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Inslee, Lege leaders say they’re closer on budget deal

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 press conference, 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 did agree 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 press 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 press conference, Hill released a statement that Democrats had agreed to reduce tuition. Not true, Sullivan said in response. At the press 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.

2nd Spec Sess Day 4: House budget cuts spending and new taxes

OLYMPIA — House Democrats unveiled their latest budget proposal, a $38.4 million plan with lower spending and fewer taxes than a bill they passed earlier this year. It's an effort to move toward the center in the current budget standoff.

Described by House Majority Leader Pat Sullivan as "a substantial compromise", it would require a capital gains tax on upper income investors, but  no increase in the business and occupation tax.

The chief budget negotiator for Senate Republicans said it comes down on spending but "they're still depending on taxes. We think taxes are unnecessary."

House Democrats counter that the Senate's $37.9 billion plan relies on accounting tricks that make it unsustainable and a gamble on sending one major change to voters in November. If voters say no, that's a $2 billion hole they'll have to fix late this year or early next.

The House plan has more for teachers' salaries and health care benefits. It does not cut tuition at the state's colleges and universities by 25 percent as Republicans propose, but it does freeze tuition and spend more on student aid.

In a press conference this afternoon, House budget chairman Ross Hunter laid out a schedule in which they could reach an agreement by June 12, although Sullivan called that scenario "very aggressive." 

One special session down, one to go

OLYMPIA – The Legislature will go into double-overtime in an effort to reach a deal on how to spend some $38 billion on state programs, agencies and salaries over the next two years.

On Thursday, the last day of a special session called primarily to reach a budget deal, Senate Republicans released their latest spending proposal, the first they’ve made public since April, passed it out of committee without a hearing and sent it to the Senate.

House Democrats said they will study and counter with a proposal to be released Monday, and hold a hearing Tuesday after the public has had a chance to study it.

Monday will be Day 4 of the second special session, which Gov. Jay Inslee said Thursday to start at 9 a.m. today. He commended Senate Republicans for moving toward the middle on some spending issues, but said they need to move off their no-new-taxes stance, and was looking forward to seeing the Democratic counter.

“The most important thing now is to help people find a middle ground,” he said at an afternoon press conference which announced the long-expected second special session.

After House Democrats release their proposal Monday, he’ll have all budget leaders in his conference room at 10 a.m. to start daily budget negotiations. Asked why he didn’t require such meetings when the first special session started 30 days ago, Inslee replied the sides were too far apart then. Now, they are “in a place where we can see success.”

But taxes could still be a sticking point.

Neither Inslee nor Democratic leaders would say how much more revenue – generally speaking higher taxes or fees – would be needed to cover programs they want to add or accounting “gimmicks” they want removed from the Senate GOP proposal. Nor would they name a preferred tax system.

“We can’t be Pollyanna-ish and think we can do this with twinkle dust,” Inslee said.

Senate Ways and Means Committee Chairman Andy Hill, R-Redmond, said Democrats need to reduce their spending requests. The need to raise taxes “went out the window” with a new forecast last week that estimates the state will collect an extra $400 million in revenue over the next two years and any argument to the contrary is just “taxes for the sake of taxes,” he said.

“That's just silly,” House Majority Leader Pat Sullivan, D-Covington, responded a few minutes later. The Senate GOP budget still relies on shifting money out of other accounts, special one-time expenditures and unspecified reductions in certain programs, he said. Finding new sources of revenue is a better option.

The Legislature did have one budget success before adjourning Thursday. They approved a plan to spend some $5 billion the state will collect in existing transportation taxes and fees for the next two years. It includes money for A more difficult decision that would require them to raise gasoline taxes by 11.7 cents for new transportation projects might be made in the second special session.

Special Session Day 30: Senate GOP releases budget 2.0

OLYMPIA — On the last day of the first special session and the eve of a second special session, Senate Republicans released their latest proposal for a 2015-17 operating budget that increases spending on salaries, health care and tuition. It meets many of the Democrats' requirements without raising taxes, the GOP budget leader Andy Hill said.

The need for raising taxes "went out the window" with a new forecast that estimates the state will collect an extra $400 million in revenue over the next two years, Hill, R-Redmond, said. Any argument to the contrary is just taxes for the sake of taxes, he said.

"That's just silly," House Majority Leader Pat Sullivan, D-Covington, responded a few minutes later. The Senate GOP budget still relies on "gimmicks" like shifting money out of other accounts, special one-time expenditures and unspecified reductions in certain programs, and finding new sources of revenue is a better option, Sullivan said.

The Senate GOP budget, dubbed Budget 2.0 because it is the second one released to the public, moves toward House Democrats' position on certain points. It segregates money from marijuana taxes for programs the voters approved with Initiative 502 rather than funneling it directly into the general fund, as well as sending $12 million of it to local governments to help deal with the effects of marijuana legalization. It pays for cost-of-living increases negotiated in contract talks between the state employees unions and the governor's office, under the condition the Legislature passes a law to open future contract talks to legislators and the public.

