As Gov. Jay Inslee has fumed, the Republican-controlled Majority Coalition Caucus' negotiating ploy to pass five conservative priority bills as part of the budget negotiations has extended the legislature into a second special session. This time the stakes are escalated. If the house and senate cannot agree to a budget by July 1 when the current biennium budget expires, the government may face an unprecedented shutdown.
During yesterday's press conference, Inslee accused the MCC of taking the budget process hostage with "ideological" policy bills. "The senate majority is trying to leverage our obligation to Washington's school children in order to pass its ideological agenda," he said. “Keep ideology and policy wish-lists out of this debate.”
Democrats in the house released their revised budget proposal last week, making considerable compromises such as the scaling back their call to eliminate tax loopholes and dropping their demand to extend the B&O tax surcharge. They also gave up on their own policy bills, such as the DREAM Act and the Reproductive Parity Act. While Republicans have dropped their full list of 33 priority bills, they've kept five high profile bills in play.
Of the five bills, the Republican-dominated senate passed three of them during the special session, and sent them to a hostile house floor. The three, which we outlined earlier this week in Fizz, include: A bill to cap non-education spending at six percent of new revenues; a bill, known as "mutual consent" that allows principals to reject teachers that have been reassigned to their schools; and a workers' compensation bill that would expand employers' ability to offer one-time settlements to injured workers. (Of course, now that they're in yet another special session, the MCC has to pass them again because the house never took action on them.)
There are two more bills on deck.
The first undermines payday loan regulations that liberal Sen. Sharon Nelson (D-34, Vashon, W. Seattle) passed in 2010, landmark legislation that limited the size of a payday loan to $700 or 30 percent of a person's income, whichever is less, barred people from taking out multiple payday loans at different companies, required companies to provide an installment plan for people who fall behind on their payments and limited the number of loans a person could get to eight per year. Nelson, one of the Democrats' budget leads, has fought the bill all session. The other bill amends voter-approved Model Toxic Cleanup Act. Both bills currently sit in Senate rules, and will likely have a hearing tomorrow.
The first bill, SB 5312, authorizes "small consumer installment loans," as a substitute to the traditional payday loan. Unlike payday loans, borrowers can pay off loans in installments between a period of 3-6 months instead of at the next payday. But while some contend this incentivizes borrowers to pay off loans earlier and with more flexibility, opponents of the bill say the high interest rates and excessive fees work in the advantage of the lender, not the borrower.
Industry data show that over 75 percent their lending is due to refinancing existing consumers, generating new fees and interest each time. When the consumer can’t make the payments they come back and refinance on the same interest, origination fee and service fee.
“The main concern of consumers is the incredibly high interest rate and the churning of fees,” says Bruce Neas, attorney at Columbia Legal Services. “The bill creates an untested, unproven, irresponsible loan product that puts consumers back into the debt trap. Industry data show that over 75 percent their lending is due to refinancing existing consumers, generating new fees and interest each time. When the consumer can’t make the payments they come back and refinance on the same interest, origination fee and service fee.”
For example, for a $1,000 loan, a borrower will pay over $1,500 in fees over twelve months, with interest reaching over 190 percent.
The MTCA reform bill, SB 5296, which we wrote about late in the regular session as it became clear it was a Republican priority bill, would amend the voter-approved toxic cleanup fund by creating a third account, the Environmental Legacy Stewardship Account, in addition to the existing local and state cleanup accounts. The ELSA account allows state clean-up money to be used for projects involving model remedies, but environmentalist are concerned that the language in this provision will allow private companies to use the fund to pay for their toxic sites. The voter-approved fund was intended to clean up public sites.
And this is how: The projects that are eligible for ELSA funding (read: redirected MTCA funding) include projects that are already written into MTCA except for a new provision for "performance or outcome based projects" and projects using model remedies are also eligible for ELSA funds. The curious thing is that model remedies for public entities are already funded through MTCA remedial action grants. Creating the "performance or outcome based" loophole and reintroducing the model remedies in a separate fund, begs the question whether privately liable parties could take advantage of state clean-up funding through ELSA.
"The problem is that many projects involving model remedies include privately liable parties, so that opens a huge door [for private companies to use state funds]," explained Darcy Nonemacher, legislative director of the Washington Environmental Council.
Recently, the bill's sponsor, Sen. Doug Ericksen (R-42, Ferndale), has worked on a possible amendment that says the bill will not "expand access" of privately liable parties to public funds. Even so, environmentalists insist the double (and vague) language essentially leaves the door open for private companies to use public clean-up funds.