Budget wrangling stymies Legislature

New proposal: Democrats make last-ditch attempt to finish business, but Republicans balk at ‘gimmick’

JORDAN SCHRADER; Staff writerMarch 9, 2012 

Majority Democrats in the state Legislature have slashed public schools, colleges and universities every time they have come to Olympia the past three years, but they found a way to cut no further – just before time was to run out on their regular session.

Republicans and renegade Democrats refused to go along, objecting to an accounting trick in the latest plan. The standoff threatened Thursday evening to stretch past the midnight end of the 60-day session.

House and Senate Democrats formed a united front as a special session loomed. Their plan preserves education funding without a general tax increase but delays a $340 million payment to school districts by a day to push it into the next budget year.

“You’ve now got agreement on both ends of this Capitol that there will be no more cuts to education,” said Rep. Larry Seaquist, the Gig Harbor Democrat who chairs the Higher Education Committee.

Democrats made their new proposal public late Wednesday night and approved it in the House on a 53-45 vote Thursday. Democratic Reps. Deb Eddy of Kirkland, Mark Miloscia of Federal Way and Jeff Morris of Anacortes crossed over to vote against it.

The Senate had yet to vote on the budget as of 9:45 p.m. The opposition – 22 Republicans and three Democrats who teamed up to form a de facto majority – showed no signs of cracking.

Early Saturday the coalition passed a budget that cut $44 million from K-12 schools and $30 million from higher education.

“I think we’re 25 strong and maybe getting better,” GOP Leader Mike Hewitt said. Late Thursday, a potential 26th vote emerged as Democratic Sen. Steve Hobbs of Lake Stevens said the House had passed too few reforms.

Hewitt predicted Thursday that Democrats would force a budget vote even if it was doomed to fail so they could pin the blame on his party for supporting education cuts and preventing an on-time finish.

But he and other Republicans stepped up their own criticism of the delayed payment to schools, comparing it to the shadowy financial practices of companies like Enron.

It’s the kind of creative accounting that has put “people in the private sector under significant scrutiny and in some cases in jail,” Rep. Gary Alexander of Thurston County, House Republicans’ budget negotiator, said on the House floor.

Alexander offered to find the money instead by transferring environmental funds, assuming more money goes unspent, furloughing state employees for 12 extra days and making deeper human-services cuts. Democrats said a budget gimmick is preferable to cutting further into the safety net.

The main competition to the Democrats’ plan is the one by the Senate coalition, which has a budget trick of its own, skipping a $133 million payment into the state’s two most underfunded pension plans.

Republicans say the skipped payment is a trade-off for saving money in the long run, which their plan does by closing older pension plans of the teachers’, public employees’, and school employees’ retirement systems and forcing new hires into newer retirement plans that are hybrids of pensions and 401(k)-style accounts and ending the practice of subsidizing early-retirement benefits.

Democratic Gov. Chris Gregoire sees the pension-payment cut as worse than the school payment delay, likening it to skipping a household bill rather than paying it a day late.

But she said she has offered Democrats and Republicans the possibility of doing a little bit of both, or choosing a third way of increasing the money available to spend. Gregoire declined to disclose how, but Senate Majority Leader Lisa Brown said her side liked the alternative ideas.

Gregoire continued huddling Thursday with Brown, Hewitt, House Speaker Frank Chopp and House GOP Leader Richard DeBolt and said everyone was working together – even as budget writers on both sides complained about a lack of real negotiation. Tensions are running high and lawmakers are tired, she said.

“I’m tired too. Tough. Get over it,” she said. “We have work to do. We’ve got to get the job done.”

It appeared all but inevitable that the Legislature would go into its fifth special session in a span of two years, at a likely cost of $10,000 a day or more. Republican leaders had suggested negotiators needed to go home and cool off before returning. But Gregoire resisted saying when she would call lawmakers back, trying to keep them working toward a deal until their midnight deadline.

The latest Democratic budget:

 • Leaves a balance of $350 million in case projections of state revenue drop further, smaller than the cushion left in any previous budget.

 • Takes $71 million in liquor revenues from local governments and doesn’t give them new local taxing authority, but avoids other proposed cuts to cities and counties.

 • Preserves medical coverage for poor and temporarily disabled patients who aren’t fully covered by federal funding but are supposed to be covered starting in 2014.

 • Doesn’t cut or shift aid to less property-rich school districts.

 • Assumes lawmakers will narrow a tax break for banks to raise $18 million, which would require supermajority votes.

 • Reduces monthly state payments to public employee insurance benefits by $50 per employee, to $800. The reduction is not expected to automatically require higher employee contributions.

Staff writer Brad Shannon contributed to this report.

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