1. The state house Democrats passed their budget out of committee last night along straight party lines, setting up a floor vote today where the Republicans are sure to speak out against the plan, which includes $500 million in new revenue from closing tax breaks plus extending business & occupation and beer taxes.

When the house Democrats rolled out their plan earlier this week, Rep. Gary Alexander (R-2, Olympia), the Republicans' budget leader, called the budget "Seattle-centric."

The House Democrats’ budget looks very much like what we’ve seen the last few years from the majority party in Olympia: a budget created in the vacuum of Seattle-centric special interests with little to no regard for the voters of this state who have said time and time again that they want state government to live within its means without raising taxes.

Alexander is right about the "Seattle-centric" nature of the budget. But not in the way he means.

People in King County—just one of 39 counties in the state—contribute nearly 42 percent of the state's tax revenues while receiving only 25 percent of the money spent from the state’s general budget, according to the latest stats from the Office of Financial Management, meaning that Seattle gets back just 59 percent of what it puts in.

The "Seattle-centric" side of the state budget comes from the region's contribution.

Meanwhile, with the exception of Thurston County, where the $35 billion state government operates out of Olympia, the top net recipients of state money are all in Eastern Washington: Whitman County gets 4.82 times what it contributes in taxes; Lincoln County gets 2.54 times its contribution; Ferry County gets 2.4 times what it contributes; and Garfield gets 2.25 times what it contributes. These counties all have something in common: they’re all small, Eastern Washington counties whose legislative delegations in Olympia, in line with their constituents, are hard-line anti-tax votes. 

And given that some of the cash cow tax breaks that the Democrats would like to close or eliminate— including two high-tech tax exemptions worth about $80 million (ouch Microsoft) and an out-of-state sales tax break worth about $63 million (most of it coming from Seattle businesses) that Democrats want to repeal—disproportionately hit Seattle and King County businesses, that puts even more of the burden of funding on Seattle. So seems like the "Seattle-centric" side of the state budget comes from the region's contribution.

 

 2. Speaking of the beer taxes, the beer industry is already fighting the Democrats' proposal, which would raise taxes by 14 cents per six-pack for large breweries and by 8 cents per six-pack for small breweries, for about $60 million per biennium for schools.

Check out the industry's website denouncing the taxes here.

3. Feeling in over our heads in the disagreement between Democratic budget leader Rep. Ross Hunter (D-48, Medina) and Republican budget leader Sen. Andy Hill (R-45, Redmond) over the constitutionality of transfering $166 million from the school construction fund into the general fund (it's a key component of the Republican budget that Hunter has denounced as illegal), we asked LawNerd to weigh in.

Here's what LawNerd, Perkins Coie attorney David A. Perez, said: There appears to be some merit to Hunter's critique that the Senate's budget, which removes $166 million from the "common school fund," violates the text of Article IX, Section 3, of the state constitution. 

Section 1 begins, of course, by proclaiming that "[i]t is the paramount duty of the state to make ample provision for the education of all children residing within its borders."  Section 2 then sets up the framework for a "uniform system of public schools." And Section 3 provides the mechanism by which those schools can be funded by setting up the "common school fund" and the "commons school construction fund."  The funds in the "common school construction fund" are to be used "exclusively for the purpose of financing the construction of facilities for the common schools." 

Simple enough, right?

"To the extent that the moneys in the common school construction fund are in excess . . . the excess shall be available for deposit to the credit of the permanent common school fund or available for the current use of the common schools, as the legislature may direct."Well, here's where things get dicey. One source of the construction fund is the state's proceeds "derived from the sale or appropriation of timber and other crops" from state land (the Department of Natural Resources' land trust fund).  The Republicans are raiding DNR's land trust fund to the tune of $166 million—money that might have otherwise gone to school construction fund. But Article IX's plain language makes clear that this money can only be used for school construction.

The Republicans' budget guru, Hill, shrugs this language off by claiming there is "excess money" in the school construction fund. But not so fast. Even if there was a surplus in the school construction fund, Section 3 provides guidance for what to do with that surplus: "[t]o the extent that the moneys in the common school construction fund are in excess . . . the excess shall be available for deposit to the credit of the permanent common school fund or available for the current use of the common schools, as the legislature may direct."  Which means that even if Senator Hill is correct that there are excess funds in the "school construction fund," that surplus can only be used to fund the state's public school system.  It can't just be transferred into the general fund.

We still need more details about the Republicans' accounting (where the money's coming from, and how it's being used).  But, on balance, Rep. Hunter may be on to something here.

4. The local hotel and food servicec workers union, UNITE HERE Local 8, endorsed Mayor Mike McGinn yesterday citing Seattle laws he championed, such as the paid sick leave law, and calling him "the most progressive mayor in America."

It's an impressive endorsement, though the tenacious union also endorsed incumbent Mayor Greg Nickels in 2009.

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