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House Democrats offer $38.4 billion budget plan

OLYMPIA – House Democrats unveiled their latest 2015-17 budget proposal, a $38.4 billion plan with lower spending and fewer taxes than a bill they passed earlier this year.

For optimists, it represents a move toward the center that could help end a budget standoff before a partial government shutdown at the start of July.

For pessimists, it’s still significantly different from a Senate Republican plan released last week that totals about $37.9 billion, which not only spends less but has no new taxes.

David Schumacher, director of the Office of Financial Management, summed up both views after a budget session called by Gov. Jay Inslee to “kick-start” negotiations. Having two new budget proposals made Monday “Day 1 of the process,” he said, adding, “It would have been nice if this were Day 1 a few months ago.”

House Majority Leader Pat Sullivan, D-Covington, called his caucus’s plan “a substantial compromise” in spending, with a capital gains tax on people who earn more than $50,000 per year in many kinds of investments but with no increase in the business and occupation tax.

Sen. Andy Hill, the chief budget negotiator for Senate Republicans, said it was a “positive step” on spending, but not so much on taxes. “They’re still depending on new taxes. We think taxes are unnecessary.”

House Democrats argue the Senate plan does not set aside enough for mental health, early learning or human services programs. It also relies on what they call accounting tricks, such as taking $100 million out of a separate capital budget usually used for long-term projects and moving it into the operating budget for ongoing expenses, being overly optimistic on taxes from newly legalized marijuana and “double-counting” sales tax collected from road and bridge projects in both the operating and transportation budgets.

Because they disagree on several major revenue points, the two sides don’t really agree how much money the state has to spend on policies, programs and wages over the next two years. That difference thwarted progress during the first special session and needs to be settled before detailed negotiations can be completed.

Both Hill, R-Redmond, and House Appropriations Committee Chairman Ross Hunter, D-Medina, said they might reach an agreement on that point by the end of this week.

Hunter said a budget deal could pass both chambers by June 12, although Sullivan labeled that “very aggressive.” June 27 is the last day of the second special session, and June 30 is the end of the fiscal year.

Both plans have some wage increases for teachers and other school employees, although the House plan’s increases are larger, and the current proposal to reduce the state’s share of health care benefit payments is unpopular with some Democrats. House Democrats don’t cut tuition at the state’s colleges and universities by 25 percent as Republicans propose; instead they freeze tuition and spend more on student aid.

Senate Republicans have likened their tuition reduction to a middle-class tax cut. Their latest plan would put it in place this fall, rather than staggering it over two years as they originally proposed.

Both budget proposals have $2.5 million for Washington State University to seek accreditation for a new medical school in Spokane, although they differ on the amount of money available for the current WWAMI program operated by the University of Washington. The House budget has $9.36 million, the same as the previous proposal, while the Senate budget increased spending on that program from $2.5 million to $9 million. (Note: An early version of this story had an incorrect number for the amount in the House budget for WWAMI.)

House Democrats rolled out their plan in phases Monday, producing copies at the first of what could be daily budget negotiations in the governor’s office, then discussing it with their full membership and later at a news conference. They scheduled a hearing in the House Appropriations Committee for today and a possible committee vote Wednesday.

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