One-Week to Go…Senate Reveals New Revenue Package

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Over the weekend, Senate leadership offered a revised revenue package to the House. The new Senate proposed revenue package would raise $816 million.

The revised package proposed by the Senate further reduces the sales tax increase from two-tenths of 1 percent to one-tenth of one percent and retains the Working Family Tax Rebate. In addition, the new proposal increases the existing tax on beer to 50 cents per gallon; beer with micro-brews exempted, and extends the sales tax to candy and gum with in-state producers getting a jobs tax credit. Finally, the new proposal includes the House’s proposal to raise taxes on all tobacco products, not just cigarettes.

Overall the new Senate proposed revenue package raises $502.5 million in business-related taxes (i.e. court cases and loopholes).  The remaining $313.8 million in revenue is raised by:

  • Taxing bottled water (effective May 1, 2010) ($35.3 million);
  • Increasing taxes on cigarettes (effective May 1, 2010) and other tobacco related products (effective October 1, 2010) ($101.4 million);
  • Increasing the sales tax by .10 (effective June 1, 2010)($90.3 million);
  • Increasing the tax on beer by $0.50 ($57.8 million); and
  • Extending the sales tax to candy and gum ($29 million)

As of today, most House members had not seen the Senate’s new revenue proposal.

House Passes Compensation Reduction Bill

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This afternoon the House passed Senate Bill 6503 which focuses on state savings through the reduction of compensation-related changes for state employees.  The bill is referred to by many as the “furlough bill”.

The bill adopted by the House this afternoon, in a vote of 50-38, differs from the version of the bill passed by the Senate on the first day of special session.  The underlying bill (Senate Bill 6503) was amended on the House floor to:

  • Provide that alternate higher education plans may provide for reductions to operations, as well as compensation.
  • Exempt agency closure requirements  for functions of the Attorney General’s Office directly related to civil, criminal, or administrative actions, the Office of Financial Management (OFM), during sessions of the Legislature, and the Labor Relations Office of OFM through November 1, 2010.
  • Allow bargaining between the governor and each exclusive bargaining representative, rather than the Governor negotiating with a single coalition of all of the exclusive bargaining representatives, in the event that general government state agencies do not have approved reduction plans.
  • Exempt the operations of the Office of the Insurance Commissioner that are funded by industry regulatory fees from the requirement of agency closure days or approved alternate compensation expenditure reduction plans.

Senate Bill 6503 now goes to the Senate for concurrence on the changes made by the House. If the Senate does not concur on the amendments the bill will go to conference.

Water is Just as Murky as Before

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The Washington House is the on the floor today to consider several bills necessary to implement the budget. The Senate opened the floor today with a Pro Forma session and then adjourned until Monday, April 5 at Noon.

Negotiations and discussions continue on all fronts and are expected to continue through the weekend. The point of contention at the end of the regular session and the beginning of the special session nineteen days ago remains the sticking point today – revenue.

The primary focus of disagreement has and continues to be the implementation of a temporary general sales tax increase. The Senate has supported this increase and included it as part of their package to reach the agreed upon $800 million revenue target. The House, however, does not have the support for an increase in the sales tax.

Last night Senator Brown, Senate Majority Leader, shared in a telephone interview that she has communicated with Governor Gregoire and House leadership that she would try to develop a new proposal without a sales tax that still meets the $800 million revenue goal.

As noted by many on the Hill the process of dropping the sales tax and adding back revenue adjustments that would reach the $200 million covered by the currently proposed sales tax is not a simple act of subtraction and addition.

For one thing, the Senate is holding firm to raising $800 million in new revenue. It also appears that the Senate is having difficulty finding the 25 votes needed to support other substitute taxes (i.e. in place of the sales tax), such as a tax on first-mortgage interest earnings of banks; adding a sales tax to custom software transactions; and ending a sales-tax exemption for out-of-state residents whose purchases help border-county businesses.  

At the same time, the House is finding challenges in securing the 50 votes necessary to pass a sales tax increase and is holding firm on its opposition to repeal a $10 million tax break for coal purchases by the TransAlta power plant in Centralia and other Senate proposals.

Which raises the point that until a deal is final and passed out of the Legislature, it still comes down to votes.

The Governor and House and Senate leadership continue to meet to try to find a go-home package that will bring the special session to an end. Fingers are crossed that an agreement will be reached early next week, giving time for printing, this would open the way for legislators to return on Friday (April 9) and work through the special session deadline (April 30) to pass a 2010 supplemental operating and capital budget and revenue package.

April Fools…Wishful Thinking…Somewhat

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Late this afternoon, it was discovered the much anticipated resolution of a tax package of $800 million to close the $2.8 billion state budget gap was not completely true. 

While there is no “final” agreement” it does appear that an initial agreement has been reached. After a brief floor session in which the Senate concurred with House amendments on three Senate bills, Senators joined their respective caucuses to discuss a new revenue proposal (this is what was hinted at in the earlier email).  There are no indications as of yet regarding the response from members.

The House is expected to discuss the new revenue proposal tomorrow when they return to Olympia to move some bills forward in the legislative process.

Change is in the Air

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Today another key staffer to Governor Gregoire announced her departure from the Governor’s Office.

Robin Arnold-Williams served as head of the Governor’s Executive Policy Office.  She has been in this role since December 2008 and will leave at the end of April. No replacement has been named at this time.

Arnold-Williams shared that it was a time for a break from a long public-service career.

Arnold-Williams departure comes after the recent resignation of Linda Bremer as Director of General Administration and Joyce Turner’s move to Director of General Administration from Gregoire’s Deputy Chief of Staff. Both of these moves come after several internal changes in the Governor’s staff including Director of the Office of Financial Management and the Governor’s Chief of Staff.

Revenue Deal Reached…We Think

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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.

Evergreen Athletes Honored by Legislature

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Three members of Evergreen’s Lady Geoducks basketball team were honored March 10 in House Resolution 4704, which recognized scholar-athletes statewide. Katie Garcin, Alison Matisons, and Angel Stewart were mentioned in the resolution, which highlighted scholar-athletes who “consistently meet rigorous athletic requirements while honoring the importance of education.”

The athletes had previously been honored by the Cascade Collegiate Conference (CCC) as All-Conference Scholar Athletes, a distinction reserved for academically high-achieving upper division students.

According to a TESC press release for the earlier CCC recognition, Katie Garcin is a senior from Gooding, ID whose academic focus at  TESC has been Pre-Physical Therapy; Alison Matisons, from Aberdeen, is also a senior focusing on Social Work; and Angel Stewart, a Sophomore from Yakima, is studying Psychology.

President Obama Signs Student Aid Legislation

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Yesterday, March 30 President Obama signed into law the reconciliation bill passed by Congress this past week.

The new law will make major investments in the Pell Grant Program and other student aid and higher eduation programs.  Many of these investments will be made from the savings at the federal level of the elimination of the Federal Family Education Loan Program (FFELP). In addition, the new law provides health benefits to college health centers and students.

On the Seventeenth Day there was Movement on the Horizon

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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…

The Beginning of Week Three

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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.