This Washington

Positive Revenue Forecast Boosts Optimism About Budget Deal

$121 million in extra revenue could bridge Democratic-Republican budget divide.

By Josh Feit June 18, 2013


The Washington Economic & Revenue Forecast Council released its revenue update today showing a $121 million increase in revenues for the 2013-15 biennium (plus $110 extra for the current biennium that ends next week) for a total of $231 million in extra money.

With the state facing about a $1 billion shortfall to meet current services plus a state Supreme Court mandate to add about $1 billion to K-12 education (which already gets about $14 billion a biennium), the extra $121 million could ease tensions between the Republican-dominated state senate and the Democratic house, which have conflicting budget proposals on the table.

"So, while today’s forecast may get us closer to a go-home budget, we can’t pretend we’ve solved the long-term problem."—Democratic majority leader, Rep. Pat Sullivan (D-47, Covington)At the revenue forecast press briefing today, Majority Coalition Caucus budget lead Sen. Andy Hill (R-45, Kirkland) said the numbers brought the two sides closer togther: "I would think we can move fairly quickly," he said.

The Democrats are currently looking for about $160 million in new revenue by closing a telcom sales tax loophole and closing an exemption for out-of-state shoppers (they already got the GOP to sign off on closing a loophole in the estate tax for $160 million in new revenue in exchange for passing a Republican bill that environmentalists dislike because it tweaks the state's toxic cleanup fund).

Here's our side-by-side analysis of the two proposals, but the basic breakdown is this: The Democrats' budget would stave off hundreds of millions in cuts to social services contemplated by the senate alternative, which puts more toward K-12, by the way, but which does not come with new taxes.

The Democrats have also proposed ending a batch of other tax loopholes worth $200 million (including giveaways to oil companies and info-economy giants like Google and Microsoft). Meanwhile, the GOP has been pushing a series of policy bills, such as an omniubs education reform bill that focuses on third grade reading requirements and amending suspension policy and a business-friendly workers' comp bill that would make it easier for employers to give injured workers one-time lump sum settlements rather than long-term state-regulated payouts.

“With $480 million more than we had just two weeks ago, there is no excuse for not reaching agreement on the size of the budget box today." MCC leader Sen. Rodney Tom (D-48, Medina)However, MCC senate majority leader Sen. Rodney Tom (D-48, Medina) indicated at a press conference after the numbers came out today that the GOP would be willing to back off on its policy demands if the Democrats back away from new taxes. (The forecast for students and social service caseloads has also dropped, saving $90 million).

As for the possibility of both sides dropping their demands, taking the new revenue to bridge the gap and striking a deal, house Democratic budget negotiator and finance chair Rep. Reuven Carlyle (D-36, Queen Anne), who's been the lead on pushing the $160 million in new revenue as part of the baseline budget and the $250 million from closing corporate tax exemptions for education, said:

"That's a likely scenario. Leverage on both sides is lessened. But our passion for long-term education funding is stronger than ever."

Tom's MCC colleauge, Republican leader Sen. Mark Schoesler, R-9, Ritzville, had similar face-saving footnote, saying that while the MCC believes changes to workers' comp are "vital," that issue is no longer linked to budget negotiations. (And Tom added: “With $480 million more than we had just two weeks ago, there is no excuse for not reaching agreement on the size of the budget box today." The $480 million is a reference to the $231 million in new revenue, the $90 million in caseload savings, and $160 million from the estate tax deal—which was only possible, by the way, because the longstanding requirement for a two-thirds vote to raise taxes was declared unconstitutional this year.)

Democratic house majority leader Rep. Pat Sullivan (D-47, Convington) indicated that the new money might be good enough for now, if not, perhaps, in the long run.

He said:

This is good news, of course.  It shows that our state’s economy is rebuilding and that consumers are starting to buy more products.
But it certainly doesn’t solve all our budget problems.  While it may move us closer to a short-term budget agreement, it doesn’t come anywhere near meeting our obligation to fully-fund basic education under the McCleary decision.
We’ve been prevented from taking even small steps toward closing outdated tax exemptions and redirecting resources toward schools.  Even loophole closures requested by the affected industries, like the telecom fix, have been rejected.
So, while today’s forecast may get us closer to a go-home budget, we can’t pretend we’ve solved the long-term problem.



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