Sullivan said that condition might meet with resistance in the House, although there may be a way to provide more coordination between the governor's office and the Legislature during contract talks. Senate Republicans weren't concerned about opening up contract talks during the recession when unions were making concessions, he added.

Republicans have also proposed adding nearly $100 million in the higher education budget to move up the pace of their planned tuition reductions at the state's public colleges. Their first budget would have cut tuition by 25 percent over two years; this plan cuts it that amount in the first year of the budget and provides extra money for state need grant recipients attending private schools.

Among the other shifts in the budget is an increase in spending for medical education in Spokane. The University of Washington would get $9 million for its WWAMI program, requiring it to have 60 first year medical students and 20 second year students next year, and 60 more first-year students in 2017.  Washington State University would still get the $2.5 million proposed to seek accreditation for its proposed medical school.

The budget proposal, which was released to the public about 11 a.m., will get a hearing — and a possible vote — in Senate Ways and Means Committee meeting that starts at 1:30 p.m. The first special session ends today, and Gov. Jay Inslee is expected to call a second special session to start Friday; the budget could come up for a vote in the full Senate early in that second session.

Spec Sess Day 29: Get ready for double overtime

OLYMPIA — The Legislature slid toward a second special session today with all sides agreeing they couldn't finish negotiating and adopting a two-year operating budget before time runs out in the first special session Tuesday at midnight.

Both chambers have passed an operating budget, but the two plans are so different that they would be difficult to reconcile even if there was general willingness to compromise and ongoing negotiations.

There isn't, and there aren't.

At the end of the regular session six weeks ago, Gov. Jay Inslee described the House and Senate as "light years apart." Today House Majority Leader Pat Sullivan, D-Covington, said the gap has closed, but not nearlyl enough.

"We're still somewhere out in space," Sullivan said of the differences.

Looking beyond Tuesday's special session deadline to another date on the calendar, the start of the state's fiscal year on July 1, the House passed a "bare bones" measure to continue work on existing capital construction projects. Without it, Capital Budget Chairman Hans Dunshee, D-Snohomish, said, those projects would run out of  money on July 1 and work would stop. 

There were charges of Washington, D.C., style politics — about the worst insult one legislator can hurl at another in Olympia — as the two chambers dug in for an unknown number of days beyond Tuesday. It wasn't strictly partisan; some criticism involved members of one chamber dissing the other.

"The other chamber wants to take us right off a cliff," Rep. Marcus Riccelli, D-Spokane, said during debate on the capital budget stop gap measure.

"There is no tolerance for shutting down the government. Let's don't play politics," Rep. Norma Smith, R-Clinton said before voting for the same bill. Smith was forced to cut her speech short when Speaker Pro Tem Jim Moeller, D-Vancouver, ruled her comments about playing politics went too far for the debate rules of the House.

In the afternoon, the Senate Ways and Means Committee held hearings on eight bills, including several tax proposals that would be necessary to pay for a wide range of education and social programs in the coming two-year fiscal period. Normal rules of the Legislature wouldn't allow those bills to move through both chambers in the day remaining in the current special session, so they offer discussion points for the next special session.

After hearing public testimony on the eight bills, the committee recessed until Tuesday morning to decide whether to pass them to the Senate floor, but not before Sen. Sharon Nelson, D-Maury Island, wondered aloud what Republicans who make up most of the Majority Coalition Caucus had in mind.

"It would be fairly helpful to know what the plan is," Nelson said.

Inslee has said he will call a second special session to start Wednesday if legislators didn't pass an operating budget, a plan to improve the state's transportation system and toughen drunk driving laws in the first special session. None of those three has passed.

Special Session: Budget deal may be far away

OLYMPIA — Senate Republicans and the conservative Democrats who helped them pass an alternate budget last month said they are no closer to agreement on a plan to fix the state's operating budget problems.

"The longer we stay here, the less sustainable th budget they put out becomes," Sen. Joe Zarelli, R-Ridgefield, said. The proposal released Wednesday morning by House Democrats "just moved us farther apart as far as the structure of the budget."

Prospects that both chambers will pass a budget and accompanying reforms before the next Tuesday, when the special session is scheduled to end, seemed to grow dimmer with each passing hour.

Zarelli, the ranking Republican on the Senate Ways and Means Committee, contended it was the GOP and the three "road kill" Democrats who have given up the most in negotiations over certain reforms.  They dropped a proposal to skip next year's payment to the state pension system and a proposal to close one of the pension plans. But they want to end early retirement provisions for state employees set up under two separate laws; House Democrats are proposing just ending the most recent law.

"We've moved significantly, but we're not going to fold our tent and go home," Zarelli said. Democrats have supported the complete package of changes to early retirement provisions in the past, he added.

Sen. Jim Kastama of Puyallup, one of the three Democrats who voted for the budget crafted by Republicans, said a new proposal to pass a law requiring a balanced budget for two years and develop ways to balance it over four years doesn't go far enough toward the goal of structuring spending plans so legislators don't face massive cuts every year when they start a session.

