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House D budget: Cuts, delays, but no sales tax hike ?>

House D budget: Cuts, delays, but no sales tax hike

Majority House Democrats launched the endgame of the election-year 2012 legislative session Tuesday, unveiling their plan to close a billion-dollar budget gap.

They propose doing this by shifting $405 million in K-12 payments into the next biennium; creating a few new taxes; shedding some revenue-sharing with local government; and cutting higher education, social and health services, inmate supervision, parks, State Archives and other programs.

The proposal includes some new revenue, including $18 million from a new tax on mortgage bankers and $13 million by taxing manufacturers of roll-it-yourself smokes.  It does not, however, require a half-cent increase in the state sales tax that Gov. Chris Gregoire had proposed for a springtime election before the state’s economic picture brightened recently.

The plan also does not require 24 furlough days by state employees, as House Republicans had proposed, nor does it cut salaries of state workers and teachers or charge them more for their health coverage.  The budget cuts the state payroll by 1,554, including about 900 layoffs due to voter approval of a 2011 initiative privatizing liquor retail.

In all, House budget Chairman Ross Hunter said, it’s a “workable solution that doesn’t do long-term harm to our state.”  In describing the state’s descent into red ink in recent years, he said “What is obvious is that we can no longer afford many existing expenditures,” particularly with a looming court mandate to ramp up K-12 support from the state level.

One change, he noted, is that the state must wean local governments from state appropriations.

Hunter said the proposal does not “securitize” future revenue streams as a way to pay for today’s spending, nor does it skip any pension contributions.

He said education suffers “no significant damage,” such as the governor’s idea of shortening the school year and levy equalization, subject to restoration with the sales tax vote. Higher education, though, does take a $65 million hit ($35 million community colleges, $30 million (more…)

Suddenly, some rosy economic news for WA ?>

Suddenly, some rosy economic news for WA

Light at the end of the tunnel: Washington economists are projecting a $96 million increase in the state’s revenue.

Coupled with news that state government will save $330 million in lower caseload costs and that House Republicans will support closing a banking tax loophole, it could mean lawmakers can avoid calling a special election to ask voters to boost the state sales tax a half-cent for the next three years. It also makes it more likely that the Legislature will wrap up within its 60-day limit.

“We’re finally seeing movement in the right direction” after the Great Recession knocked billions from the state’s treasury, said Senate budget Chairman Ed Murray.

Tough budget decisions still remain, though.  Budget and revenue leaders on the Revenue Forecast Council said that, in round numbers, lawmakers face a billion-dollar problem — a budget gap of $500 million and the need to salt away reserves of $500 million.

“We’re still pretty deep in the hole,” said House budget Chairman Ross Hunter, while acknowledging that the new revenue and caseload forecast numbers make it easier.  Both he and Murray declined to say whether majority Democrats will be able to balance the budget without a public tax vote.  Gov. Chris Gregoire had proposed a half-cent sales tax hike, bringing in about $500 million for each of the next three years.

Chief economist Steve Lerch characterized the revenue update as a relatively small change in a $30 billion, two-year budget. He said the state continues to outpace the national economic recovery a little, led by gains in aerospace (up 11,500 jobs since May of 2010), software, agriculture and export trade.  The construction sector remains flat, but employment is no longer falling.

The state economy will “muddle through” during the next year, with “a high degree of downside risk,” including the weakness in Europe and gridlock in D.C., Lerch said.

Murray said it now appears likely that lawmakers will be able to adjourn on time, March 8. Hunter said House Democrats will unveil their budget plans next week and Murray said the Senate will roll out its plan the following week.  Murray is building the Senate plan in consultation with minority Republicans.

Gov. Gregoire welcomed the news, noting that Olympia may be able to handle the budget gap (without the tax referendum), but added:

“We’re not out of the woods yet, and solving the budget problem remains a significant and daunting task.”


Red ink: House offers $32 billion cut-laden budget ?>

Red ink: House offers $32 billion cut-laden budget

Majority House Democrats have unveiled a $32.4 billion state budget that incorporates $3.2 billion in assorted cuts, a 3 percent salary reduction and higher medical contributions for public employees, pension reforms, and more.

The no-new-taxes budget for the next two years was the first draft to surface in the Legislature since a new revenue forecast knocked another $800 million hole in the budget last month, bringing the total gap to over $5 billion.  Tax collections have lagged as the state and national recovery struggles to take hold.

House budget Chairman Ross Hunter and other House Democratic leaders briefed reporters on the new plan, which was scheduled for a public hearing later in the day and action by the Ways and Means Committee on Wednesday.  The full House may vote by week’s end, and soon the Senate is expected to come up with its counterproposal.  In the House, minority Republicans are producing an alternative budget; in the Senate, Republicans are at the table.

The House plan freezes voter-approved initiatives for teacher pay and class-size reduction, cuts $482 million from higher education, cuts public employee pay by $177 million, eliminates K-4 class-size appropriations to save $216 million, trims the Basic Health Plan by $108 million and the Disability Lifeline program by $100 million, and saves $362 million from automatic pension COLAs for some older retirees.

The budget proposal would cut the Office of Secretary of State by about $15 million, including cuts of 22 percent at the State Library and the Legacy Project, and saving $10 million by suspending the 2012 presidential primary.  Secretary of State Sam Reed and Gov. Chris Gregoire jointly requested the primary cut, given the dire straits of the budget.

Reed will resist the deep Library and Legacy Project cuts.   The budget does not contemplate removing the Library and Legacy Project from the Office of Secretary of State, as a separate bill had proposed.

But the budget does sweep up the funds that the Legislature previously authorized for construction of a new Heritage Center for the Capitol Campus, to house the Library and State Archives and to provide an education and visitor center and historical exhibits.

House Democrats also proposed a state construction budget that uses $1.6 billion in new bonds.  A separate transportation budget was approved earlier and awaits action in the Senate.