Democrats in both houses of the Legislature favor using the same budgeting trick to make the state's spending numbers balance.
Senate Democrats plan to use the same accounting gimmick as their House counterparts to balance Washington's budget for the rest of 2011-2103.
That is to delay paying hundreds of millions of school-related expenses until July 2013 — a few days into the next budget biennium. In fact, Senate Democrats are considering making this type of accounting maneuver permanent, caucus leaders announced Tuesday when they unveiled their budget proposal to finish the 2011-2013 biennium.
The Senate proposal would delay $330 million in education payments until the first few days of 2013-2015. The House Democrats budget proposal would delay paying $405 million for those same few days.
On Tuesday, Sen. Ed Murray, D-Seattle and chairman of the Senate Ways and Means Committee, said legislation will likely be proposed to make the delay to the early part fo the next fiscal year in some education payments a permanent annual feature of the legislative budget process. He contended that won't disrupt the flow of money from the state to school districts.
Overall, the Senate Democrats proposal would cut spending by $356 million mostly in health, human services, administration, and corrections; it would also close two tax loopholes on first mortgages for banks and on sales taxes for renewable energy equipment; and make several fund shifts. Murray said some of the administrative and transfer proposals came from the Senate Republicans.
Murray speculated that the Democrat budget proposal is one or two votes shy of getting a 25-vote majority in the Senate when accounting for 22 Republicans and a handful of moderate Democrats who have been inclined to cross the aisle on financial issues. However, he said that is normally the case each year when the Senate Democrats initially release their first budget proposals.
House and Senate Republicans are dead set against the delay of education payments until the next fiscal year, arguing it is just accounting trickery. However, Republicans are also dead set against raising any taxes and against closing almost all tax exemptions, limiting budget-balancing measures available to the Democrats who do not have the legal two-thirds majority required to raise taxes. However, Republicans have agreed to close a couple tax exemptions.
The chief thrust of the current 60-day legislative session is to fix the 2011-2013 state budget, which is currently expected to have $1.05 billion less in revenue than it has earmarked for expenses.
Here is a comparison of the House Democrats' and Senate Democrats' proposal — with the House budget going to a floor vote today (Wednesday, Feb. 29).
- The new Senate proposed budget is $30.814 billion.The House proposed budget, unveiled last week, is $30.66 billion for 2011-2013.
- The Senate Democrats propose a $369 million reserve for emergencies. The House Democrats propose a $504 million reserve. Conventional Olympia wisdom says that reserve should be $1 billion to $1.5 billion, a goal that has been out of reach of the Legislature for years. The state began 2011-2013 with a budget reserve of $740 million.
- The Senate proposal would cut nothing from higher education. The House proposal would cut $65 million. Sen. Derek Kilmer, D-Gig Harbor and vice-chairman of the Ways and Means Committee, said protecting higher education will lead to bigger paychecks, which will provide more revenue to the state while cutting the need for state services. Andrew Lewis, a student lobbyist from the University of Washington, said the lack of higher education cuts will help head off tuition increases, saddling students with less post-graduation debt.
- The Senate proposal would cut nothing from K-12 education. The House proposal would cut $9.2 million in state-level administrative costs. Education is also the budget sacred cow for Republicans. "If we're going to create jobs and stop the Great Recession, we have to stop the bleeding in education," Murray said.
- The Senate proposal wold reduce state funds to local governments by $71 million, while the House version would reduce those funds by $81.6 million.
- The House Democrats expect to introduce bills that would allow counties with populations greater than 250,000 to install an extra 0.1 percent sales tax, while the smaller counties could install extra sales taxes of up to 0.2 percent. Also, local governments would be allowed to impose restaurant taxes of up to 0.5 percent if the Legislature approves such a bill. And counties would be able to impose a utility tax of up to 6 percent, according the House version. The Senate version does not include those planks.
Both the House and Senate versions have no proposed tax increase. However, Senate Majority Leader Lisa Brown, D-Spokane, said the Legislature will eventually have to tackle overhauling the tax revenue structure. She noted that Washington used to be in the top third of states in tax revenue, but it is now in the bottom half.