Office of Governmental Relations

The first special session of 2012 ended last night as of midnight. Though close the Washington Legislature did not complete business by this deadline and Governor Gregoire called the Legislature back for a second special session. After nearly eight straight hours of work from midnight to early this morning, the Legislature passed a balanced budget, jobs act, and a handful of policy reform bills.

Operating Budget

 The 2012 supplemental operating budget passed 64-34 in the House and 44-2 in the Senate and was delivered to the Governor for her consideration early this morning. The operating budget makes no reductions to K-12 and higher education.  Some of the highlights of the budget include $238 million to the general fund as a result of the state temporarily claiming control of local sales taxes before they are redistributed back to jurisdictions at their usual time, an increase in taxes raising about $14.5 million by eliminating a tax deduction for some large banks, additional revenue to the state through changing rules on roll-your-own cigarettes, and at the end a reserve fund of $320 million.

Impact to Higher Education

The operating budget as passed by the Legislature does not reduce general fund support for higher education, this includes further eductions to institutions and financial aid. The budget however does include some provisos and policy changes.

• Bellevue College is authorized to offer baccalaureate degrees. Prior to the passage of this bill the College could only offer applied baccalaureate degrees.
• The two and four year institutions are required to conduct a comprehensive review of institutional tuition waiver policies.
• Evergreen is required to reallocate $276,000 for FY2013 for an expansion in enrollments in STEM as defined in HB 1795. This definition includes bachelor and advanced degree programs in the sciences, which includes agriculture and natural resources, biology and biomedical sciences, computer and information sciences, engineering and engineering technologies, health professions and clinical sciences, mathematics and statistics, and physical sciences and science technologies, including participation and degree completion rates for students from traditionally underrepresented populations.
• The Washington State Institute for Public Policy is required to conduct a longitudinal study of the state need grant program ($100,000).
• The two and four year institutions are not permitted to use state appropriated funds to support intercollegiate athletic programs
• Changes state payments for public employee health benefits from $850 to $800 per month

Capital Budget and Jobs Act

The 2012  capital budget made no changes to Evergreen’s biennial capital budget. The Jobs Acts  which includes a new bonds bill and the traditional capital budget  are estimated to have an economic impact of $1.1 billion in construction work over the next 14 months.  

Reform Bills

As critical to the process as balancing the budget were efforts to pass reform bills to provide for greater long-term sustainability in the state budget. Among the policy bills passed by the Legislature three were critical to finally ending the 2012 supplemental session.

Pension

SB 6378 addresses early retirement benefits for future state employees.. Under law changes in 2000 and 2007, an employee with 30 years’ service could retire at age 62 with no reduction in benefits, and at age 55 with only a 20 percent reduction. Under the new law, retirement at age 62 will lower the benefit by 15 percent and age 55 by 50 percent. The savings will go to the state’s general fund.

 K-12 Healthcare

SB 5940 attempts to equalize health-insurance benefits for full-time and part-time school district employees and their families. The bill requires school districts to meet certain requirements, including making all employees pay a share of premiums, offering a high-deductible health plan and tying the price of individual and family benefits.

Balanced Budget

SB 6636 requires the state’s two-year budget to be in line with anticipated revenue over a four-year period or 4.5% growth per year, whichever is greater.   Growth has met or exceeded 4.5 percent in half of the past 16 years.

On Friday, the Washington House Republicans released its proposed supplemental operating  budget for the remainder of the biennium.

2012 Supplemental Operating Budget Proposal
The proposed supplemental budget makes approximately $840 million in state funding reductions. The budget leaves $651 million in reserves and does not put forth a revenue package.

The budget reduces funding for higher education by $105.3 million. Of this amount, state funding for community and technical colleges is reduced by $14.5 million and state funding for the four-year, public institutions is $15 million lower. The Evergreen State College is reduced by $541,000.

