Early this evening the Washington Legislature brought to a close the 2013 legislative session.
After a regular session and two special sessions the Legislature passed a biennial operating and capital budget and a handful of policy bills in the final days of the second special session.
The Governor is expected to sign the legislation passed by the Legislature on Sunday.
Today the Washington Legislature took action on a biennial capital budget. The Governor is expected to sign the capital budget along with the operating budget on Sunday.
The biennial capital budget passed by the Senate and the House provides $15.267 million for Evergreen’s capital program. This level of funding was below the budget originally passed by the Senate but above the budget passed by the House.
Over the next biennium Evergreen receives funding for three projects: (1) Science Lab I – Basement Renovation ($1.805 million), (2) Science Lab II – Second Floor Renovation ($4.694 million), and (3) Lecture Hall Renovation – Design ($1.308 million).
In addition the budget includes funding for minor works preservation and preventative maintenance.
Though the final capital budget represents approximately half of what Evergreen requested for the biennium, the funding provided allows the College to continue to move forward on critical capital projects over the next two years.
Congress headed home this evening for the Fourth of July recess without implementing legislation to prevent an increase in the interest rate on federally subsidized students loans. As a result, interest rates will double for students on Monday from 3.4% to 6.8% on new subsidized Stafford loans.
Over the last year, Congress has been working on efforts to prevent what will now take place on Monday.
The Obama administration and Congressional Republicans supported a long-term change to how interest rates are determined for all federal student loans. Those plans differed in the particulars, but both would have tied interest rates to market rates, allowing them to rise without a cap as interest rates go up in the broader economy. Congressional Democrats pushed for a one- or two-year extension of the current 3.4 percent interest rate for subsidized student loans, arguing that the issue should be settled when Congress debates broader higher education legislation in the coming years.
It appeared earlier this week that a bipartisan compromise proposal might be the way to go. However the proposal could not garner sufficient bipartisan support in the Senate and its fate in the House remained uncertain.
Whether students will actually pay the new rate is unclear. On Thursday, Senator Tom Harkin, the Iowa Democrat who chairs the education committee, said that he wanted a one-year fix that would apply retroactively. Since the federal government is the lender for all new student loans, Congress could adjust interest rates after the fact. But where the money will come to pay for the extension, which last year cost $6 billion, is an open question.
This evening after a week of long days and nights on the floor and two legislative sessions the Washington Legislature sent to the Governor an operating budget that makes a substantial reinvestment in higher education.
Last session the Washington Legislature held the line on funding for higher education. This session the Legislature set a new path forward for higher education making a substantial reinvestment in access to an affordable quality education for students. The budget put forth by the Legislature reverses the trend of deep reductions all to familiar in higher education since the beginning of the Great Recession and makes a commitment to invest in higher education and to ease the financial burden for Washingtonians and their families.
The budget invests nearly $3 billion in Evergreen above a fully funded maintenance level budget. This represents an increase of 5.6% above 2011-13 levels and represents roughly half of the total request the Evergreen Board of Trustees put forth this past fall.
The reinvestment of state dollars will allow Evergreen to move forward in several critical areas including student success programming, basic technology and infrastructure needs, and staff and faculty recruitment and retention efforts.
Perhaps most critical in this budget is the commitment the Legislature makes to students by holding tuition at current levels for the next two years in the budget and making a substantial investment with state funds to preserve quality.
Late Thursday night the Washington Legislature released details on a final budget compromise for the 2013-15 biennium. And by late this evening the Washington Legislature forwarded the final budget to Governor Inslee’s desk for signature.
Overall the proposed budget makes several policy enhancements, primarily in education. These include: (1) over $1 billion in K-12 education increases for basic education; (2) over $180 million in policy level enhancements in state funding for higher education; and (3) $25 million for expanded preschool through the Department of Early Learning.
In addition the budget leaves approximately $630 million in reserves.
These enhancements as well as the other parts of the budget are funded through a combination of savings, transfers, and the redirection of funds.
Finally the budget assumes $267 million in other resources. This increase includes a combination of $11 million in legislation reducing revenue and $279 million in legislation/budget actions increasing revenue. The source of the increased revenue is: (1) $159 million from enactment of the estate taxes, (2) $110 million from telecommunications services reform, and (3) $9.5 million from enhanced liquor revenue collected by the Department of Revenue.
