In a bid to break their budget logjam with the Republican Senate, House Democrats put a new budget offer on the table Wednesday that sharply reduces their previous spending targets and tax-hike plans. The new bill, an amendment to House Bill 1057, cuts $790 million in spending from the Democrats’ original plans and jettisons $800 million in new tax revenues previously sought.
A Republican-led coalition that runs the Senate immediately threw cold water on the plan, claiming Democrats were failing to pay for children’s education first.
The Legislature’s 30-day special session runs out next Tuesday, June 11, and House Majority Leader Pat Sullivan, D-Covington, said the “clock is ticking” on a budget detail that gets harder to do after that deadline. He said the full House could vote on the new budget proposal starting Thursday morning and it represents a major move toward the Senate GOP’s position.
“We’re clearly going more than halfway” to the Republican-led Senate’s no-new-taxes position, Sullivan said in an interview, noting the Democrats’ request for new revenue is less than half its original goal and its spending reductions were “significant.”
Among tax proposals left by the wayside was a permanent extension of a business-and-occupations tax surcharge on service businesses. But the plan does include about $340 million in new revenues – including two tax changes in response to state Supreme Court rulings on the estate tax and telecommunications, which could cost the state millions if lawmakers don’t act.
Democrats from both the House and Senate stood together in offering the budget proposal – including Sen. Jim Hargrove of Hoquiam and Sen. Sharon Nelson of Vashon-Maury Island. They described the proposal as a major move to the GOP’s position but also said it retained safety-net programs.
Gov. Jay Inslee also praised the offer. But if any of the Democrats hoped to unlock the budget door to agreement with the Senate Majority Coalition Caucus any time soon, they will be disappointed.
Senate Majority Leader Rodney Tom, a Democrat from Medina, put out a statement that did not acknowledge the House had moved off its original position:
I am disappointed that this House budget proposal is balanced on the backs of Washington’s school kids. Our children deserve our first dollars, not our last dime. We in the Senate will continue to work with our House colleagues to seek a workable compromise, but we will not let political expediency stand in the way of fulfilling our obligation to provide for our schools.
Republican Sen. Bruce Dammeier of Puyallup elaborated on that criticism while also praising Democrats’ concessions: lowering the overall spending level, backing away from taxes and leaving the state’s rainy-day fund untouched.
Dammeier said his objection is taking the reductions from what was proposed to be spent on schools. ”They have backed away from (a) commitment to making that the state’s paramount duty,” he said. Overall, he said of the new proposal: “I’m not sure this helps.”
Senate Ways and Means chairman Andy Hill, R-Redmond, simply declined to comment to reporters as he walked between buildings on the Capitol Campus. ”I’m off to negotiate in good faith,” Hill said.
It does appear that the House proposal puts less new money into K-12 education than the Senate proposal – to fulfill the Supreme Court ruling in the McCleary case that said Washington was failing to meet its constitutional obligation to amply fund basic education. The Senate plan puts about $886 million in new funds, but House Appropriations chairman Ross Hunter said the Democrats would put in $704 million by one measure and about $800 million by another.
However, that is not the full story. The House Democrats’ plan also has a separate option to raise additional money earmarked for K-12 schools by closing tax exemptions. Specifically it closes seven tax breaks on bottled water, oil refineries, high-tech research, travel agents and tour operators and others to raise $255 million extra money for K-12 schools and bring the total new investment in schools to just over $1 billion.
Dammeier said making education spending dependent on new revenue would mean “holding our kids hostage for a tax increase.”
Some House Democrats also are leery of the deal, and Rep. Chris Reykdal of Tumwater said the new budget amendment may be a bad negotiating move if Republicans in the other chamber have no interest in actually reaching an agreement.
Reykdal suggested that some Senate Republicans may be seeking an actual government shutdown and said he was not yet sure he could vote for the new compromise bill.
“There is serious heartburn,” he said. “It’s a $900 million compromise off our original revenue proposal. But it’s not a deal with the Republicans. It’s a hope that that much compromise will get us to the table in a meaningful way. I don’t think that is a good way to do negotiations. I don’t think you keep coming down from your position in hopes they will suddenly take the negotiation more seriously.’’
He said it also worries him that the compromise bill – without the additional $255 million tax package – lands barely halfway to the $1.4 billion target for new money he thinks is needed to answer the state Supreme Court’s ruling in the McCleary case that schools are not amply funded.
“This is a hope and a prayer that the Senate will receive this with no guarantee at all. There is no guarantee we will close any loopholes,’’ Reykdal said.
UPDATE: Rep. Gary Alexander, the House Republicans’ lead on budgets, put out a statement that questioned whether the new proposal helps move the budget talks forward. He said the Democrats’ use of a press conference could be a step backward. But he also said he sees “some genuine effort to find agreement – common ground – with the Senate Majority Coalition Caucus. I know some of the changes made in this budget plan are causing angst with several members of the House Democrat Caucus who want to see taxes raised for more state spending. As a result, it remains to be seen whether or not this proposal has the full support of their caucus.”