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Key Democrats voted for Senate budget to avoid gridlock, set up House negotiation on revenue

Post by Brad Shannon / The Olympian on April 6, 2013 at 12:22 pm | No Comments »
April 8, 2013 12:16 pm
Sen. Jim Hargrove
Sen. Jim Hargrove
Sen. Andy Hill
Sen. Andy Hill

In the end, 30 lawmakers in the divided Washington state Senate agreed on a budget Friday night that sent many messages and served one purpose above all others.

It got the Senate out of possible gridlock – even while some Republicans had qualms about the state’s growing reliance on federal health-care money to serve the poor and most Democrats voting in favor had criticisms about cutting aid to the poor, too.

“This is the new way of doing things,’’ Sen. Andy Hill, the Redmond Republican and leading budget author whose floor speech touched on the two-party effort to write the $33.2 billion, two-year budget. “This is different. In Washington state, we are different. We’re here to solve problems.”

Hill also extolled the lack of new taxes, which gives him leverage in bargaining with the Democrat-controlled House that is expected to put out a budget and tax plan next Wednesday. The budget also puts $1.5 billion of new money into K-12 schools, lowers tuition and expands Medicaid to provide health care coverage to as many as 250,000 more low-income people.

Hill may not avoid taxes in the end game, but a no-tax agenda help him negotiate for smaller increases.

“We couldn’t stay in stalemate,” said Sen. Jim Hargrove, the conservative Hoquiam Democrat who was his minority Democratic Caucus’ leader in negotiations and open advocate for more revenue.

Hargrove is a pragmatist known for working across the aisle, who had liberal Democrat, Sen. Sharon Nelson of Maury Island, at the table with him.

“It’s a constitutional requirement to pass a budget. We could have been just plain obstructionists,” Hargrove told reporters after the vote, explaining  why it was essential to approve a budget that he deeply disliked in some respects. [He has clearly voiced objections to cuts in housing and child-care help for needy mothers going to jobs and said new revenue will be needed to fix those.]

“Basically, if we hadn’t passed this budget tonight we would have created a situation where we wouldn’t have gotten any budget out of the Senate. We would have just had to wait for the House,” Hargrove said. “And that maybe would have sent us into one, two or three special sessions. … I don’t want to sit around here for months and months.’’

In the end, the 30-to-18 vote drew seven members of the minority Democratic Caucus in favor with the short-handed majority caucus that kicked in 21 votes (that included two Democratic mavericks, Rodney Tom and Tim Sheldon, whose defections gave Republicans the majority in January).

Some Democrats who voted in favor had debts to pay or other obligations. Two were collaborators in the actual budget writing (Hargrove and Nelson); three were serving as chairs of committees that the Majority Coalition Caucus offered them in a pre-session show of bipartisanship (Sens. Brian Hatfield of Raymond, Steve Hobbs of Lake Stevens and Tracey Eide of Des Moines); one wanted to show support for collective bargaining agreements that are, in effect, ratified by the budget (Sen. Karen Fraser of Thurston County); and one was a freshman from a swing district (Sen. Mark Mullet of Issaquah).

But it was clear from the speeches and comments by Hargrove and others that they also worked very hard to get things in the budget that they believe in or think need to be in any final product worked out with the House and Gov. Jay Inslee.

Among those things favored by Democrats: fully expanding Medicaid and funding for immigrant programs, children’s health and family planning.

Now that a Senate budget is on the table, eyes turn to the House – and revenue. The House plan is expected Wednesday, and House leaders including Majority Leader Pat Sullivan, D-Covington, and Appropriations Committee chairman Ross Hunter, D-Medina, say revenue must be part of the equation.

Gov. Inslee says the same – having proposed $1.2 billion in new revenue by making some temporary taxes on business and beer permanent and by closing or trimming numerous tax breaks that Inslee says have less public value than public education.

On the Senate Majority Coalition Caucus side, Hill acknowledges that revenue could eventually be part of the final product – although his caucus made clear that is not its preference. He said many believe a temporary tax increase is a temporary increase – unlike Inslee who wants to make business and beer taxes permanent beyond their June expiration date.

But Hill’s caucus did support a $238 million “hospital safety net” charge that some might characterize as a tax – or even money-laundering – but Hill called a fee. The gist: hospitals agree to pay higher facility fees that let the state pay hospitals more for services, which in turn triggers higher federal matching payments for Medicaid claims.

In stretching to write a balanced budget without outright tax hikes, the Majority Coalition Caucus took risks on revenue that may never materialize. For example, it assumes savings from agency efficiencies on top of assuming agencies will have huge amounts of leftover money at the end of the budget period.

It also relies on a controversial grab of $166 million from state timber-trust accounts that are dedicated to school construction. The state treasurer thinks is not constitutional, Hill and Hargrove say legislative lawyers think it can be done, and in the end it may end up in court.

But Hill gave no hint which revenue options are considered least offensive, saying only that what his caucus does depends on what the House does.

But there are more than $250 million in obvious tax revenues both parties could go after that House Republican budget writer Gary Alexander has already said he is open to.

One is closing a loophole in the estate tax created by a recent Supreme Court ruling that could cost the state $160 million over two years. The court ruling carved out married couples, leaving the voter-ratified tax in place for single people.

Another is worth $73 million and answers another court ruling – this time dealing with a tax exemption on home phone service that now is being claimed by wireless providers. Without action the state could lose another $150 million or more yearly, according to the Department of Revenue.

Stay tuned.

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