Olympia's state budget talks are like Rashomon.
The 1950 Japanese film has four people telling radically different stories about the same crime — the truth remains subjective, self-serving and murky.
Olympia's Rashomon finds Senate Republicans, House Democrats and Gov. Jay Inslee with different takes on whether progress is being made on the sluggish budget talks, which appear on track to linger into June.
Inslee believes the talks are still slow. On Tuesday, he said the House Democrats need to trim some of their proposed tax increases and tax break closures, and that Republicans need to back off their hardcore no-new-taxes stance. "Both sides will have to compromise," he said.
The governor is still relatively bullish on a capital gains tax for the state's wealthiest earners and a tax on carbon emissions to cut pollution and help fund education. Reading between the lines, the Democratic governor's personal preference seems to be to give ground to Republicans on some of the proposed tax break closures, or on raising the business-and-occupation tax on service firms.
Inslee believes the Democrats can ease up on the tax issue because a new state government revenue forecast predicted $327 million in additional tax revenue for 2015-2017 and $79 million more for 2013-2015 than what was estimated in late March, when Republicans and Democrats first unveiled their 2015-2017 budget proposals. The state also expects more than $100 million extra in federal money to materialize for 2015-2017.
Meanwhile, Senate Majority Leader Mark Schoesler (below), R-Ritzville, said Tuesday that budget "negotiations are going quite well." The state shows $1.1 billion in unexpected revenue for 2015-2017, according to Schoesler, GOP Caucus Chair Sen. Linda Evans Parlette, R-Wenatchee, and GOP Floor Leader Sen. Joe Fain, R- Auburn. That figure comes from extra money in the 2013-2015 and 2015-2017 tax revenue forecasts that were unveiled in February and this month — and the $100 million in extra federal money and some other new funds.
Schoesler contended the $1.1 billion in new money obviates the need for the Democratic proposal to raise an extra $1.5 billion through new taxes and closing tax breaks.
When told that Inslee believes little progress has been made in the budget talks, Schoesler said: "If you're not there, you really shouldn't comment on it."
The governor has not been present for much of the actual budget negotiating, but he has kept close tabs on the talks, said his spokesperson Jaime Smith. Inslee has discussed the talks with the negotiators and has participated when requested by the negotiators, she said.
Then there's the view of House Majority Leader Pat Sullivan, D-Covington, who said on Tuesday that the GOP claim of $1.1 billion extra money is "disingenuous." More than half of that supposed extra revenue, he added, was forecast in February, prior to the late March budget proposals.
The House Democrats proposed $38.8 billion for the main state budget; Senate Republicans suggested a $38 billion plan. Sullivan said the two sides have significant unresolved differences in how the proposals are structured: Democrats are looking first at what needs to be done, then adjusting revenues and appropriations to those needs. Republicans are first looking at what revenue is available, then adjusting appropriations to match that income.
There are other big differences between the two sides.
A major plank of the Supreme Court's 2012 mandate to fix education involves overhauling Washington’s school revenue system, both to increase it and make it more stable. The GOP wants to accomplish this with a property tax reform package — phasing up the amount of state property taxes paid while phasing down the amount of local property taxes. The goal is to provide a uniform funding source for the state’s richest and poorest school districts. The GOP approach would raise property taxes in roughly 40 percent of the state’s school districts while shrinking that rate in roughly 60 percent.
Democrats, in contrast, have proposed levying a 5 percent capital gains tax on the state’s wealthiest 32,000 people as a way to raise a significant chunk of the education money needed to satisfy the Supreme Court. An alternative Democratic proposal surfaced recently to install a 7 percent capital gains tax on the wealthiest 7,000 Washingtonians instead.
The Republicans hate the capital gains tax concept as much as the Democrats hate the property tax reform proposal. And that's where things stand on the revenue side of the budget talks.
On the spending side, the Republicans want to install some type of statewide salary system for teachers, with adjustments for cost-of-living in different areas. Under the system, teachers would not be allowed to collectively bargain with the state for their basic salary arrangements and amounts. Democrats oppose those proposals.
Hanging over the entire process is the specter of Initiative 1351, which state voters passed narrowly last November. I-1351 requires dramatic reductions in teacher-student ratios in Grades K-12. It's projected to cost the state an extra $2 billion for 2015-2017 — money the state doesn’t have.
Both Republicans and Democrats want to limit the I-1351 requirement to Grades K-3 in 2015-2017. Republicans want to send I-1351 back to the voters in November. Democrats say they'd rather collect two-thirds majorities in both the House and Senate to repeal the measure.
Then there is Gov. Inslee's proposal to tax the state’s biggest carbon emitters. Republicans flat out hate that idea. And the two sides still have to agree on a long-range transportation and capital projects budget, which probably won't be nailed down until the broad strokes of the main budget are agreed upon.
The Legislature's first 30-day special session ends next Thursday — with Monday's Memorial Day holiday in between. Bottom line: It's impossible for lawmakers to resolve their budget differences and pass all the required legislation this month. A second 30-day special session is inevitable.
If the Republicans and Democrats don’t resolve their differences by June 30, the budget-less state government will partially shut down on July 1. The Legislature dodged that bullet by only three days back in 2013.
Inslee plans to start the second special session on May 29, a week from this Friday. "I want them to buckle down 24/7," said the governor. ..."with a little time off for sleep."
