Legislature: Double-overtime nearly over; no budget agreement yet

The State Legislature is in its second special session and so far no agreements have been reached on the operating and capital budgets nor on the comprehensive transportation funding package.

This special session is slated to end by June 30 but the more important deadline is July 1 – that’s when the new fiscal year begins and without a budget the state government may have to start shutting down some of its operations. Gov. Inslee has asked the departments to start drawing up plans. 

It is important to note that state transportation projects as well as the State Patrol and ferries would not be impacted by a shutdown because they are not funded by the operating budget but rather by the separate transportation budget. The Legislature passed and the Governor signed the “current law” 2015-20117 transportation budget (but not the transportation-funding package for new projects).

Here’s where we are:

Operating budget  The most recent public offer from the Democrat-controlled House called for $38.4 billion in two-year spending from the state’s main budget while the Republican-controlled Senate offered $37.7 billion. There were announcements that the negotiators had agreed to an overall spending amount – the precursor to figuring out individual line items and how to pay for it all – but then retractions. So they haven’t agreed to an overall number but it appears they are getting closer. The tougher sticking point seems to be the House Democrat leadership’s insistence on a capital gains tax which the Senate considers a non-starter. Notably both the Senate and House make significant increases for K-12 education as required by the State Supreme Court’s McCleary decision.

Over the last couple of weeks Gov. Inslee has been hosting negotiation sessions at the Governor’s mansion but recently the rumor mill has quieted and the Governor said “the less said about budget negotiations the better.” This “cone of silence” seems like an indication of progress… for the moment no one is throwing political bombs across the aisle which could mean a deal is near.

Capital budget   Not to be lost amid the controversies of the operating budget is the capital budget. The House-passed version would appropriate $3.77 billion while the Senate-passed version would appropriate $3.62 billion. The Senate also passed a related bill (SB 6080) that would appropriate $280 million in bonds for school construction related to class-size reduction. So overall the Senate is proposing slightly more for capital projects but unlike the House it would swipe additional funds out of the Public Works Trust Fund. There are a few other areas of disagreement and no guarantees that it will be finalized soon.

Transportation package  The Governor signed the “current law” transportation budget which basically keeps existing projects going. But the $14-billion transportation package funded largely by an 11.7-cent gas-tax increase has yet to pass both houses. The Senate passed its version several weeks ago and a House version passed the Transportation Committee but not the full House.

Negotiations are ongoing and rumor has it that headway is being made on two major sticking points: whether to eliminate the sales tax on transportation projects and the Governor’s low carbon-fuel standard proposal. Of course the list of projects evolves during the negotiation process but it appears the gas-tax increase itself is not a stumbling block. Regarding Sound Transit the Senate bill granted it authority to go to the ballot with a $12 billion request for “ST3” and the House wants to give it authority for $15 billion (as Sound Transit requested). It appears this issue is being resolved.

It’s important to note that House leadership has said that a vote on the transportation package won’t happen until after an operating budget is passed. AGC is working to make sure that once an operating budget is passed Legislators don’t hurry home and “conveniently forget” to take up the transportation package! If you haven’t yet remind your legislator by sending them an email via AGC’s Action-Alert system.

For more information contact AGC Chief Lobbyist Jerry VanderWood 360.352.5000.