Special session in Olympia ends with deep divide, no budget deal

OLYMPIA — With state lawmakers still squabbling over how to fund government, Gov. Jay Inslee Thursday ordered a second special legislative session to start Friday.

The new session comes as Republicans spent Thursday, the last day of the first special session, proposing a new plan for the 2015-2017 state operating budget. Democrats announced that they’ll publicly release their own new budget plan Monday.

But as the parties continue to trade ideas, they’re still struggling over philosophical differences on how — and how much — to fund government.

To try to bridge those differences, Inslee said, he’ll host daily budget-negotiating meetings with lawmakers, starting Monday morning.

“I’m urging lawmakers not to act as if they have a 30-day reprieve,” Inslee said at a news conference. “They do not. Their work should be done much faster than that.”

The clock to reach an agreement is running down. Lawmakers are still in contempt of the state Supreme Court, which could impose sanctions if legislators don’t do enough to fully plan for more K-12 school funding per its McCleary order.

And if there’s no new budget in place by July 1, the start of the new fiscal year, some government services could shut down.

Beginning Friday, the state will start sending out notices to state employee unions and contractors warning of temporary layoffs or other effects of a shutdown, according to the state Office of Financial Management.

“I don’t want to think,” Inslee said, “about the consequences of failure.”

Democrats cite the McCleary order and other court decisions regarding the state’s mental-health and social-service programs, as well as their desire to counter cuts made during the Great Recession, as reasons new tax revenue is needed. They planned to do that by helping to fund their $38.8 billion budget, proposed in March, with $1.5 billion in additional taxes, including a new tax on capital gains.

The landscape since then has shifted, with a recent economic forecast projecting about $400 million in new revenue from existing taxes through 2017. Separately, state coffers are being padded with some newfound federal money.

Still, Democratic leaders said Thursday that long-term needs — including continued funding down the road for the McCleary decision — make new revenue a necessity.

“We do not want, two years from now, to be in a position where we’re having to go through these same conversations, solving the same problems,” said House Majority Leader Pat Sullivan, D-Covington. “We need a stable and reliable budget … into the future, as well.”

Republicans, however, say that the new revenue from existing taxes — especially with the new tax projections — should cover what the state must fund. The original GOP budget plan, also released in March, would have spent $37.8 billion without any new revenue.

“The constituents I talk to, they’d much rather us hold the line on $1.5 billion in new taxes and bear the expense of a few extra days in special session,” said Sen. John Braun, R-Centralia and deputy Republican leader in that chamber.

Revenue projections

The new GOP budget proposal outlined both where the parties may find agreement and where they continue to disagree.

Sen. Andy Hill, R-Redmond, and chief GOP budget writer, called the proposal a move toward Democratic positions and proof “that we’re willing to move, we’re willing to compromise.”

The new Senate proposal reflects the higher revenue projections from existing taxes and new federal money, spending $242 million more on policies over the original proposal, according to a summary of the plan released Thursday.

It spends $113 million more in higher education, $77 million more to fund state worker compensation, $27 million more on developmental disabilities and long-term care, and $16 million more on natural resources, according to the summary.

The GOP budget plan leaves recreational marijuana-tax revenue in its current accounts under Initiative 502 and uses the money in a way similar to the Democratic House budget proposal, according to Hill. The plan originally released by the GOP transferred recreational-marijuana tax money from specific accounts into the state’s general fund.

The new plan also restores $100 million of $200 million that the original GOP proposal took from an account in the state’s capital budget that disburses loans and guarantees for local government public-works projects.

Democrats had criticized the GOP’s treatment of the capital budget money and marijuana revenue. But even with some compromise by Republicans on those, Democratic leaders still found elements to dislike in the new proposal.

House Speaker Frank Chopp, D-Seattle, said that the Democratic proposal now spends more on early education and mental-health programs. And Sullivan called for additional money to provide for the higher cost-of-living raises given teachers under the Democratic plan.

Combined, those three policy additions amount to about $320 million, according to Chopp and Sullivan.

Chopp also raised concerns over language in the Republican proposal that would only fund the state employee contracts if Democrats agreed to a GOP-favored bill that would open up contract negotiations in collective-bargaining sessions to the public.

And Democrats have argued that the projections for new marijuana-tax money in the recent revenue forecast could be too optimistic. Rep. Reuven Carlyle, D-Seattle, Wednesday described the reliance on projected marijuana-tax money for an operating budget as “wildly optimistic and an unhealthy addiction to marijuana revenue.”

The new GOP budget proposal was passed Thursday afternoon in the Senate Ways and Means Committee without a public hearing. Chopp said Democrats will release their new budget proposal Monday and hold a public hearing on it Tuesday.

Hill described drawn-out discussions as the reality of divided government that would ultimately produce a better budget.

“We want to make sure we get things done right,” Hill said.