This morning it was reported that the House and Senate have reached a deal on a tax package of $800 million to close the $2.8 billion state budget gap. 

Specific details are not available, but it is anticipated that the final deal will not include the temporary sales tax included in the Senate’s proposed revenue package.

It will take several days to draft the bill, run the numbers, and print documents. With that in mind a vote is not expected until mid-week next week or later.

This week has been a quiet one at the Capital.  Both the House and Senate have held “Pro Forma” sessions (no action) since Monday. Beginning tomorrow that is expected to change.

The Senate will come in on Thursday, April 1 (hopefully not an April Fool’s joke) to take action on a few remaining bills in order to move them to the House.  The House is expected to come in for floor action on Friday, April 2 to approve the bills the Senate moved over.

Negotiations continue to take place with regard to the supplemental budgets and possible revenue, with revenue continuing to be the major point of contention.

Last week Governor Gregoire suggested that a compromise may be to reduce the revenue package to $700 million. This would require either lowering the state’s ending fund balance or spending in the overall budget. The Senate strongly rejected both ideas.

In order to continue to move forward, last Friday, Sen. Brown (Senate Majority Leader) indicated in a press conference that she is beginning to discuss the possibility of finding something other than the sales tax that would fill the $200 million revenue gap that remains between the House and Senate. The other $600 million, noting the revenue target is $800 million, has been pretty much agreed upon (i.e. closing loopholes, using one-time funds, increasing the cigarette tax).

In response to Senator Brown’s comment, Senate budget writers spent this past weekend combing through a huge list of current tax exemptions looking for the elusive solution to end this special session.

It may appear that this hard work is paying off. Word on the street has it that the Senate and House will work this Thursday and Friday and perhaps the weekend and, if necessary, return April 9 to wrap up the special session by April 13 (the 30-day deadline).

Stay tuned…

While many of us on Evergreen’s campus consider today the first day of spring term, for those of us with a foot in the legislative arena it also marks the first day of week three of the first special session of 2010. Is there any end in sight?

Negotiations continue on the 2010 supplemental operating and capital budgets. Though no agreements on either budget have been finalized, the issue  that has kept legislators in Olympia 15 days beyond the end of the regular session is revenue. More specifically, the sales tax and whether to increase the sales tax or not. The Senate is in favor and the House and Governor are not.

On Friday, some suggested that the Senate’s decision to move Senate Bill 6143 (revenue bill) to conference may be a small and optimistic sign towards the passage of a supplemental budget.  Optimism continued to rise, when later that day in a press conference Sen. Brown eluded to looking for $200 million in taxes to replace the Senate’s proposed sales tax increase. The source of these taxes was not made clear.

Both of these moves may lead one to be more optimistic than even 48 hours ago. However, there are still many in the Senate who support a sales tax and have concerns with regard to the business tax increases, proposed by the House, that are still in the mix.

As for now, the bills needed to implement a 2010 supplemental operating budget, 2010 supplemental capital budget, and increase revenue remain where they were at the end of last week. In addition, the bills that Evergreen is tracking this special session also have not moved further in the process.

Yesterday was the first time since Monday that the Senate floor was active. Most Senators returned to Olympia for a brief floor session to concur on a handful of House bills. The House did not take any floor action.

Of most interest was the action the Senate took on Senate Bill 6143 (revenue tax bill). The Senate rejected the House’s amendments to SB 6143 and formally asked for an official Conference Committee.

In the meantime, the leadership of both chambers continue behind-the-scenes negotiations on a tax package to fund the 2010 supplemental operating budget and take action on a 2010 supplemental capital budget.

Lawmakers remain deadlocked over how to raise this revenue, the primary dividing point being the implementation of a sales tax. The Senate still supports a temporary general sales-tax increase and the House does not.

The ongoing divide between the two chambers has opened the door for “what if” conversations about concluding the session without the adoption of  a budget. The state’s budget for 2009-11 is already in place (i.e. the budgets that passed at the end of the 2009 session) and a supplemental budget is not required. 

These conversations, which can be recognized as still too-early conversations at this time, fail to address the state’s remaining $2.8 billion budget problem.  As you may recall, State Treasurer McIntire publicly stated earlier this year that Washington is at risk of running out of “cash” by fall 2010 without new revenues or reductions in budget expenditures. At that point, Governor Gregoire would have the authority and legal obligation to implement across-the-board cuts. An option she has been public about in the last few days but does not desire.

An across-the-board reduction of state funding is not appealing to many policymakers. It is believed that such action could be as high as 20 percent to close the $2.8 billion budget gap.   Some believe that yesterday’s move by the Senate to move Senate Bill 6143 to conference may be a small and optimistic sign towards the passage of a supplemental budget, only time will tell.

As for now, the bills needed to implement a 2010 supplemental operating budget, 2010 supplemental capital budget, and increase revenue remain where they were this weekend, with the execption of SB 6143 which has gone to conference. In addition, the bills that Evergreen is tracking this special session also have not moved further in the process.