A Good Deal for Washington

Medicaid Expansion infographicOne of the three key items that need to be resolved this year is the Medicaid expansion that is part of the federal Affordable Care Act (ACA) or “Obamacare. (The other two are the overall budget and education funding increase as a result of the McCleary decision.) The policy choices are getting clearer and clearer as we go through the session, and the support has become more substantial as the numbers work themselves out.

In short,

  1. We will be able to provide coverage for almost 350,000 additional people in Washington.
  2. The federal government will pick up the tab, covering 100% of the cost of the newly eligible.
  3. The expansion will save the state money, with around $250 million in savings in the first two years.
  4. The benefits are spread throughout the state, with the biggest impacts in rural counties with high poverty rates.
  5. The expansion will generate about 10,000 new jobs in Washington, and bring lots of new cash into the state from Washington DC, instead of the other way around as it usually works.

Continue reading “A Good Deal for Washington”

Standardized Tax Rates for all Marijuana

Rep. Reuven Carlyle and I introduced legislation today to standardize state tax rates across medical and non-medical marijuana. The medical market would now look like the setup initiative 502 put in place for recreational use. The press release we issued is below. My concern is that if we have an identical product being sold with two different tax schemes we are likely to have significant leakage of recreational use into the medical channel. This will create a black market and put us at serious risk of federal intervention.

I expect this to be controversial, but I think it’s important to have an orderly market with no diversion.

Legislative news from Rep. Ross Hunter and Rep. Reuven Carlyle

Thursday, February 07, 2013

Leading Democrats propose standardized tax rates for all marijuana

Two leading House Democrats introduced legislation today that would standardize tax rates for all sales of marijuana.

Sponsored by Appropriations Committee Chair Rep. Ross Hunter (D-48) and House Finance Committee Chair Reuven Carlyle (D-36), HB 1789 would create a consistent regulatory scheme for marijuana transactions.

“A responsible regulatory system requires that we have consistent, transparent oversight and tracking mechanisms, and that taxes be applied evenly,” said Rep. Hunter, “or we will create a lucrative black market.”

Washington voters approved recreational cannabis use last November with Initiative 502.

“We’re very concerned that having two systems, one almost completely without oversight, would make it difficult to win federal approval for overall marijuana legalization,” said Rep. Carlyle.  “It will distort the market and drive non-medical use inappropriately into the medical channel.”

The House Government Accountability and Oversight Committee will hear HB 1789 this Friday, February, 15th at their 1:30 PM meeting.

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For interviews or more information:

Rep. Ross Hunter 360-786-7936 or ross.hunter@leg.wa.gov

Staff: Kristen Mattern 360-786-7936 or kristen.mattern@leg.wa.gov

Legislative Update

We’ve gone through the first week. The governor and the state-wide officials have all been inaugurated, I fit into the same tuxedo I got married in 23 years ago for the inaugural ball, the Senate is in uproar about Senator Tom’s defection and the consequent change in partisan control, the sun came out (briefly) in Olympia, and we are back to work. The only real surprise to me was the tuxedo fitting.

The Senate is controlled by Republicans due to Democratic Senators Rodney Tom and Tim Sheldon caucusing with them. Sen. Tom is the “majority leader” and Sen. Sheldon has a leadership role. I’m not sure how this will work out in the end but it’s gotten a lot of press. We have successfully negotiated a bipartisan budget for the last two years that I have been budget chairman, and I expect that to continue. The change in control of the Senate does not affect the budget as much as you might expect. It may have a profound effect on issues like women’s healthcare, gun safety and those that have more partisan differences of opinion. I am withholding judgment until the end of the session and we see how things work out.

We have three big tasks this year that we must complete, plus a few additional projects many of us would like to get to if we complete the important work.

  1. Adopt a budget that balances for both 2013-15 and 2015-17 in order to comply with the strongest balanced budget requirement in the country. (It’s interesting to note that the state has adopted balanced budgets every year since 1889 without this requirement so maybe it wasn’t as important as people thought it should be…)
  2. Resolve the supreme court’s requirement in the McCleary case that we live up to the constitutional requirement to “amply provide for the education of all children.” Current estimates are that this will require about $4.5 billion every two years by 2018, and we must make “steady progress” towards meeting this goal.
  3. Work out all the details of the Medicaid expansion enabled by the federal Affordable Care Act (Obamacare.) This will cover nearly 350,000 additional people in Washington and save the state over $100 million a year. The health insurance exchange will cover an additional 400,000 or so people, leaving almost everyone in Washington covered.

