House OKs budget, $750 million surplus

OLYMPIA – The Democratic-controlled Washington House on Monday approved a new supplemental state budget that boosts overall spending by nearly $300 million, while leaving $750 million in reserve to help deal with expected deficits next year.

Minority Republicans warned that Democrats are wildly overspending, setting the state up for big tax increases. Democrats conceded that the state is feeling the effects of a national economic downturn, but it’s nothing to get too worried about.

The House budget vote, a nearly straight partyline 62-33, followed hours of debate, framing arguments that are likely to carry forward onto the campaign trail after lawmakers adjourn next month.

The measure now goes to the Senate, which planned to roll out its own plan today, with roughly the same spending and reserves as the House. Gov. Chris Gregoire and some senators have recommended boosting the $750 million reserve figure.

The House plan would increase the current two-year $33 billion budget by a net of about $297 million and leave $750 million in savings to cope with future economic woes. A big chunk of the reserve would be in a hard-to-tap “rainy day” fund created last November.

Lawmakers are fine-tuning the second year of the state budget. The House proposal is the Legislature’s first concrete reaction to the recent state Revenue Forecast Council announcement that state revenue is expected to drop by $423 million and to a new calculation that added nearly $100 million in expenses for teacher salaries and caseload changes.

The House would spend extra for teacher pay, Medicaid, foster care, family planning, housing, lawsuits against the state, flood relief, long-term care, green-collar jobs and other environmental and climate change programs, as well as public safety.

Gregoire sent up her own $234 million budget in December, with a $1.2 billion reserve, and leaders in both chambers had agreed to a goal of saving at least $1 billion. But after the grim new forecast, House leaders peeled the reserves back to $750 million, a number that Democrats say is the minimum they expect to pass.

But Republicans said Gregoire and her legislative colleagues are spending far too heavily, driving up the budget by 33 percent in the past four years, raising spending twice as fast as the growth in tax revenue.

Alluding to biblical plagues, Rep. Bill Hinkle, R-Cle Elum, said the Democrats are setting up the state for seven years of fiscal pestilence.

“We’ve got to wake up, people!” thundered Rep. Mike Armstrong, R-Wenatchee. One more bad revenue forecast and the state will have deficits, he said.

A new projection from the nonpartisan Senate budget staff shows a deficit of $2.4 billion in the upcoming two-year fiscal period and $5 billion for 2011-13, said Rep. Doug Ericksen, R-Ferndale, deputy minority leader.

“Washington isn’t underperforming as a state; the majority party is overspending,” taking record surpluses and turning them into what could be record deficits, he said.

“We defend the things that are important,” said Rep. Hans Dunshee, D-Snohomish, budget vice chairman, mentioning 10,000 new college enrollment slots, 30,000 more children with health insurance, and an investment of $1.7 billion in new K-12 spending.

Teacher pay was the main flashpoint for the debate.

The budget proposal includes $43 million in additional money to cover the voter-mandated cost-of-living allowance of 3.9 percent, rather than the previously budgeted 2.8 percent, for the next school year. The controversy, though, was over the Democrats’ proposal for an additional 1 percent pay boost, costing another $39 million.

Republicans tried to roll back the 1 percent, at one point proposing an amendment to use some of the money to restore daylong kindergarten for more children, suicide prevention, school lunch programs, vocational education equipment and other popular programs.

House Democrats had initially proposed saving more than $16 million by freezing the program for phasing in daylong kindergarten within 10 years. But they restored half the money, allowing the program to expand to 15 percent of students in the upcoming school year.