The majority of the reductions to higher education come through policy changes to state funded financial aid programs. The State Need Grant program is reduced by $75.8 million. This reduction is achieved by altering eligibilty guidelines in two ways. First awards for students attending baccalaureate institutions are limited to 12 quarters (4 years) and for students attending two-year institutions their awards are limited to 6 quarters (2 years). In addition only those students who file their Federal Application for Federal Financial Aid (FAFSA) by the March 15th deadline would be eligible to receive a State Need Grant.

In addition the proposed budget would restore funding to private, for-profit institutions, previously reduced in the 2011 biennial budget. Finally the proposed budget maintains current funding for the state work study program and eliminates funding for remedial education for those under 20 at community colleges.

The proposed budget would also reduce state employee monthly health benefit funding rates form $850 to $800 ($33.1 million) and institute 24 days of furlough for all state employees, including those at higher education institutions, beginning July 1, 2012 ($91 million). The exception to the furloughs would be any state employees working for critical services such as corrections and hospitals.

In addition to the reductions to higher education the proposed budget makes the following reductions to achieve a total savings of $840 million.

• Reduces funding to the Department of Ecology by 14%
• Eliminates all general fund spending for the Puget Sound Partnership
• Makes $33 million in administrative efficiencies in information technology, goods and services, personal service contracts, travel, equipment and cell phones.
• Reduces most general government agencies by 5-10%

The House Republican’s budget proposal will be followed by a proposal put forth by the House Democrats on February 21. The Senate’s proposed operating budget is expected to follow next week.

This evening the Washington House passed legislation that will reduce the current budget shortfall by nearly $500 million, setting up the potential for adjournment of the special session as early as tomorrow night.

The House voted 86 to 8 to pass a budget package that consists of reductions to programs and services, fund shifts, and new revenues.

The bill now goes to the Senate. Earlier today the Senate Ways & Means Committee passed its version of the budget proposal setting up a late morning or early afternoon vote tomorrow on the Senate floor.

This afternoon the Senate Ways & Means Committee passed legislation that will reduce the current budget shortfall by $479.9 million.

The Committee considered a handful of amendments, but passed only a few that were technical in nature. The bill now goes to the Senate floor for consideration.

Both the Senate and the House will convene for floor sessions tomorrow morning.

Early this morning the House Ways & Means Committee passed legislation that will reduce the current budget shortfall by $479.9 million.

The Committee considered a handful of amendments and passed three that were technical in nature. The bill now goes to the House floor for consideration as early as this afternoon.

On the Senate side, the Senate Ways & Means Committee will hold an executive session on the Senate’s early action budget proposal this afternoon.

Yesterday, both the House and Senate Republicans and the House Democrats issued their proposals to balance the $1.2 billion shortfall in the current fiscal year.

Both proposals come on the heels of a detailed list issued by the Governor. Senate Democrats have yet to issue a proposal to balance the current budget shortfall.

House Republicans

Rep. Gary Alexander, current Ranking Minority Leader on the House Ways & Means Committee, issued a letter outlining a general framework for balancing the current budget. 

The House Republicans agree with many of the suggestions the Governor put forth in her proposed list of reductions. In addition, the House Republicans suggested items not included on the Governor’s proposed list, including suspension of all-day kindergarten and redefining the Temporary Assistance for Needy Families program.

The letter also noted areas of disagreement between the House Republicans and the Governor. Rep. Alexander spoke to concerns regarding retroactive actions on moneys already spent and the use of delaying payments to balance the budget.

Finally, the House Republicans offered a compromise with regard to employee health care benefits, suggesting a graduated ratio based on income. The proposal would begin with 14% and end with 26%, with the median around the 20% mark beginning in January. The Governor proposed a shift from a ratio of 74 state to 26 employees.

Senate Republicans

Senate Republicans issued a much more detailed list of proposals to balance the current budget shortfall.  The list of proposals range from redirecting revenue streams to the General Fund to reductions to all state agency budgets to reductions in state and higher education employee salaries.

