Thank you again for letting me represent you in Olympia. It’s an honor and a privilege, though I feel much less privileged when the session runs into July. We finished our work Friday morning June 10th, passing a transportation spending bill and bills that allow the state to take out bonds based on the revenue. We also passed a small bill changing high school graduation requirements, the centerpiece of a disagreement in the Senate over initiative 1351 (class size reduction.) The graduation bill delays the imposition of the science standards for two years, allowing 2000 kids who met all the graduation requirements other than passing the biology end of course exam to graduate. It does NOT make a number of other changes I took issue with when they came up earlier in session.
In the last week of June we passed the 2015-17 operating budget, my particular responsibility in the Legislature. It’s reasonably straightforward and didn’t need to take us until the end of June to resolve, but the Republican Senate was unwilling to compromise on their all-gimmicks, no revenue strategy until the very end. In the last few days we came to an agreement that is a true compromise – the House conceded to the use of more financial shortcuts than we would have preferred and the Republican Senate agreed to close $350 million of tax loopholes. I didn’t get everything I wanted, and there are some elements of the deal that are distasteful. I think the same is true for the Senate Republicans. Had we gone past June 30th the state would have gone into a partial shutdown, including laying off doctors and nurses, shutting childcare facilities for 50,000 kids (which would cause 30,000 low-income single moms to lose their jobs or depend on sketchy care), and other bad things.
Chris Vance has a lot to say in this article on Crosscut that I agree with, but more that I don’t.
He is right that the Legislature didn’t address the compensation element and still needs to. I expect the court to have something to say on this soon.
However, he and Superintendent Dorn remain confused about the scope of class-size reduction requirements the court specifies. He seems to believe that the court is requiring class size reductions in grades 4-12. They are not.
The Legislature created many advisory groups to provide input for the decisions it would make on class size investments, compensation, etc. These groups, while often providing valuable advice, do not make decisions that become part of the definition of “basic education.” If they did we would be spending prodigious amounts of money indeed. The Legislature reserves for itself the definition of basic education, and, based on inputs from several advisory groups, made those changes in HB 2776 in 2010. This created requirements for lower class sizes in K-3, all-day Kindergarten, a transportation funding formula that was based on expected costs, and maintenance and supplies funding. The court Specifically insisted that the Legislature fund the definition in that bill. We have done so. Both House Democrat and Senate Republican budgets funded a rational phase in of these investments, and provide adequate funding in the 2017-19 biennium to finish the job before 2018. The final budget does as well.
I agree with Mr. Vance that compensation for basic education employees is a responsibility of the state, not of local districts, and that significant structural changes will need to be made to how funding goes out to address the problem. I proposed HB 2239 this year that created a plan to work this out, with an court-enforceable deadline of 2018. The Senate Republicans refused to take up the bill, and did not send their proposal over to the House. This might lead one to believe that they are choosing to ask the court to be more aggressive in forcing resolution.
The remaining problem is about $3.5 billion a biennium, not $5 billion a year. Much, but not all of this is already being paid by taxpayers and a large part of the problem could be resolved with a wrenching property tax change that would be close to revenue-neutral at the state level, but cause significant tax increases in urban areas and corresponding decreases in rural areas. Not surprisingly, this has been resisted by urban areas who suggest a more balanced way of addressing the problem using capital gains or some other mechanism in addition to some of the property tax changes I and others have proposed over the years.
When writing about the budget it’s important to share good news as well as bad. First the good: (it’s short) the revenue forecast picked up a little bit. The bad is that we face one of the most difficult budget cycles of my time in the Legislature, and perhaps worse than we’ve seen in many decades.
The budget is showing strains from the slow recovery from the recession, we are seeing a slew of court cases that require us to spend significant amounts of money, and we are going to have to make significant progress in meeting our constitutional responsibility to fund public education.
One 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.
We will be able to provide coverage for almost 350,000 additional people in Washington.
The federal government will pick up the tab, covering 100% of the cost of the newly eligible.
The expansion will save the state money, with around $250 million in savings in the first two years.
The benefits are spread throughout the state, with the biggest impacts in rural counties with high poverty rates.
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.
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.
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.
The Supreme Court’s 2012 McCleary decision has major impact on school funding decisions and adds $1.4 billion to the already difficult problem.
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.
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.
OLYMPIA – The House is moving forward Wednesday with a short list of bills that will be necessary to implement (NTIB) the supplemental operating budget. Although an agreement on the final budget has not yet been reached, the House Democratic negotiating team wants to get the ball rolling.
“We have been negotiating in good faith practically every day of this special session,” said House Ways and Means Chair Ross Hunter (D-Medina). “We’ve taken significant steps toward the Republican position, and are still willing to discuss the final sticking points, but the time has come to act as well as talk.”
“We will also be placing a striking amendment to the budget on the bar Wednesday morning,” said House Majority Leader Pat Sullivan (D- Covington), “and we plan to take action on it later this week. The length of time it takes to pass a budget through both chambers means we have to begin moving things now.”
Earlier this week the House Democrats voted to make me chairman of the Ways and Means committee in the House, responsible for tax policy and crafting the biennial budget. I’m pleased that my co-workers believe I am capable of leading the process of creating a budget in these difficult times.
The Finance committee that I chair today was combined with the existing Ways and Means committee.
After the holidays I’ll write more about how we’re going to go about this.