House Democrats finally approved their $680 million tax package in the wee hours Tuesday morning, but time was running out on the Senate and the House as they moved to negotiate the budget and a way to pay for it.
Gov. Chris Gregoire said she still thinks lawmakers can finish the session by Thursday’s deadline, and House Speaker Frank Chopp said it remains possible.
“We’re now to that point where we need 25, 50 and 1,” Gregoire told reporters, referring to the vote requirements needed to pass measures through the Senate and House, followed by her signature. “And there is a lot of work to be done, but I am very optimistic that we can get it done.”
“They’ve been looking those cuts in the eye, as I did, and they have concluded that to make that all-cuts budget would be unjust, unwise and unfair,” Gregoire added.
Republicans certainly disagreed late Monday night in the floor fight over the House tax package, and they waged a battle with amendments and speeches that didn’t end until the final 52-45 vote at 1:15 a.m. Nine Democrats crossed over to join Republicans in opposition: Reps. John Driscoll of Spokane, Deborah Eddy of Kirkland, Christopher Hurst of Enumclaw, Troy Kelley of Tacoma, Mark Miloscia of Federal Way, Dawn Morrell of Puyallup, Tim Probst of Vancouver, Dave Quall of Mount Vernon and Larry Seaquist of Gig Harbor.
Even after that big push, Democrats have other mountains to climb.
The House and the Senate are more than $200 million apart on a tax plan, with the House approving $683 million Tuesday and the Senate $890 million a week ago. Chopp said “something in between makes sense,” but he also said his caucus strongly opposes a general sales tax increase, which is a big piece of the Senate’s plan.
Senate Majority Leader Lisa Brown, D-Spokane, has said her caucus is not locked down to a fixed position on that tax, which House Democratic Campaign Committee polling shows is very unpopular.
If lawmakers want to go home on time, they’ll have to deal with plenty of problems beyond taxes. The two chambers have a huge job left to reconcile their budgets; each involves spending about $30.5 billion, but they are far apart in key areas.
Budget writers have to resolve how to cut prison space, fund state health insurance and reform the assistance program of cash payments to out-of-work people with disabilities. They also must figure out how much to spend to keep the state employee health insurance fund solvent and provide child care for welfare recipients.
It’s difficult for negotiators to agree on specific spending items and taxes when they can’t agree on how much money they have to work with.
The next step is agreeing on levels of spending, taxes and money left over for an even rainier day, Gregoire said Tuesday morning. Little progress seemed to have been made by Tuesday evening. Sen. Rodney Tom, the Senate’s No. 2 budget writer, said “holes” in the House budget are preventing consensus.
He mentioned $70 million more in federal funds the House is counting on, $30 million in planned information-technology savings, and $30 million in a hoped-for increase in lottery revenue by marketing the lottery as a way to fund higher education.
“We’re using dollars and they’re using another currency,” said Tom, D-Medina. “It’s easy to spend money when it’s Monopoly money.”
One of the biggest differences is how much additional money the state should put into the Health Care Authority accounts to cover rising costs for state employee medical care.
The House voted Friday evening to adopt a budget that would provide about $134 million more in health care contributions for workers. This in effect would ratchet up the monthly state contribution to worker premiums from $768 to $863 and would shield workers from the effects of medical inflation.
The Senate wanted to raise it to $795, and Gregoire is in the middle of the two numbers.
Another disagreement involves which state institutions should close or shrink. On the table are facilities such as the juvenile lockup Maple Lane School south of Grand Mound, Bremerton’s Francis Haddon Morgan Center for people with autism, and prisons such as Larch Corrections Center in Yacolt, Pine Lodge women’s prison in Medical Lake and McNeil Island Corrections Center.
Gregoire sided with supporters of McNeil and Larch, saying the facilities should remain open on a smaller scale to accommodate future increases in the state’s inmate population.
Gregoire also said something is needed to spark job growth in the battered construction industry. That could mean some version of voter-approved construction bonds that House Democrats have pushed for, or a larger tax on toxic materials to pay for city and county stormwater projects. The governor also wants a tax credit aimed at luring data centers to Eastern Washington, a move that some Pierce County officials say should include the South Sound.
There also is more work to be done in reorganizing state government, Gregoire said, although she’s encouraged by moves to trim the number of state boards and commissions. Lawmakers have been unsuccessful in efforts to consolidate natural-resource agencies and outsource the work done by the state printer or state liquor stores.
Gregoire dug in her heels regarding an attempt to make public school reforms that could help Washington compete for a share of $4.35 billion in federal Race to the Top grants.
“That will be an essential piece before anyone goes home,” she said.
The Senate refused to agree to House changes to the education bill that would create a new system for distributing state money to school districts.
Lawmakers, however, did broker an agreement on a transportation budget. The Senate was preparing a final vote Tuesday evening to send it to the governor for signing.
The going has been slow, though, and House Finance Committee chairman Ross Hunter, D-Medina, said he was just starting to prepare a proposal to send to the Senate after Tuesday’s early-morning vote on the tax package.
Hunter declined to say whether lawmakers were doomed to a special session, but he did say he thinks he can broker a tax deal with the Senate’s Democratic majority and get it passed by Thursday. At the same time, he said, “I’m actually more interested in getting a budget done right than getting out of here.”
If the tax package has to be enacted in special session, it could mean a long fight on the floor of both chambers, because the bills would be moved back for action all over again, Hunter said.
Republicans mounted a more than four-hour floor fight Monday night and into the morning, offering many amendments. Some would have allowed a voter referendum to repeal the taxes; others would send the whole package to the ballot for approval by voters.