Higher State Wages Key To Budget Battle Salaries And Bigger Tax Cuts Are Seen As Basic Tradeoff

Republican leaders, now hopeful lawmakers will pass a budget by this month’s adjournment deadline, said Tuesday the final battle will be over higher salaries for state employees vs. bigger tax cuts.

While big-ticket items like education and higher education still are being negotiated, leaders said that when the House-Senate differences come within $200 million of closure, the basic tradeoff will be whether to accept the Senate level of salaries or the House push for larger tax breaks.

“We’ve always known that would be the endgame,” said House Majority Leader Dale Foreman, R-Wenatchee, the chief House budget negotiator.

When framed like that, the public will side with the House, said House Majority Caucus Chairman Todd Mielke, R-Spokane. In many communities, the teachers and state employees are better paid than the average worker, he said.

The House offers $100-a-month in pay boosts for state workers and requires them to pay a co-payment of about $32 a month on their health insurance. The pay increases for teachers, college faculty and state agency workers totals $286 million.

The Senate, at $460 million, would permit a 5 percent pay raise and would not require an insurance copay.

Foreman said a possible compromise was floated by union officials on Tuesday: 2 percent in each year of the two-year budget, plus a $10 million pot of money to give better raises to workers who lag the most behind counterparts in the private sector.

He said the plan was worthy of study, but didn’t endorse it. It’s closer to the House position than the Senate’s plan.

Foreman predicted the eventual compensation package will include the insurance co-pay. Most taxpayers have to pay part of their monthly premium and don’t feel state workers should be treated differently, he said.

Senate chief negotiator Nita Rinehart, D-Seattle, said Tuesday she’s willing to debate the issue, but only as part of the overall compensation debate.

The tax-cut remains a big bone of contention, said House Speaker Clyde Ballard, R-East Wenatchee, and Senate Majority Leader Marcus Gaspard, D-Puyallup.

The House has passed a $738 million package of tax cuts; the Senate level is $264 million. The one area of overlap is a tax break of about $150 million for manufacturing plant construction and equipment.

Mielke, who is negotiating the House’s tax position, said he presumes the Senate will approve at least half of the House’s business-tax rollbacks. That would bring the total tax-cut bill to $325 million. If the Senate also approved half of the House’s property-tax relief bill, the tally would reach $415 million.”After that, we seem to hit a wall,” he said.

The Senate would like to preserve at least part of its $100 million sales tax break on medical supplies and non-prescription drugs and the House wants to include more business tax rollbacks, he said.