Getting closer to 2nd special session; budget stalemate continues

In the Everett Herald, Jerry Cornfield sums up the state budget, er, discussions.

You can call them budget talks or you can call them budget briefings.

Just don’t call them negotiations.

Because no one is negotiating. According to Cornfield, legislators are talking, trying to understand each other’s position, and so on. But not “making decisions,” in House Majority Leader Pat Sullivan’s words.

Once they get around to deal-making, things can move quickly. The revenue forecast next week may help. But, as Cornfield reports,

Given the impasse, there is mounting skepticism lawmakers can reach a deal by May 28, when this extra session will end.

The House budget depends on about $1.5 billion in new taxes. The Senate doesn’t raise taxes, but does rely on fund transfers and other assumptions to balance. The House has yet to pass the required tax bills; the Senate says the House needs to pass the tax measures before there can be serious discussions. Then there are the nontrivial differences in spending to consider

The House tax plans have changed some, at least in theory, since the end of the regular session. The Washington Research Council notes yesterday’s introduction of a revised cap-and-trade bill in the House Appropriations Committee.

A new capital gains tax remains among the options considered by House Democrats, though that, too, has been revised since it was originally introduced. The Tax Foundation recently offered its critique of the tax.

So go the non-negotiations on Day 16 of the first special session.

School levies emerge as critical issue in what-might-not-be-final days of 2015 Legislature

With the state Supreme Court’s McCleary emphasis on the uneven role of local levies in school funding, legislative attention to the state-local funding mix was inevitable. We noted earlier that competing proposal have emerged in the last weeks of the regular legislative session. 

There are several good news stories on the local levy issue. The Seattle Times editorial board frames the matter.

As the Supreme Court noted, the state has ceded its responsibility to local school districts that raise money from their local taxpayers. The state contributes only around 70 percent of total funding, with the rest coming from federal and local sources. The quality and resources at public schools varies widely because some district voters approve higher levies, creating a haves and have-nots system — the antithesis of what the state’s founders had in mind.

The Times editorial goes on to discuss several of the legislative proposals.

For a good discussion of the competing plans, see this new Washington Research Council policy brief on the levy swap. It’s a key element in most strategies for reducing local levy reliance and boosting state support of basic education. As the WRC notes, current discussions of the swap come with a twist.

There has been a convergence of two policy elements being proposed in Olympia this session. The capital gains tax first floated by Governor Jay Inslee has new life as Senate Democrats connect the proposal’s additional revenue potential with the second element that will need new state revenue: the reduction of local levies currently funding education…

Local property tax levies cannot be used to meet the state’s constitutional obligation to fully fund basic education. The levy swap, substituting state property taxes for local school district maintenance and operation (M&O) levies to fund basic education, is seen by some to be the natural remedy for this portion of the McCleary problem.

The Association of Washington Business has two short newsletter items worth your attention, setting out AWB’s position on local levies and the capital gains tax.  

While the levy discussions seem to be heating up in the Legislature, Austin Jenkins reports that the governor is not on board yet.

In recent days several levy reform proposals have been floated in Olympia. But so far Governor Jay Inslee isn’t embracing any of them.

“It’s kind of a second step,” Inslee said. “We are focusing on the budget right now to take the first step which is actually to have financing for the McCleary decision, that second step I don’t think is necessary to accomplishing the first step. I’m focused on that first step.”

The News Tribune, like the Seattle Times, believes it’s critical to address the levy problem

What has to be done is obvious: Local levies should be lowered sharply and their use strictly limited to genuinely supplemental expenses. The Legislature should assume all responsibility for teacher compensation – and should pay them well. The profession should not come out behind in the bargain.

Lawmakers could pay for this by collecting what districts wouldn’t be collecting once local levies were lowered. Or they could find a different source of revenue.

The Spokesman-Review has a good rundown on the politics complicating levy reform.  And Rep. Ross Hunter, one of the originators of the levy swap concept, has an extended blog post examining the options, their prospects and how they also fit into the budget debate. It’s long and wonky, but provides important insight into the challenges of structuring a politically viable plan. The key takeaway: it’s complicated, involves myriad tradeoffs among affected groups, and any resolution this session will likely be partial and transitional.
 
A lot going on. The session appears headed for extra innings.