staff that he said would provide quality teachers in every classroom and extra money to help students who are below grade level.

The budget also has a significant increase for the mental health system and sets up the new Department of Children, Youth and Families.

He said he would sign in the coming days the other legislation needed to implement the budget, including the change to the state’s property tax levy system, even though it wasn’t his first choice for a source of revenue, but it was substantial.

Inslee added he was pleased Democratic negotiators were able to convince Republicans to lower their original proposal for an increase in the state property tax levy.

6:48 Update: The Senate passed a major change to the property tax system, increasing the state levy and restricting the amount local school districts can levy. It’s the money needed help pay for the 2017-19 operating budget.

The bill passed 32-17 on a bipartisan vote.

5:50 Update: The Senate began debate on the changes to the property tax system to pay for changes to the public school system.

Sen. Mike Baumgartner, R-Spokane, proposed an amendment that the changes be submitted to voters in the November elections.

People should have a chance to decide the “fundamental biggest change in state history on how education is funded,” Baumgartner said.

The amendment failed on a voice vote.

5 p.m. Update: With Gov. Jay Inslee watching from the wings, the House passed the 2017-19 operating budget on a 70-23 vote.

Many who said they support it predicted the Legislature will have to make some corrections to it when they return in 2018. But that, after all, is only six months away.

Some who opposed it said the levels of spending were unsustainable, and a downturn in the economy would force them to choose which services to cut.

“What will get cut first?” Rep. Morgan Irwin, R-Enumclaw, asked. “To my mind, this is just too large.”

But House Majority Leader Pat Sullivan, D-Covington and a member of the group that helped negotiate the budget, said the spending plan is large because of the increases for public schools.

“The largest percentage of that growth is in K-12,” Sullivan said.

Inslee congratulated lawmakers after it passed, and told reporters he had “every reason to believe” it would satisfy the Washington Supreme Court mandate, known as the McCleary decision, to improve public schools.

“This goes beyond McCleary,” Inslee said. “It adds net new money” to education.

Inslee has until midnight to sign it to avoid a partial government shutdown. David Postman, the governor’s chief of staff, said the office has been studying the budget bill since it was released early this morning, along with requests for line-item vetoes. He didn’t know when Inslee would sign it.

“It could be close to midnight,” Postman said, adding that ordinarily the staff would have 20 days to review the bill before it had to be signed.

Among Spokane area representatives, Democrats Timm Ormsby and Marcus Riccelli voted yes; Republicans Mary Dye, Joel Kretz, Jacquelin Maycumber, Bob McCaslin, Joe Schmick, and Mike Volz voted no. Republicans Jeff Holy and Matt Shea were excused.

4:15 p.m. Update: House begins debate on the 2017-19 operating budget.

House Appropriations Committee Chairman Timm Ormsby, D-Spokane, called it a family first budget that makes public schools better and college more affordable.

“This is the job we came here to do. Let’s do it and go home,” Ormsby said.

3:40 p.m. Update: The change in the state’s property tax levy system, designed to pay for major changes in the public school system, passes the House on a 67-26 vote.

Among Spokane area representatives, Democrats Timm Ormsby and Marcus Riccelli and Republican Mary Dye voted yes. Republicans Joel Kretz, Jacquelin Maycumber, Bob McCaslin, Joe Schmick and Mike Volz voted no. Republicans Jeff Holy and Matt Shea were excused.

3:33 p.m. Update: The 2017-19 operating budget passes the Senate 39-10.

Among Spokane area senators, Republicans Mike Baumgartner, Mark Schoesler and Shelly Short, and Democrat Andy Billig voted yes. Republican Mike Padden voted no.

Baumgartner said the bill had many good things in it, including money for medical school students in Spokane, but chided legislators for the process that had them voting on a budget on June 30.

“I’ve seen a lot of sausage made, and this is probably the bloodiest sausage I’ve seen,” he said.

3:05 update: House begins debate on the tax package needed to pay for improvements in education while the Senate begins debate on the 2017-19 operating budget.

The House rejected, on a voice vote, a proposed amendment that would put the shift in property taxes on the November ballot.

House Majority Leader Pat Sullivan, D-Covington, and others said it was not a perfect bill, and will likely have to be amended next year.

“This is a historic day in moving our public school system forward,” Sullivan said.

Rep. Matt Manweller, R-Ellensburg, said passing the bill is worth celebrating, but the fact that the Legislature is acting under a mandate from the Washington Supreme Court is not.

“We allowed ourselves to be strong-armed by another institution,” Manweller, a professor at Central Washington University, said. But he would vote for it because “the teacher in me trumps the advocate.”

1:10 p.m. Update: After debating and voting on a half-dozen bills that were not the 2017-19 operating budget, on topics ranging from commercial fishing to paying for local infrastructure projects, the Senate went “at ease subject to the call of the president”.

Translation: Members are free to leave the floor and have lunch until notified they are needed back to debate bills. The House has been at ease since shortly before noon.