I’d like to adopt a transportation package that finishes the funding for the West end of the 520 project and invests in other important transportation infrastructure, but this should come after we address the base budget issues and McCleary. I’d also like us to take reasonable steps forward on gun safety in light of the recent spurt of mass killings, but this will be difficult as there are substantial differences between members on the issue. Perhaps the US Congress will be more functional than the Legislature on this topic, but that would be a real surprise.

This newsletter is made up of several recent blog postings I’ve done. If you’re interested in the topic you should be able to click through to the website to see the rest of the article. I find that if I share everything I write with you that the parts at the end don’t get read. Perhaps I should take this as a sign, but I can’t help myself.

For more posts that didn’t fit into this newsletter, and the stuff I post during session you can read my website.

Budget Outline

The current economic outlook calls for modest growth, but growth in tax revenue slower than our obligations. Our current projections show a shortfall of $904 million in the 2013-15 budget.

2013-15 balance sheet

The cryptic “NGFS + Op PW” title in the spreadsheet stands for “Near General Fund plus Opportunity Pathways” accounts, and is the sum of most state taxes that go into the overall budget. “BSA” stands for “Budget Stabilization Account” or the rainy day fund. We can’t spend this fund without a super-majority vote, so the problem is $904 million, not the $349 million on the bottom line.

Many changes will happen to this budget before we are done, including the addition of the McCleary obligation. Adding all the problems together nets you about a $2.8 billion problem.

Keep reading about the budget… 

What’s the “McCleary Problem?”

In 2012 the Washington State Supreme Court found that Washington State was not funding our education system at anything close to the level the constitution requires. Just before the holidays the court opined again, that

“the overall level of funding remains below the levels that have been declared constitutionally inadequate.” (Washington State Supreme Court, 2012)

On the Legislative side the Joint Task Force on Education Finance report issued in December 2012 detailed an eventual cost of about $4.5 billion dollars per biennium in additional funding needed to meet the court’s definition of “constitutionally adequate.” Arguments that the court isn’t talking about funding are belied by the quote above.

Despite protestations to the contrary, this session the Legislature needs to make steady progress towards completely meeting the court’s requirement by 2018. There are 5 school years between now and 2018, and “steady progress” means we get about 2/5ths of the way to the complete solution, or about $1.7 billion.

I personally do not believe that just adding additional money to the system will resolve all the problems we face, particularly with respect to the achievement gap faced by many low-income students. The funds are necessary, but probably not sufficient to improve matters significantly. The same can be said about the proposed accountability changes. I believe we can do both, and have significant results. There will be much negotiation this year to come to a resolution.

For more information read What’s in McCleary?

Gun Safety

I’ve held off commenting on gun safety because I wanted to think about it for a while after the Sandy Hook incident. Writing new policy in knee-jerk response to a single incident typically is a bad idea. However, there have been enough incidents that I think we need to respond and create a safer place to live.

I have already received a lot of email on this issue and I try to address most of the issues that have come up. These are addressed in the actual blog post – there have been a LOT of issues raised.

Some people think about this issue from a “rights” perspective – “I have a constitutional right to own whatever kind of firearm I want” and some from a public health perspective – “it turns out to be a bad idea to let people with unresolved mental health problems or domestic violence issues, felons, and children own dangerous weapons.” We can balance these two perspectives in reasonable ways.

