On Thursday Governor Inslee released his proposed 2015-17 Operating and Capital budgets.  The budget – Book 2- reflects the Governor’s focus that “after more than a decade of cutting vital services and neglecting obligations,… it is time to start reinvesting in Washington”. The budget proposes a mix of spending cuts, new revenue and reserves to pay for education and services.

The Governor also submitted, as required by law, a budget – Book 1 – that would provide for a balanced budget within existing revenues.

Governor’s Proposed Biennial Operating Budget

The Governor’s proposed budget – Book 2 – invests $2.3 billion in education.  Under his proposal the budget would provide funding to reduce class sizes statewide for kindergarten through third grade, meet the state’s commitment to fully fund basic education, make major investments in early learning, target investments to increase student success and boost graduation rates and freeze resident undergraduate tuition.

The budget also makes a number of other investments:

• Increase mental health bed capacity to prevent inappropriate boarding of psychiatric patients
• Hire more than 100 child protective and child welfare services workers to speed up investigations of abuse and neglect and ensure safe conditions for children in foster care
• Boost staffing levels at state parks to restore services and catch up on a backlog of maintenance work
• Implement the Governor’s proposed market-based carbon pollution reduction program
• Prevent and respond to oil spills along rail lines and reduce toxics in our waters
• Provide modest pay raises for state employees

The budget proposes tax and revenue changes ($1.4 billion) in combination with reserves and reductions to support the biennial operating budget. The budget uses $450 million from reserves and includes $211 million in General Fund spending reductions. Finally the proposal maximizes federal funds and shifts general fund costs to other fund sources to save an additional $212 million.

Among the tax and revenue changes is a new capital gains tax ($798 million) on the sale of stocks, bonds, and other assets to increase the share of state taxes paid by the wealthiest taxpayers, new revenue from a market-based carbon pollution reduction plan ($380 million), and a repeal of a sales tax exemption for trade-ins valued over $10,000 ($105 million).

 Higher Education

The Governor’s proposed budget freezes tuition for undergraduate, resident students for the biennium. No additional dollars are provided to offset the tuition freeze. The Governor will also introduce legislation to: (1) return tuition setting authority to the budget, (2) eliminate differential tuition, (3) repeal negotiation of Higher Education performance plans, (4) repeal publication of the 60th percentile global challenge states comparisons, and (5) amend financial aid mitigation provided with tuition setting authority so that any institution that exercised tuition setting authority above levels assumed by the legislature in 2011-13 and 2013-15 will continue to provide the financial aid mitigation.

In addition the budget makes an investment in math and science for each of the public baccalaureate institutions and the CCTCs and provides compensation at 3% and 1.8% for classified, professional, and faculty employees. The proposed funding only recognize the general fund portion. The remaining funding to support the compensation request is presumed to come from tuition but the budget prohibits increases in resident undergraduate tuition. This is also reflected in the health benefit increase. The budget also makes a handful of specific investments in other programs including the health professions, ocean acidification, and renewable energy.

Finally the budget maintains current funding for the State Need Grant and increases funding for the College Bound Scholarship program to recognize caseload increases.

It is worth noting that the Governor’s proposed budget without new revenues would result in a 10% reduction to higher education.

Evergreen

Under the Governor’s budget tuition would be frozen for undergraduate, resident students for the biennium at Evergreen. No additional investments are made to the College to offset the tuition freeze.

In addition the budget invests in math and science at Evergreen and provides compensation at 3% and 1.8% for classified, professional and faculty employees. The funding levels for compensation only recognizes the general fund portion, or just over a third of the cost. The remaining funding to support the compensation request is presumed to come from tuition but the budget prohibits increases in resident undergraduate tuition. This would require institutions to fund the rest from institutional dollars. For Evergreen this is $1.82 million. This split is also reflected in the health benefit increase. Evergreen would need to provide an estimated $169k.

Finally the budget requires Evergreen to report on STEM outcome measures, provides funding for several Washington State Institute for Public Policy studies in Evergreen’s allocation, and retains budget language in support of the Longhouse.

It is worth noting that the Governor’s proposed budget without new revenues would result in a 10% reduction to higher education, this would be a reduction of $2.13 million annually to Evergreen.

Capital Budget
Governor Inslee also proposed a biennial capital budget for higher education. The Governor provided funding for several projects across higher education. This includes funding for three projects at Evergreen – Lecture Hall Renovation Construction, Lab I Basement Construction funding, and Seminar I Renovation Predesign.  The budget also provides authorization to purchase the Tacoma Campus property.

In addition the budget includes funds to support facilities preservation, minor works, and preventative facility maintenance and building system repairs.

Next Steps

The Governor’s budget is the first of many budgets that will be released to address the 2015-17 biennium. While the Governor’s budget is the first step in the budget development process, there will be at least four more legislative budgets to review as the legislative session progresses.

The Washington Legislature will convene on January 12 to begin its work to develop a biennial budget.  Over the next 105 days, the House and Senate will hold work sessions and public hearings on the gubernatorial proposed budgets as well as the budgets put forth by each chamber before finalizing a conference budget.