The Legislature already passes a balanced budget over two years, even if that's not required by law, Kastama added. "If we didn't do that, we couldn't sell our bonds."

Through the assembled reporters, the coalition of senators traded jabs with House Democrats and their earlier statements about who was responsible for the slow progress toward a budget deal in this latest special session.  Each group accused the other of refusing to make concessions, and painted themselves as the ones giving the most in closed door negotiations.

House Majority Leader Pat Sullivan, D-Covington, had said negotiators hadn't even been able to negotiate the budget because of Senate Republicans insistence on reforming state government. "We've come significantly toward their position."

Countered Zarelli: "I don't see it as a good faith effort. They want to take the last few days before Easter, and send an Easter egg our way."

To complete its work by Tuesday, the House will have to pass a budget and the bills surrounding it sometime this week, and send them to the Senate where it must pass in the same version. House Democratic leaders said they don't know if they have the votes to pass some of the reforms they are proposing; if they do, it goes to the Senate where Democrats also hold a majority but don't have the votes to pass the current proposal.

Asked whether the state was looking at another special session — which would be the third since Thanksgiving to address the current budget problem — Zarelli said Republicans expected "to be flexible but not roll over" and weren't going to be rushed into a vote: "It's going to take whatever time it takes."

Special Session: New House budget may not have the votes

OLYMPIA — House Democrats rolled out the latest version of a general operating budget this morning, along with several changes to state programs, but conceded they didn't know whether this exact plan will break the ongoing stalemate.

"We actually don't know if we have the votes for all this," Rep. Ross Hunter, D-Medina, chairman of the House Ways and Means Committee, said.

House Majority Leader Pat Sullivan, D-Covington, called it an effort to "get the ball rolling" and address concerns from Republicans that have been discussed in negotiations, rather than the final package of budget and supporting laws that will pass.

"It's mostly an effort to keep the process moving," Sullivan said. The clock is ticking. The last day of the special session is Tuesday, and in between are Good Friday, the beginning of Passover, and Easter.

Hunter said he assumes there are enough Democratic votes to pass the budget in the House, but some of the other changes that the budget relies on — changes to the state's early retirement plans, reduced class sizes that are on the books from a statewide initiative but often cancelled to cut costs, new rules for balancing the budget over two and four years — will need Republican votes to pass. Although Democrats and Republicans from both chambers have been in negotiations for three weeks, there's no indication the GOP will sign on.

In a report on Northwest News Service, Joe Zarelli, the top Republican on budget matters in the Senate, referred to reforms the Democrats were proposing as "dust." Senate Republicans, and Democrats who joined with them during the regular session to pass a very different budget, scheduled a press conference for 12:30 p.m. For a report on that press conference, click here.

House Democrats also said they would introduced a pared down version of the Capital Budget, which they refer to as the Jobs Plan, that is nearly $1 billion. It's that plan that has major state construction project, some of them funded by state bond sales and others by special accounts. On the list of projects from various accounts is some $37 million to complete the Biomedical and Health Sciences building at Washington State University's Riverpoint campus in Spokane.

Rep. Hans Dunshee, D-Snohomish, chairman of the Capital Budget Committee, said it was time to take advantage of low interest rates in the bond market to build the projects. All the projects listed would employ more than 22,000 people, most in the hard-hit construction sector.

But the Capital Budget is tied in part to the General Operating budget, which revenue projections and scheduled expenses say has a hole of more than $1 billion. Legislators struggled through the regular 60-day session and are 23 days into their 30-day special session, trying to fill that hole.

In past budget plans, Democrats have suggested an accounting shift that delays a payment to the state's school districts by a few days, moving it into the next biennium so it doesn't show up on the state's books. Republicans have criticized that as a gimmick, and the latest budget drops that.

It also does not have a Republican proposal to skip a payment to the state's pension plans, which Democrats have derided as a gimmick and did not include in previous budgets. Democrats are proposing one shift to the state pension system, eliminating for new employees an option for early retirement that was approved in 2007, allowing retilrement with a full pension at 62 for those with 30 years of service; Republicans also wanted another early retirement option passed by the Legislature in 2000; Democrats don't have that, nor are they calling for the closure of some other plans. That cuts estimates for long-term savings about in half, to $1 billion over some 20 years, but doesn't really help or hurt the General Fund's bottom line this biennium.

Instead of the delayed school payment or the skipped pension payment, House Democrats embrace a proposal by Gov. Chris Gregoire to modernize the system the state uses to pay cities and counties the money collected for sales tax. That shifts about $238 million into a working reserve, and boosts the budget's bottom line.

The budget has  no tax increases, and no reductions to tax credits or exemptions offered to busineses. It makes no changes to public schools or state universities and colleges, and drops a proposed 5 percent increase in Temporary Assistance to Need Families payments.

The package of reforms that will have a hearing this afternoon in the House Ways and Means Committee includes a new law that would require a two-year balanced budget and propose a way to create a four-year balanced budget. But that could fall short of a proposal by Senate Republicans and some conservative Democrats for a four-year balanced budget amendment.