$1.3 billion supplemental budget agreed on

OLYMPIA – Democratic negotiators struck a deal Monday on a $1.3 billion supplemental state budget that includes more than $50 million in business tax cuts and a savings account of about $935 million.

“We’ve got a deal!” said House Majority Leader Lynn Kessler, D-Hoquiam. “We’re all happy with what we’ve come up with.”

The first vote, in the Senate, could come late today. The 60-day session must end by Thursday, but leaders said they could finish Wednesday.

Gov. Chris Gregoire was less than enthusiastic about the package developed by her fellow Democrats. She had wanted the reserves kept at more than $950 million and criticized some of the proposed spending increases and the size of the tax package.

Details still were sketchy as negotiators wanted to brief their caucus members before saying much publicly. They said the supplemental spending plan appropriates more than each house did as they meshed their two wish lists.

That leaves the reserve account at about $935 million. Previously, both houses had topped the $950 million mark as Gregoire wanted. Much of the money is being appropriated into savings accounts earmarked for education, health care, pension and debt service.

Both the savings accounts and the new spending are coming from a projected surplus of nearly $1.6 billion.

The supplemental spending will be in addition to the $26 billion, two-year budget adopted last spring.

The budget chairwomen, Sen. Margarita Prentice, D-Renton, and Rep. Helen Sommers, D-Seattle, both were satisfied with the outcome. Both defended the spending increases agreed on during the closed-door negotiations.

“We looked at what our real needs are, and that’s what we filled in at the last minute,” Prentice said, adding that because the two houses had somewhat different priorities, “there were painful ‘gives’ on each side.”

She said the $935 million reserve is “a very big number” and said Democrats should get credit for saving the lion’s share of the surplus rather than starting major new spending that couldn’t be sustained in the 2007-09 budget that lawmakers will write next year.

Sommers said the new budget will devote $28 million to remedial help for students who are struggling with the Washington Assessment of Student Learning.

The new budget also provides more for higher education, pension contributions, health care and K-12 education. It eliminates the $5-a-day parking fee at state parks.

Negotiators were putting the finishing touches on a separate tax-cut package. Kessler said it would be a little less than the $55 million the House originally had supported.