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WashingtonVotes NEWS: Wednesday, July 1, 2015

Legislature approves budget/transportation package; averts government shutdown but work still to be done for budget to balance

With just hours to spare before a partial state government shutdown, the legislature overwhelming adopted the state’s 2015-17 budget. By a vote of 38-10 in the Senate and 90-8 in the House, lawmakers approved a $38.2 billion biennial budget ($79 billion all funds). This represents a 13% increase in spending from the 2013-15 budget. It is also the largest state spending increase since the 18% increase adopted for the 2005-07 budget. Both of these large spending increases were facilitated by lawmakers suspending/changing the state’s spending limit.

To make up the difference between the $38.2 billion in spending and the state’s $37.5 billion revenue forecast, lawmakers utilized the $929 million beginning fund balance (left over revenue from 2013-15), approved $178 million in fund transfers and enacted a net revenue increase of $165 million. That revenue increase is from closing several tax preferences. No general tax increases were used. Lawmakers also still need to suspend the I-1351 class size reduction initiative that voters passed last fall for the budget to balance since the budget assumes a $2 billion reduction of spending for this policy. Although the House has already voted to suspend I-1351 for four years by a vote of 72-26 the vote failed to be approved in the Senate. The vote to suspend I-1351 requires a 2/3 vote. There is some question if the 2015-17 budget signed by Governor Inslee late Tuesday night is truly balanced without the suspension of I-1351 being in place. The Senate is continuing to work to address this problem.

Among the spending policies adopted in the budget are $1.3 billion increase for K-12 education (McCleary Supreme Court ruling obligation), higher education tuition cuts ranging from 5-20% (depending on the type of state university/college), full funding of the cost of living increases for teachers (including a one-time bonus payment) and adoption of compensation increases for state employees that were negotiated by Governor Inslee and the state employees unions last summer. The capital gains income tax and cap-and-trade carbon fee system originally sought by the governor for the budget was not adopted by lawmakers this year.

Along with adoption of the 2015-17 operating budget, lawmakers also came to agreement on a $16 billion tax and spending transportation revenue package. Approval of the statewide transportation package was facilitated by Governor Inslee agreeing with the Senate not to impose a Low Carbon Fuel Standard cost on gasoline sales until at least 2023. The transportation projects are funded by an 11.9 cent gas-tax increase (starting with a seven cents increase effective August 1, 2015), adding a sales tax to Sound Transit construction projects to be paid by people living in King, Pierce and Snohomish counties (generates $518 million), and increasing car tab fees. The transportation revenue package was approved by a vote of 37-7 in the Senate and 54-44 in the House.

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