Politics & Government

Legislature approves budget that cuts tuition, funds state worker raises

State lawmakers have approved a new two-year spending plan that will cut college tuition, give teachers cost-of-living raises and help satisfy a court order that the state fully fund public schools.

The state Senate passed the $38.2 billion budget Monday evening on a 38-10 vote, and the state House approved the spending plan shortly afterward, 90-8.

Lawmakers were racing to pass the budget to avoid a partial shutdown of state government Wednesday. The measure now goes to the desk of Gov. Jay Inslee, who must sign it by the end of the day Tuesday to avoid lapses in state services and temporary layoffs of state workers.

In addition to boosting public school funding, negotiators said the budget would comply with court orders that the state improve mental health services, as well as fully fund labor contracts negotiated with state workers.

“It makes great investments in education, it restores our safety net that took cuts during the recession, and it really focuses on the priorities of the state,” said Sen. Andy Hill of Redmond, the lead Republican budget writer.

“The public should be happy with what’s in this package,” said his House counterpart, Rep. Ross Hunter, D-Medina.

The compromise budget excludes previous tax proposals floated by House Democrats, such as a capital gains tax and an increase in some business taxes. But it includes about $185 million in revenue over the next two years from closing some tax exemptions and increasing penalties for those who file late business tax returns, concessions made by Senate Republicans.

The budget relies on revenue that would come from – among other sources – ending tax breaks for software manufacturers and expanding the state’s ability to tax out-of-state retailers and wholesalers. About $300 million in projected revenue from retail marijuana sales also is used to balance the budget, along with about $178 million in transfers from other accounts.

Hill called the revenue measures “sound tax policy.”

“It aligns it better with what is going on in today’s world, and without doing undue harm to the economy,” Hill said.

But some House Republicans criticized the budget for how much it would increase spending – about 13 percent above the two-year budget lawmakers approved in 2013.

Rep. Gina McCabe, R-Goldendale, said she also didn’t like a provision that would let the state tax out-of-state retailers that receive customers through ads on Washington-based websites. McCabe said the so-called “click-through nexus” changes would hurt small businesses, especially those that operate online.

“I told my constituents throughout the whole election that I would vote against increased spending and any new taxes, especially taxes on businesses,” said McCabe, who voted against the budget in the House.

In a prepared statement, Inslee praised lawmakers for working “to find the middle ground.” He said he would take action on the budget – which could include vetoing parts of it – Tuesday afternoon.

“The only major complaint I have with this budget is we’re talking about it on June 29. This should have happened two months ago,” Inslee’s statement said.

Lawmakers entered a third overtime session Sunday to finish a budget, after adjourning their 105-day session two days early in April without an agreement.

One area where the Democrat-controlled House and the Republican-run Senate compromised was on whether to cut or freeze tuition at state colleges and universities. Earlier in the year, Senate Republicans had advocated a 25 percent tuition cut, while Democrats in the House had pushed for freezing tuition at current levels.

The budget lawmakers approved Monday would cut tuition at the University of Washington and Washington State University by 15 percent over two years, while cutting tuition by 20 percent at other state universities during the same timeframe. The tuition reductions would be phased in under the negotiated plan, with only a 5 percent tuition cut at universities in the first year.

Community college tuition would go down 5 percent starting in July 2016.

“We think it’s a tax cut for working-class families and college students, and a great accomplishment,” said Sen. Michael Baumgartner, R-Spokane.

Yet where the budget increases spending even more is in the area of K-12 education.

The budget would put $1.3 billion toward satisfying elements of the state Supreme Court’s McCleary ruling, which found that the state was failing to meet its constitutional obligation to fully fund public schools. That money would pay for reducing class sizes in kindergarten through third grade, expanding all-day kindergarten and covering school supplies and operating costs.

The plan also would give teachers cost-of-living raises above what the law requires under Initiative 732, a 2000 ballot measure the Legislature has suspended the past several years. Under the deal struck between the House and the Senate, an additional $153 million would be provided to give school employees larger raises than those promised under I-732 during the next two years. But the extra money above the I-732 increases wouldn’t carry over in employees’ salaries after August 2017.

It was unclear if those steps would be enough to persuade the Supreme Court to lift its September order finding the state in contempt in the McCleary case, however.

On Monday, the statewide teachers union criticized the budget’s failure to fund Initiative 1351 – the measure voters approved in November to reduce class sizes in all grades – and some lawmakers wondered how justices would view that move.

“We don’t know how they’re going to evaluate our non-action on 1351,” Sen. David Frockt, D-Seattle, said.

If funded, the class-size law would cost the state $2 billion in the next two years. Both Democrats and Republicans this year proposed scaling back the initiative to line up with the court-ordered class-size reductions in kindergarten through third grade.

The House voted Monday to delay implementation of the intitiative for four years, but the Senate has yet to approve that plan.

Frockt noted lawmakers also have not given the court a plan for how it will address pay for school employees. A bipartisan group of Senate negotiators say the state must take over responsibility for $3.5 billion worth of salaries from school districts.

House Finance Committee Chairman Reuven Carlyle, D-Seattle, said a capital-gains tax would have prepared the state to add funding for educator pay, both in the coming 2015-17 budget cycle and beyond.

“The consequences of the Senate Republican position is we have a ’15-17 budget but we are likely to face a buzzsaw of pain in ’17-19,” Carlyle said.

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