  • Ensure that people with domestic violence restraining orders, mental health issues, etc. are unable to purchase guns by requiring background checks on all gun purchases, including those at gun shows.
  • Keep guns out of the hands of small children and other unauthorized people by creating some kind of “safe storage” requirement. If you are going to keep a gun in your house or car you should be responsible to ensure that children do not have access to it.
  • Reduce the availability of military capacity guns that can fire many rounds very quickly. This is an extension of the principle we use in banning the private ownership of machine guns, bazookas and tanks and would fall under the supreme court’s definition of “unusual and dangerous” weapons. I believe this is a problem that can best be addressed at the federal level, not at the state level. I have no detailed knowledge of Sen. Feinstein’s bill or President Obama’s proposal and cannot comment on the specifics other than to say that it is an issue in the other Washington, not this one.
  • And, on a more personal note, I would feel more secure if most people (including elected officials, but not the numerous state patrol officers stationed at the capitol) were prohibited from carrying firearms on the floor of the House. A surprisingly large number of people who are not off-duty police officers feel a need to carry concealed pistols in a building filled with children, tour groups and sometimes angry protesters. The likelihood of accidents seems high.

For the much longer post read Gun Safety in Washington.

Education Voters Public Forum – Tuesday Jan 22nd

I’m appearing with Senator Steve Litzow at a forum hosted by the League of Education Voters on Tuesday of this week. I don’t expect the event to be a formal debate, but Steve and I will lay out some differences between the positions our caucuses have, and talk about the possibility of compromise and what that might look like. (I recognize that “compromise” is a word that is vanishing from our political lexicon, but in this Washington we try to maintain a quality vocabulary.)

Formal press release:

The League of Education Voters is hosting a forum to discuss education in Washington state with Rep. Ross Hunter and Sen. Steve Litzow on Tuesday, Jan. 22 from 7 to 8:30 p.m. at the King County Library Administration Building. (960 Newport Way NW, Issaquah)

The forum will allow residents to learn more about competing visions for funding public education in Washington.

During the event, participants will hear about the current budget shortfall, the costs associated with meeting the McCleary decision by 2018 and a comparison of the different legislative approaches to address the issue.

The forum is free and open to the public. Please register by emailing info@educationvoters.org. There will be more of these events.

What’s in “McCleary?”

In 2012 the Washington State Supreme Court found that Washington State is not funding our education system at anything close to the level the constitution requires. Just before the holidays the court opined again, that

“the overall level of funding remains below the levels that have been declared constitutionally inadequate.” (Washington State Supreme Court, 2012)

On the Legislative side the Joint Task Force on Education Finance report issued in December 2012 detailed an eventual cost of about $4.5 billion dollars per biennium in additional funding needed to meet the court’s definition of “constitutionally adequate.” Arguments that the court isn’t talking about funding are belied by the quote above.

Despite protestations to the contrary, this session the Legislature needs to make steady progress towards completely meeting the court’s requirement by 2018. There are 5 school years between now and 2018, and “steady progress” means we get about 2/5ths of the way to the complete solution, or about $1.7 billion.

Continue reading “What’s in “McCleary?””

Budget Outline 2013-15

In 2013 the Legislature has three big budget problems to address. It may be that there are other issues for the Legislature (gun safety, mental health, transportation…) but as the budget chair I have an odd focus on what I’m responsible for.

  1. Balance the 2013-15 budget, plus make sure that the 2015-17 budget is structurally sound. We start with a $904 million shortfall and have to address the two issues below, plus comply with the strongest 4-year balanced budget requirement in the nation.
  2. The Supreme Court’s 2012 McCleary decision has major impact on school funding decisions and adds $1.4 billion to the already difficult problem.
  3. The Medicaid expansion called for by the federal Affordable Care Act (ACA) is complex, but provides us with the opportunity to cover hundreds of thousands of Washington citizens and save hundreds of millions. Implementation decisions will be difficult given the campaign rhetoric, but I believe we will get there.

The political situation in the state Senate will make resolution more interesting and create a lot of political theater. I look forward to negotiating a rational solution.

For a printable version of this post click here.

Financial Management Software: Not Sexy but Good

Policy Center logoThe Washington Policy Center posted last week about State Auditor Brian Sonntag’s report to Governor Gregoire recommending financial management reforms. It’s a dry report filled with acronyms that’re geeky to both computer scientists AND to accountants. (This hides the fact that they’re talking about hundreds of millions in software development expense.) Jason Mercier, the director of the Policy Center’s “Center for Government Reform” agrees with the auditor. You can read his post here. The post links to the auditor’s report.

I don’t always agree with Jason Mercier about how government ought to be run. Actually, it would be more fair to say that I RARELY agree with him.