According to one source, the operating budget may not come up for a vote in the Senate until about 4 p.m., with a House vote to follow late in the evening. Meanwhile, the clock ticks toward the midnight deadline for the end of the fiscal year.

Also on the Legislature’s plate is the much smaller Capital Budget, for buildings and other construction projects, which also needs to be passed before midnight in order to save the state from having to renegotiate existing contracts.

11:50 a.m. update: With both the House and Senate in long caucus meetings where members are getting details of the budget proposal and other bills they’ll be asked to vote on Friday, we decided to give you a few details of the changes in property taxes and school funding under the proposals. All are based on the most current estimates, and subject to change.

Spokane Public Schools

The property tax on the average priced home in the district would go up $130 in 2018, down $80 in 2019, down $60 in 2020 and down $20 in 2021.

The district would get an extra $10.4 million from the state in school year 2018-19, $23.8 million in 2019-20, $43.4 million in 2020-21 and $45.1 million in 2021-22.

Mead School District

Property tax on average priced home up $210 in 2018, down $90 in 2019, down $40 in 2020, up $10 in 2021.

District funding from state up $2.7 million/$5.7 million/$12.6 million/$13.1 million.

Central Valley School District

Property tax on average home up $170 in 2018, down $70 in 2019, down $10 in 2020, up $20 in 2021.

District funding from state up $3.7 million/$4 million/$12.9 million/$14.4 million

East Valley School District

Property tax on average home up $150 in 2018, down $20 in 2019, down $80 in 2020, down $70 in 2021

District funding from the state up $1.4 million/$830,000/$3.4 million/$3.9 million

West Valley School District

Property tax on the average home up $140 in 2018, down $190 in 2019, down $140 in 2020, down $120 in 2021

District funding from the $1.2 million/$1.4 million/$3.2 million/$3.7 million

Deer Park School District

Property tax on average home up $140 in 2018, up $20 in 2019, up $50 in 2020, up $70 in 2021

District funding from the state up $682,000/$2.1 million/$4.4 million/$4.6 million

Medical Lake School District

Property tax on average home up $150 in 2018, up $100 in 2019, up $130 in 2020, up $160 in 2021

District funding from the state up $545,000/$1.8 million, $3.7 million/$3.9 million

Cheney School District

Property tax on average home up $150 in 2018, $10 in 2019, $10 in 2019, $70 in 2020, up $110 2021

District funding from the state up $1.3 million/$2.6 million/$5.8 million/$6.8 million

For a breakdown of all 295 school districts, click here.

10:09 update: The Senate Ways and Means Committee approved the proposed $43.7 billion operating budget, moving it to the full Senate where it is expected to come to a vote later Friday.

Voting no on the proposal was Sen. Reuven Carlyle, D-Seattle, who said he knows the Legislature needs to pass the spending plan but blasted the process that finds lawmakers forced to vote on a budget that was just released an hour earlier.

“I don’t think any of us know what is truly in this budget,” Carlyle said. “I think we really owe the people of the state an apology.”

A few minutes later the committee passed a series of tax changes tied to the budget.

OLYMPIA – Washington lawmakers began the heavy lifting Friday morning of passing a $43.7 billion budget and staving off a partial government shutdown before midnight.

The Senate Ways and Means Committee got the first full look at the details inside the 2017-19 operating budget, which includes most state policies and programs other than transportation in its 616 pages.

A key feature of the budget is the money for a major revision in state education policy, which will be spelled out in separate legislation which will also be put to a vote Friday. The state will spend an extra $1.8 billion on those changes in the next two years, and a total of $7.3 billion over four years.

Overall, state spending on schools makes up about half of the operating budget.

The proposal would add $75 million for public colleges and universities, including a total of $15 million for medical school students in Spokane at Washington State University and the University of Washington.

To pay for the increases in public schools, lawmakers are being asked to approve a major overhaul of the property tax system, increasing the statewide property tax to $2.70 from $1.88 per every $1,000 of assessed value. The property taxing authority for most local school districts would be capped at $1.50 per $1,000.

A separate tax packages would also extend or change some tax exemptions. The tax credit for motion pictures made in Washington, which producers of the “Z Nation” series say is critical to continue filming in Spokane, would be extended for 10 years at its current rate.

The Senate is scheduled to vote on the budget sometime after it convenes this morning and send it to the House. The education changes are expected to receive a vote first in the House, and be sent to the Senate.

Because Friday is the last day of the state’s fiscal year, the operating budget must pass and be signed by Gov. Jay Inslee before midnight to give Washington agencies the authority to operate starting Saturday. Inslee has said he believes that will happen and has ordered the Park Department not to close state parks Friday afternoon and for the Department of Social and Health Services to continue preparing some benefit checks that would be mailed Saturday.

Friday is the Legislature’s 175th day and lawmakers are in their third special session in an effort to pass the budget. For more about the Legislature’s struggle to pass the operating budget, click here.