Shutdown averted as $43.7 billion state budget passed and signed

OLYMPIA – After studying, arguing, haggling and delaying for 175 days, lawmakers took just a few hours to push through an operating budget of historic proportions and a major change in the property tax system.

Gov. Jay Inslee signed the budget, with a few line-item vetoes, at 11:14 p.m., preventing a partial government shutdown that was set to start when the state’s new fiscal year starts on Saturday.

The $43.7 billion spending plan is the largest two-year budget in history. It spends about half of that total on public schools.

It also accepts the contracts negotiated with the state labor unions, with increases totaling 6 percent over the next two years, which will cost the state $618 million. It adds $102 million for behavioral health programs and an extra $73 million for the state’s public colleges. Included in the boost for higher education is a total of $15 million for additional medical school students in Spokane at Washington State University and the University of Washington programs.

A $1.8 billion boost to the current level of spending on education – the Legislature’s attempt to meet a Washington Supreme Court mandate to improve public schools – is supported by a shift in property taxes that increases the amount the state collects from all property owners and decreases the amount local school districts can levy on them.

Most taxpayers around the state will see a property tax increase next year as the systems change over, but many in Eastern Washington will see a drop the three years after that.

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.

Sen. Mike Baumgartner, R-Spokane, said the budget 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.

When the Senate voted later in the day on revisions to the property tax system, Baumgartner introduced an amendment to ask voters to approve them on the November ballot. The original Senate Republican budget had such a condition, but it was dropped in the compromises that led to the negotiated budget.

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

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.”

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

The budget and the property tax changes passed both chambers with bipartisan support – and bipartisan opposition.

Republicans said the budget spent too much, and wouldn’t be sustainable in an economic downturn.

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

Democratic critics generally supported the boost to schools and other programs, but objected to paying for them with higher property taxes instead of new taxes House Democrats had proposed that target upper income residents.

“The middle class is going to feel this in a very real way,” Sen. Reuven Carlyle, D-Seattle, said during debate on the tax plan. “We’re better than this.”

Sen. Andy Billig, D-Spokane, a member of the group that negotiated the changes to the public school system, said he thought there were fairer ways to raise the money for education, but in compromise, no one gets everything they want.

Billig said later that the day was historic in terms of the state providing support for children. Along with the improvements to public schools, the operating budget also sets up the new state Department of Children, Youth and Families, and the Legislature later passed a program for paid family and medical leave.

Bipartisan majorities in both chambers approved the new program of paid leave, which includes up to 12 weeks of paid leave after the birth of a child or a serious family illness. The state already has unpaid family leave, but the new law sets up an insurance funded by premiums from employers and workers and operated by the state Employment Security Department.

The Legislature also has a package of tax preferences that would lower taxes for many manufacturing businesses and continue some existing tax breaks. Among them is the tax credit for motion picture and film companies that shoot in Washington state, which producers of the “Z Nation” series say is critical to continue filming in Spokane, that would be extended for 10 years at its current rate.

Estimates released by nonpartisan legislative staff estimate the property tax on the average priced home in the Spokane Public School 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.

In 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 would go up $2.7 million/$5.7 million/$12.6 million/$13.1 million.

In 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

In 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

In 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 state would go up $1.2 million/$1.4 million/$3.2 million/$3.7 million