Despite increase in state revenues, budget talks likely to go in 2nd special session

Yesterday’s revenue forecasts added more than $400 million to projected funds available to state budget writers. Yet, the two chambers remain far enough apart that most expect negotiations, should they commence soon, will require the governor to call a second special session. 

In the Seattle Times, Joseph O’Sullivan has a good account of where things stand.

The parallel universes Democrats and Republicans have inhabited over the writing of the state’s two-year operating budget don’t seem to be inching closer together.

…Democrats question some of the forecast’s assumptions, including the large amount of marijuana tax money it assumes, and say new revenue is still needed. Meanwhile, a trio of Republican senators argue that the state’s budget situation is so rosy, lawmakers can now cut business taxes.

Handling good news seems to be as difficult as accepting bad news.

But Sen. Andy Hill, R-Redmond and chief GOP budget writer, argued that the new revenue projection weakens Democrats’ case for raising taxes.

“At some point you have to say, ‘Holy cow, we have a lot of money,’ ” said Hill. “We should be able to get this job done very quickly.”

O’Sullivan reports a different reaction from Hill’s House counterpart.

The new revenue forecast “doesn’t completely solve the problem,” said Rep. Ross Hunter, D-Medina, the Democrats’ chief budget writer.

Hunter raised concerns over whether the marijuana tax collections assumed in the forecast will pan out.

The first special session is scheduled to end in nine days, on May 28. The new fiscal year begins July 1. As the Columbian reports,

In Washington, special sessions, although technically meant to be “extraordinary,” are more just, well, ordinary.

Since 2000, lawmakers have held 18 special sessions; some years, there was more than one.

The Spokesman-Review gives the reaction of the state budget director

David Schumacher, director of the Office of Financial Management, said the additional revenue should make it easier for budget negotiators to find a middle ground. If the revenue projections had been this strong last Nov-ember, Gov. Jay Inslee would not have proposed the tax increases for his budget, and House Democrats likely would have had a smaller tax package also, Schumacher said.

The projected revenues from marijuana taxes remain a forecaster’s volatile variable. Nonetheless, in a phrase we don’t like very much, the forecast is what it is – the official number lawmakers rely on to write their budget. The revenue boost should make it easier to get that job done, though probably not by May 28.

Budget debate turns to taxes: Are carbon, pot and income in the mix?

House and Senate budget negotiators will move swiftly to close the gap between budget plans separated by more than a billion dollars and a philosophical chasm. And that means that everything is again in play, as a series of articles today makes clear.

Carbon. The carbon tax proposed by Gov. Inslee, which recently received national attention, did not make it into the House budget (it was always unlikely to appear in the Senate’s plan). Yet, today, Joe Copeland writes in Crosscut that it may be back

House Environment Committee chair Rep. Joe Fitzgibbon, D-Des Moines, said Thursday that he, administration officials, House representatives and even representation from the GOP Senate caucus have been meeting almost daily to discuss the possibility of reviving the Inslee’s dormant proposal.

Publicola also has the story. And the Wall Street Journal reports on a national carbon tax proposal being pitched to conservatives. This is a debate worth watching.

Pot. While it’s not a lot of money in the scope the $38 billion state budget, marijuana taxes play a role in both chambers’ budgets. The Seattle Times reports today on the different budget approaches to pot money

The Republican-led Senate estimates the marijuana industry will generate about $296 million in the next two years. Save for $8 million a year for the Liquor Control Board and $6 million a year split among cities and counties, that money will go toward education funding…

The Democrat-led House budget expects about $270 million in marijuana revenue. About $7.4 million a year would go to the Liquor Control Board, $720,000 to fund studies and $6 million a year for cities and counties. The rest is distributed, by percentage, to a number of prevention, treatment and health-care programs.

There are other differences, also worth watching.

Income tax. While not on anyone’s agenda in Olympia this year (at least not publicly), the personal income tax remains the white whale of tax reform for many Washingtonians. Seattle economist Dick Conway argues for a 10.6 percent flat rate personal income tax on the op-ed pages of the Seattle Times today. 

That’s not to mention the capital gains tax, B&O tax rate increases, bottled water taxes, and more that are currently in the House budget plan. We’re approaching the anything-can-happen last days of the regular session, which can be the very definition of taxing times.