With regard to higher education, the Senate Republican proposal:

• Supports the Maintenance of Effort requirement for higher education
• Calls for examination of non-state need grant and work study financial assistance programs
• Reduces tuition waiver authority

House Democrats

Speaker Chopp and Representative Sullivan (Majority Leader-Elect) issued a preliminary 
list of reduction ideas. The list put forth by the  House Democrats does not include some of the proposed reductions put forth by Governor Gregoire, such as elimination of the Basic Health Plan and reductions to Levy Equalization.

With regard to higher education, the House Democrat proposal suggests:

• Reductions to state financial aid programs, with the intent to minimize impact to students
• Supports the Maintenance of Effort requirement for higher education

Yesterday, Governor Gregoire met with Democrat and Republican leaders from the House and Senate, but did not reach an agreement regarding a special session to deal with the looming $1.2 billion budget deficit in the current fiscal year.

Governor Gregoire would like action this month to balance the 2009-11 budget, but is hesistant to call in legislators without an agreement.  Legislative leadership still needs time to talk with their caucuses about proposals for reductions.

More meetings are planned with the Governor.

A potential special session in December is one of many topics under consideration by Governor Gregoire and legislative leadership.

Gregoire is scheduled to meet with Demoratic and Republican leaders on Wednesday to discuss options for cutting the budget. She had asked leadership for ideas for cutting the budget by Monday but several asked for additional time.

A special session in December would address the state’s need to cut more than $1 billion out of this year’s budget and about $5.7 billion from the next two-year budget.  The more time that passes without a resolution to the budget the greater the impact.

Last week Governor Gregoire identified options to reduce the state’s budget. Many of the items she proposed would require legislative action by December 12.

The Governor wants an agreement on an agenda before calling a special session to avoid lengthy delibrations.

Legislative leadership has expressed concerns regarding the elimination of programs and services without first trying to reduce the costs of these programs and services. In addition, there is some preference for a full supplemental budget versus quick program cuts.

Today Governor Gregoire released to legislative leadership a series of proposals to solve the current fiscal year’s deficit of $1.14 billion. 

The proposals include across-the-boards cuts already imposed but does not include the recent decision to reopen collective bargaining agreements.

The proposals listed include the estimated savings, effective date of the change needed to secure the savings, notice requirements to meet the effective date and whether legislative action is needed

Among the proposals are the across-the-board cuts taken by institutions of higher education, including Evergreen’s reduction of $800,000. The reduction does not reflect the full 6.3% initially required but is closer to 4.5% to reflect the federal maintenance effort requirement.

In addition, the proposal includes other higher education related measures including:

• Delaying State Need Grant funding to FY2012 
• Requirement to make whole shortfalls in the Opportunity Pathways Account and Education Legacy Account

Many of the proposals would require legislative action by Dec. 12, but it’s not clear yet if the governor will call a special session. The Governor wants to make sure legislative leaders agree on a solution before deciding whether to call lawmakers back.

She has given lawmakers until Monday to submit their own budget ideas.

The make-up of the 2011-13 Washington State Legislature is all but determined. As of Friday it appeared that all legislative races were resolved except for two.

In the Washington House the race fo the 25th District (Pierce County) remains undetermined. Totals released on Friday showed incumbent Democrat  Dawn Morrell trailing Republican challenger Hans Zieger by 18 votes.

The race for the 25th District clearly meets the criteria for an automatic recount, which require the gap between candidates is fewer than 2,000 votes and less than one half of one percentage point.

The final outcome in the Washington State Senate will be determined when the results of the race for the 41st Districk (King County) are known. Currently, Republican Steve Litzow holds a 309 vote lead over Democrat incumbent Randy Gordon.

The gap between the two candidates has decreased since election night. King County still has an estimated 50,000 ballots to be counted, but it is unknown how many are in the 41st District.

Finally, one race that was considered a toss-up last week was determined. Rep. Kelli Linville conceded the race for the 42nd District to Republican challenger Vincent Buys. As of Friday, only 177 votes had separated the two candidates.

If trends continue as they have over the last couple of weeks, it appears that the Senate Democrats will retain the majority in the Senate, 27-22 and the House Democrats will retain their majority with 57 or 56 seats.