Higher Education
The legislatively passed operating budget makes the strongest investment in higher education in years. The proposed budget assumes no increases in resident undergraduate tuition rates for the 2013-15 biennium. For 2013-14 the public, four-year institutions are prohibited from using tuition-setting authority to exceed the appropriated tuition level.
The total budget provides $3.1 billion in state funds to support higher education. The budget provides $119.3 million in funding to support the core academic functions of the institutions of higher education. Finally the budget makes an investment in financial aid including the College Bound Scholarship program and the State Need Grant.
In addition $17.6 million is provided to the University of Washington (UW), Washington State University (WSU) and Western Washington University to expand enrollments in computer science and engineering. Additional dollars are provided to WSU to expand their medical programs in Spokane and to establish the Clean Energy Institute and the Center on Ocean Acidification at the UW.
Evergreen
For Evergreen the budget passed by the Legislature would require that tuition remain at zero for the 2013-15 biennium for undergraduate resident students. The College is prohibited from increasing tuition in 2013-14 but may increase tuition beyond this level with a prescribed investment in institutional financial aid in the following year.
In addition the budget invests $2.899 million above maintenance level funding for Evergreen. This represents a 5.6% increase from 2011-13 levels and provides funds for Evergreen to maintain affordable tuition, invest in student success programming, and support needs in basic technology infrastructure.
Finally, the Washington State Institute for Public Policy, a public service center of Evergreen, is funded to support seven study/research projects for the Legislature.
Next Steps
The Governor is expected to sign into law the operating budget on Sunday. It is reported that no further action will be taken to try to move forward a transportation revenue. Finally, it is expected that a biennial capital budget will be released later this evening or tomorrow with hopes that the final capital budget will be sent to the Governor for his signature on Sunday.
This morning both chambers confirmed that a final budget deal has been reached for the 2013-15 biennium. Members will be briefed on the proposal this afternoon. There is hope that the final budget may reach Governor Inslee’s desk by tomorrow night.
While we await details on the $33.6 billion budget, reports state that the budget includes an additional $1 billion into public schools; a prohibition on higher-education tuition increases for one year, with some flexibility in the second year; and an agreement to end a tax break for residential phone service that’s projected to net about $85 million over the next two years.
Though the general outlook is this will move forward, there is a cautious tone because disagreements between the two chambers remain. The disagreements, however, are primarily focused on separate pieces of legislation and not part of the budget. Among the topics still left undetermined include budget language to conduct a study on fish consumption and recovery plans for the protected Eastern Washington wolf population.
The budget deal comes after a week of negotiations and actions on the floor. Earlier this week both the House and Senate met and passed a handful of non-controversial bills that were deemed necessary to implement the budget.
Today the House successfully passed a $10 billion transportation tax package which includes a tax on gasoline. This is after a failed attempt yesterday.The future of the transportation package is uncertain in the Senate.
In addition, the House may take up legislation to stiffen drunken-driving penalties that was passed by the Senate earlier.
The U.S. Senate is reported to be near a bipartisan compromise regarding student loan interest rates, but it is unclear if the Senate and the U.S. House will be able to find common ground before July 1.
On Monday, the interest rate will increase from 3.4% to 6.8% for federally subsidized Stafford loans without legislative action.
After a year of work on finding a solution and several proposals from both chambers, both parties, and the President it appears there may be emerging a compromise in the Senate. A proposal is circulating that would establish market-based interest rates that split the difference between the Administration’s plan and an earlier proposal put forth by Senate Republicans.
The proposal would base interest rates on the 10-year Treasury note: undergraduate Stafford loans would have an interest rate of the 10-year Treasury rate plus 1.9 percentage points. Based on Tuesday’s 10-year Treasury note, that would lead to undergraduate loans with an interest rate of about 4.5 percent. Graduate and parent PLUS loans would have higher rates. Rates would vary from year to year for new loans, but remain fixed over the life of the loan.
The House Republican plan is based on similar principles, but would reset the interest rate each year for existing loans based on market conditions — a truly variable rate.
Senator Tom Harkin, the Iowa Democrat who chairs the Senate Committee on Health, Education, Labor and Pensions, was said to be a major hurdle. Harkin is now circulating a market-based proposal of his own. Harkin’s plan would include an interest rate cap — said to be a deal-breaker for Senate Republicans.