In this case he’s right. The legislature has not approved funding for the software systems the state auditor proposes replacing because the administration did not have the technical infrastructure in place to make it happen and we thought the money could be better spent somewhere else. There are significant long-term savings and efficiency that could be realized by investments in a stronger financial IT backbone, more coordinated purchasing and support policies, etc. It will take structural reform in the office of financial management and a significant change in how decision making about IT investment happens to make these successful and I look forward to working with the new administration to make this work.

2013 Legislative Agenda

My agenda for 2013 is simple to outline here, but I expect great difficulties in working through it:

  1. Produce a budget that balances for 2013-15 and 2015-17, resolves the  McCleary education funding decision, implements the Medicaid expansion envisioned in the Affordable Care Act (Obamacare), and projects rationally into the future.
  2. Inside the education box make some strategic decisions that enable our K-12 and higher education systems to be more productive, including
    1. More thoughtful allocation of proposed new K-12 spending to fund pre-school for at-risk three and four-year-old children. Most research in the field leads me to believe that this is a more optimum spending plan than what we are currently on a path to do.
    2. Create a strategy for how we fund and manage our higher education system so that a reasonable proportion of Washington students can learn the skills necessary to survive economically in the 21st century. Our current path is unattractive. I am concerned (optimistic?) about a radical dislocation in higher education driven by the Internet and think the state should do some planning.
  3. Take a step forward on transportation infrastructure, including finalizing how we will pay for the remainder of the 520 bridge project. (Tolling I-90 is the current plan, and there are not many alternatives.) There are other transportation projects that need to be considered as part of an overall plan, and the business community is pushing us to consider an increase in the gas tax to fund it.

There are lots of other issues that will come up this year. I do not expect to be the lead on most issues outside the budget, but if there is one that will get some of my attention it is taking a rational step forward on gun safety.  What this will be is unclear at this point.

The politics in the state Senate will be interesting, though I don’t think they change the reality of budget votes in any significant way. The mix of votes in the Senate makes it difficult to pass a budget there with 25 Democratic votes, requiring the same kind of bi-partisan budget vote we’ve negotiated in the past few years.

As usual, I’ll try to write about policy developments on my blog at www.rosshunter.info, and will send out infrequent email updates. If I send them out too frequently you don’t read them, so I try to be careful. Of course when I do this they are tremendously long, but you can’t have everything.

Great article on early childhood education

The most leveraged investment, the investment that would have the strongest effect on educational outcomes would be a high-quality pre-school program for at-risk 3 and 4 year olds, with thoughtful attention paid to making sure we don’t damage the child care system for younger kids. (There is a lot of financial cross-subsidization to enable care of very young children.)

Click here to read the article.

 

Today’s speech at Redmond Chamber of Commerce

A super crowd at the Redmond Chamber today. It was great to see everyone. I said I’d post the slides from today’s talk and here they are.

WA State Budget Preview (PDF, requires Adobe Reader.)

4-year budget outlook released

The Office of Financial Management (OFM – the gov’s budget office) just released their 4-year budget outlook. This will be the basis for our new 4-year balanced budget requirement.

You can see the spreadsheet here.

It shows a “shortfall” of about half a billion dollars ($496 million) by the end of the next biennium, in 2015.  This assumes no ending fund balance (not realistic) and full implementation of many laws that mandate additional spending in the future (also not realistic.) When we finished the current budget I thought this number would be around $100-$250 million, but we’re discovering new changes in assumptions as we do a more detailed look at future costs.

Any document looking this far out into the future is difficult to do and is based on a set of assumptions. This particular set are created by an amazing process of consensus between the Governor’s office and the non-partisan staff of the House and Senate. Eventually the forecast council will take a vote to formally adopt it so that it’s not a staff product, but one approved by elected folks. I don’t expect much contention about the assumptions – they’re pretty reasonable and they point out the difficulty in projects like this. You can read the basic ones on the back of the spreadsheet, and a more detailed look at future caseloads can be found at http://www.cfc.wa.gov/.

The biggest variable is the revenue forecast, which has proven really fickle over the last 4 years. Small changes in percentage growth lead to wild swings in revenue.

We’ll use this as the basic planning document as we devise a way to comply with the McCleary decision from the Supreme Court. I’ll continue to post on these issues.