Was It Really A Budget Compromise or Did the Democrats Actually Win?

By Josh Feit April 11, 2012

Did the Democrats pull off a surprise victory in Olympia?

Today's Fizz boiled the budget compromise in Olympia down to this: The Democrats were able to fund education and social services (the Republicans originally had the chainsaw out) while the Republicans were able to win on a trio of fiscal reform bills (the Democrats had originally condemned the reforms—limiting public employee pension options, for example—as standard GOP attacks on the public sector.)

Was it a true compromise or did one side actually win? Here's the little secret of this year's legislative session: While all the editorials (PubliCola included) have focused on the brilliance of the GOP coup and how they commandeered the session, if you actually look at what happened, the Democrats are the surprise winners.

Of course, both sides came out declaring victory this morning.

Republican budget chief, Sen. Joe Zarelli (R-18, Ridgefield), who used the controversial "Ninth Order" to commandeer the senate (away from the Democratic majority) and pass his own budget, finally giving conservatives a seat at the negotiating table in a legislature traditionally controlled by Democrats, had this to say early today:

It’s safe to figure none of these reforms would have made it through the Legislature if our bipartisan coalition had not taken the lead on the budget process in the Senate, and we would not have had a bipartisan coalition without the three Democratic senators who were rock-solid in their commitment to reforms that would make a difference. They proved ideas were stronger than affiliations.

Zarelli's Democratic counterpart, the senate ways and means chair, Sen. Ed Murray (D-43, Seattle) had this to say:

They went with the ninth order. We passed a budget last night that did not cut higher education or K-12. The ninth order budget did. We passed a budget that did not cut the disability lifeline. The ninth order budget did. We've passed a budget that did not cut family planning. The ninth order budget did.  We cut a budget that did not cut food assistance for legal immigrants. The ninth order budget did. So what was the ninth order all about?

(By the way, Murray has his facts right. Zarelli's original proposal cut $73 million from education while Murray's added $32 million. Zarelli eliminated the Disability Lifeline with an $89 million cut; Murray funded it. Zarelli's budget would have cut $6 million from family planning services; Murray funded them. Zarelli's proposal eliminated the state food assistance program, cutting $13.9 million. Murray funded it. And in the end, after last night's deal, the legislature went with Murray's version, the one that was displaced in the March 2 coup.)

However, isn't Zarelli right too? If he hadn't orchestrated the coup, the GOP reforms—limiting state employees early retirement options (predicted to save $1.3 billion over 25 years); requiring a four-year balanced budget plan; and increasing state oversight of K-12 employee health care plans—would never have been put in place.

Murray acknowledges that the GOP reforms were put in play thanks to the GOP's hard line, but he disputes that Republicans actually got what they wanted. Saying they didn't get their reforms in the "Draconian form they wanted them [in]" Murray argues:

"They did not get a balanced budget amendment that would have cause massive cuts to state government. They did not get changes to the pension system that would have truly devastated all state employees. They did not get their K-12 health care bill that was simply an attack on teachers and the WEA in particular."

We could go back and forth on this forever. And Zarelli certainly talked up the reforms this morning. For example, on the four-year budgeting plan, Zarelli said: "This requirement, thought to be the first of its kind in the nation, will force legislators to consider the long-term costs that go with their spending choices, and reduce the chance that one biennium’s budget will lead to a big deficit in the next biennium."

So, I  talked to nonpartisan staff about Zarelli's signature piece of legislation, the pension reform bill, to get a read on how much "reform" Zarelli actually got.

His initial proposal had three main elements.

Here's what he asked for and here's what he got:

1) Discourage new state employees from retiring early by making them pay regular actuarial rates—a 9 percent average hit—on each year, counting back from 65, that is an early retirement year. Current rules allow much lower hits, as low as 2 percent, and in some instances consider the legit retirement age to be 62, making the count back from 65 even less costly. Zarelli's change would have saved $2.5 billion over 25 years.

In the end, what he got was a five percent hit, and he locked in the baseline at 65 instead of 62. The estimated savings is $1.3 billion.

2) Limit state employee pension plans to what's known as the PERS 3 system, in which the state's guaranteed payment is one percent in a plan where the employee also has a 401-K style savings account of their own.  Currently, state employees can opt for either PERS 3 or PERS 2, where the state matches the employee pay with a 2 percent payment.

In the end, this was not enacted.

3) Suspend a $138 million payment to PERS 1 recipients (an older system that the state is still paying down.)

In the end, this was not enacted.

That's about 25 percent of what Zarelli wanted.

As for the K-12 health care bill and the balanced budget bill, it's pretty obvious that the Republicans came up short. On K-12 health care they wanted to create a state board that would decide on the plan, totally eliminating the teachers' union's bargaining rights. No such board was created and the local unions remained fully in control of negotiating for coverage on the local level. On the balanced budget rules, the GOP wanted a constitutional balanced budget amendment; what they got was a stipulation that legislators would keep an eye on the next biennium when budgeting.

To quote state Rep. Hans Dunshee (D-44, Snohomish), who got what he wanted---a $1.6 billion jobs bond bill, "I call the Republican reform bills 'message bills.' There's really not much substance there."

Perhaps messaging is all they need. Again, here's Zarelli, while batting just .250, boasting: “Our side came in saying we wanted to act on reforms before we would even consider revenue. We will leave having accomplished that,” he said.

By the way, speaking of revenue,  the Democrats did squeeze some in: $15 million (and probably more when the economy improves) from ending the big bank loophole; and $12 million from new taxes on "roll your own" cigarettes.
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