The question is whether House Republicans would support the bill. House Republicans have so far been unwilling to support legislation that increases the deficit within the five-year window — the reason their interest rate bill included a variable rate for student loans that resets each year.
If a Senate compromise can’t get enough support to pass the House before the July 1 deadline, Congress could also reach a retroactive compromise that affects loans the Education Department has already made.
Yesterday Governor Inslee held a press conference to provide an update on the special session. Inslee stated that a major breakthrough in the negotiations had taken place in the morning and that a budget deal was imminent.
As of this morning no announcement regarding a final deal or what that deal will look like. Word on the street is that budget negotiators are focused on the smaller details of the budget, closing in on a final deal.
On the heels of a positive revenue forecast last week, momentum has picked up to bring a close to this second special session prior to July 1 and well before the full thirty days run out. The House and Senate convened for floor action on Sunday afternoon and again Monday afternoon, passing non-controversial legislation deemed necessary to implement the budget.
Today both chambers are convening earlier in the day with the House arriving this morning and the Senate at Noon.
This morning the Washington Revenue Forecast Council met for the release of the quarterly revenue forecast.
The forecast projects that the state will take in $231 million more than was expected – $100 million for 2011-13 and $121 million for 2013-15. In addition the release of the caseload forecast this afternoon is expected to provide $90 million in relief. This good news may be the push needed for the Legislature to strike a final budget and head home.
Throughout the legislative session and the first special session budget negotiators have been stuck trying to reach a deal for additional revenue (House) and reform legislation (Senate). The projected increase in the revenue forecast may allow for the case to be made that additional revenue is not needed and in turn no reform (such as workers compensation and K-12) would be necessary at this time in exchange for revenue.
After weeks of non-action on The Hill, the Washington Legislature held a marathon session last Thursday to pass two major pieces of legislation. This is considerable movement forward given that no bills were passed and sent to the Governor during the first special session.
In the early hours of Friday morning Governor Inslee signed into law two pieces of legislation. The first bill fully restores the estate tax, responding to the recent Bracken decision by the courts, and devotes the funds to education. The passage of this bill prevented the Washington Department of Revenue from issuing several checks to taxpayers in the next budget period because of the court ruling that found married couples using a certain kind of investment strategy should not have been on the hook for the tax. The bill does make this change to taxes retroactive which is likely to draw a legal challenge.
The passage of the estate tax legislation was successful in the Senate only because the House agreed to approve legislation that would deal with how the state handles environmental clean-up funds.
So what is next.
No further action took place on Friday. Over the weekend rank-and-file members for both chambers were sent back to district while budget negotiators met. Both chambers are scheduled for floor action on Monday, but the House is not asking members to return until Tuesday.
On June 18 the Economic and Revenue Forecast Council will release its quarterly revenue forecast. In addition, the caseload forecast will also be issued. Speculation suggests that both forecasts will provide lawmakers with good news to close out the budget negotiations for the next biennium.
Budget negotiations continue. Though no breakthrough occurred over the weekend the progress made late last week lends itself to some optimism that the Legislature will complete its work prior to July 1. The major difference between the Senate and the House continues to be the Senate’s opposition to new taxes and the Houses’ concern about the policy bills put forth by the Senate in exchange for a revenue and budget deal.
Throughout the regular session and the first special session, the Senate has moved forward a number of policy bills in exchange for moving forward some revenue in a final budget. Last Thursday saw the first breakthrough in this area with the passage of the estate tax bill, which only came after the passage of an environmental-cleanup fund policy bill.
In addition the Senate also passed a wide-ranging education bill on Thursday that is now being considered by the House. The education bill along with a workers’ compensation reform bill are still in the mix, but two other major policy bills – state expenditure limitations on non-education areas of the budget and legislation that would grant principals the option to reject teachers who are appointed to their schools – appear to be off the table as the process moves forward. The Senate is still working to move forward the workers compensation and education bills in exchange for additional revenue around out-of-state shoppers and/or restoration of a tax on phone and other communications companies.
If the Legislature is unable to pass a budget by July 1, much of state government would likely have to shut down. The heads of state agencies have until 5:00 p.m. today to brings lists to the Governor identifying the services and staff that would be legally allowed to continue operating int he event of a partial government shutdown.