With the second special session in Olympia underway, the current standoff is over five policy bills that the Republican-dominated Majority Coalition Caucus wants the Democratic house to sign off on:
1) A business-friendly change to the workers' comp fund that would make it easier for employers to offer one-time payouts rather than ongoing compensation to injured workers; 2) A bill that would ease restrictions on payday loans; 3) An education reform bill that would allow principals to refuse to hire teachers reassigned to their schools; 4) A bill that environmentalists complain compromises the voter-approved toxic cleanup fund; and 5) A bill that would cap non-education spending at six percent of new revenues.
The Democrats and Gov. Jay Inslee have complained that the GOP is holding the budget hostage in exchange for these ideological policy bills. And, the exasperated Democrats add that they've dropped their own ideological wish list, including a gun control bill, a pro-choice bill, and an immigrant rights bill.
The Republicans object to the accusation that they're holding the budget hostage and say the Democrats can simply pass the MCC budget—which the Democrats don't like because it cuts $338 million from government services such as assistance to needy families, food banks, and early learning—and go home, no reform bills necessary.
But this raises a basic question: If the MCC's reform bills aren't an urgent priority, that is, they aren't necessary to pass a budget, why are the Republicans threatening to shut down state government over them (the existing state budget runs out on July 1)?
Shouldn't they be compromising over budget differences? Saying the MCC budget was based on gimmicks, such as $200 million in unspecified savings from efficiencies and ignoring federal mandates, the Democratic house has offered a budget proposal which, by closing $300 million in loopholes for telephone companies, a loophole in the voter-approved estate tax, and the exemption for out-of-state shoppers, doesn't make the harsh cuts to social services. (The Democratic program also closes about $200 million in other tax loopholes, like one for big oil and two for techie companies such as Google and Microsoft, but those proposals, which would add dollars to education funding, aren't part of the Democrats' baseline budget.)
We talked to outspoken Republican Sen. Doug Ericksen (R-42, Ferndale) today—Ericksen is the senate's environmental committee chair and is pushing the toxic fund bill that has environmentalists on edge—about the MCC's bargaining position. (Take note, by the way, he says the senate doesn't need to fix the estate tax loophole, which, as I posted earlier, could cost the state $160 million immediately.)
Here's a edited transcript of the interview.
PubliCola: I heard you on the senate floor saying, “Look, we’re not taking hostages, if the Democrats would simply pass the Majority Coalition Caucus budget that we passed off the floor, hey, we can go home, our work’s done.” But that indicated that the reforms you're calling for aren’t that urgent, aren’t a priority. This leads me to the question: If the Democrats have offered a budget, and you guys have offered a budget, why not just stick to those budgeting issues and hammer out a compromise without bringing in non-urgent policy matters?
Sen. Ericksen: Two things, one is a lot of comments that were made on the senate floor that day were with regards to a supposed push to a government shutdown, and if these bills are being held hostage, it would push us over the brink. And my viewpoint is, we passed a standalone budget that balances for four years and puts $1.5 billion bucks into education.
[Editor's Note: The MCC budget puts $1 billion toward the Washington State Supreme Court's McCleary K-12 funding mandate—the house puts $700 million toward McCleary—and another $500 million toward K-12, such as $240 million in learning assistance for high-poverty schools.]
So if your fear is a shutdown, then you can grab this budget, which works in many ways and isn’t that different from what the Democrats passed down in many capacities, and we’re done, and we go home. And, essentially those reform bills go away, and we can deal with them next year. So if we’re holding hostages, we’re not very good at it because they have the budget that they can pass, which would end the hostage crisis immediately.
PubliCola: But the context is, the Democrats also passed a budget, right? That they like. So why not have a head-to-head compromise on your budget and their budget without tossing in what they’re seeing as ransom with these policy bills, especially if you’re saying the toxics bill, or the workers' comp bill, or the six percent cap aren’t urgent right now before July 1. Why not just compromise on the two budgets absent these five reforms?
Sen. Ericksen: That’s possible, we’re not giving up on that.
If somebody passed a budget tomorrow, those reforms aren’t going to keep us in Olympia.
One of the other components of it is the tax increase side. And so the Democrats are pushing very hard for the tax increases. So our go-home budget doesn’t include tax increases. Their budget does. So it’s really about tax increases, I suppose. But the reforms are important. Like I say, if somebody passed a budget tomorrow, those reforms aren’t going to keep us in Olympia.
[Editor's note: The Democratic budget includes $300 million from closing tax loopholes—closing a loophole in the voter-approved estate tax, closing a loophole that has allowed landline telecoms to avoid a tax that cell phone companies pay, and closing the sales tax exemption for non-resident shoppers. Note that later in the interview, Ericksen describes two of these taxes, $250 million worth, as "correcting a court action ... different from outright tax increases."]
I think you come to Olympia with a lot of different goals, and one of those is to control spending ...
The budget will keep us in Olympia. Once the budget passes, reform bills will not keep us here in special session. We will go home.
So, we could not just grab the house budget and pass it and go home.
So, we passed a budget that balances without raising any taxes, and it is the only one. Because now that I think about it, the Democrat’s budget assumes Bracken [the estate tax] and the telecom parity bill, so that’s $250 million there. They assume both of those, and they assume the Oregon state tax issue. So they built in $300 million, but they had another $300 million in tax increases on top of that.
[Editoiral Note: The additional money Ericksen is talking about come from a list of six exemptions the Democrats want to close, but that money, $204 million, is not part of their formal budget bill.]
So, to go back to it, the Senate is the only one that has passed currently a go-home overall budget. It balances without any tax increases, including Bracken and Sprint, and it balances for four years. So we could not just grab the house budget and pass it and go home. We’d have to do those other tax increase bills.
So if you’re keeping hostages, it’s not a very good hostage strategy, to give the other side the ability to end the crisis immediately. I know they [senate Democrats] gave 'with concerns' speeches, but this is the same budget essentially with some rather significant modifications with how money was spent, that nine democrats voted for last time. [ A crew of moderate Democrats supported the MCC budget when it first passed, but they bailed on it when the senate passed it during the special session negotiations.—Eds.]
I know they said they wanted more money, but as we say in the legislature, there is no “with concerns” button.
PubliCola: Aren't telecom and Bracken really necessary, given the legal context here? That the telecom companies are going to sue and cost the state maybe a billion dollars? And with Bracken, you're following the will of the voters wanting the estate tax. Shouldn’t those be in the budget as opposed to policy bills?
Sen. Ericksen: There are two things here. Both of those bills could be dealt with next year. Bracken, we’d lose some money, but many people were going to lose the retro-money later anyway. So I could deal with it now and make it retro and enrich some lawyers who are going to go out there and win in court on the retro issue anyway. On telecom, we can deal with it next year. We also have tax-neutral solutions that could be put on the table. But most people in the Coalition Caucus have been clear that correcting a court action is different from an outright tax increase.
PubliCola: What’s your prognosis of wrapping this thing up?
Sen. Ericksen: Tuesday is the over-under.
PubliCola: Where do you thing the gives are?
Sen. Ericksen: All of the places we just talked about.