Lawmakers spar over proposed capital gains tax

By | January 8, 2015 | 0 Comments

The debate over Gov. Jay Inslee‘s proposed capital gains tax continued along party lines at Thursday’s Associated Press Legislative Preview event.

The tax was debated on a budget panel that included Rep. Ross Hunter (D-Medina), chairman of the House Appropriations Committee; Sen. Andy Hill (R-Redmond) chairman of the Senate Ways and Means Committee; Rep. Bruce Chandler (R-Granger), ranking Republican on the House Appropriations Committee; Sen. Karen Fraser (D-Olympia), member of the Senate Ways and Means Committee.

Inslee last month proposed a $39 billion 2015-17 budget that ends a number of tax breaks, charges carbon polluting companies and raises $800 million over two years through a proposed capital gains tax. The proposed capital gains tax would be 7 percent on money made from the sale of stocks and bonds above $25,000 for individuals and $50,000 for joint filers — which lawmakers say would affect the top 1 percent of earners in Washington state.

Inslee, in his Q&A session, defended his proposal of a capital gains tax, saying it gets the state closer to a system that can get the benefit of people earning more money without also increasing the tax burden on lower-income and middle-income earners.

“If we can tax higher income folks when they get capital gains, and not lower income folks when they buy a pair of shoes, that’s good,” he said.

“Whatever the concerns on the volatility of the capital gains tax, the alternative is zero,” Inslee said.

Sen. Andy Hill (R-Redmond)

Sen. Andy Hill (R-Redmond)

Hill criticized Inslee’s budget as perpetuating what he called a “deficit myth,” in which the only option was to raise taxes.

He said that because the state’s revenue has risen by more than 4 percent in each of the past two years, the state can continue its existing services and put an additional $1 billion in state education funding over two years.

“When I’m talking with business groups, I ask, ‘Would you like 4 percent growth year over year in this economy,’ ” he said. “I see nods. With some I see a little drool.”

“To say we have a huge budget problem, I think it’s meant to scare people,” Hill said. “The next step is you have to raise taxes.”

Hill also said that a capital gains tax is too unpredictable to be a reliable source of funding for school education, which was one of the requirements under the McCleary ruling. (more…)

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Lawmakers offer preview of 2015 session at Washington Policy Center summit in Bellevue

By | January 7, 2015 | 0 Comments

It wasn’t quite a debate, but the differences were clear in presentations on state legislative priorities given by Sen. Andy Hill (R-Redmond) and Rep. Reuven Carlyle (D-Seattle) at the Washington Policy Center’s Solutions Summit in Bellevue on Wednesday.

Sen. Andy Hill (R-Redmond) and Rep. Reuven Carlyle (D-Seattle) speak at the Washington Policy Center's Solutions Summit in Bellevue on Wednesday.

Rep. Reuven Carlyle (D-Seattle), seated, and Sen. Andy Hill (R-Redmond) speak at the Washington Policy Center's Solutions Summit in Bellevue on Wednesday.

Hill made the argument that the surplus in the state revenues would allow for an additional $1 billion in education spending and cover existing expenses over the next biennium.

However, Hill, the Senate Ways & Means chairman, criticized Gov. Jay Inslee‘s proposed new capital gains tax in his $39 billion, two-year budget, which the governor introduced last month.

“We do not have a brutal deficit,” Hill said. “It’s a false choice to say you raise taxes or you make cuts.”

Carlyle, the House Finance chairman, was critical of Washington’s taxing system as a whole, which he says squeezes middle- and lower-income taxpayers as well as small businesses. But Carlyle was also skeptical of the idea that the spending side of a budget should get the most scrutiny. He said many of the state’s tax exemptions to businesses have not been revisited since they were passed.

“I believe the best tax structure would be low rates, broadly applied with few exemptions,” he said.

The Washington Policy Center, a pro-business think tank, hosted Hill, Carlyle and Sen. Curtis King (R-Yakima) and others in a half-day summit that prepared attendees and other supporters for the 2015 Washington state legislative session. The Bellevue event, which drew 400 people, was the second day of a two-day summit on legislative issues. The first day was held in Kennewick on Tuesday.

Other speakers at the Bellevue event included former Attorney General Rob McKenna, former New York Gov. George Pataki, Forbes columnist and former health care policy advisor to Mitt Romney Avik Roy and a small business panel that included former Starbucks president Howard Behar and restaurateur Taylor Hoang, who owns Pho Cyclo restaurants.

Sen. Curtis King (R-Yakima) speaks at the Washington Policy Center's Solutions Summit in Bellevue on Wednesday.

In a transportation forum, King, the Senate transportation chairman, declined to discuss in detail why lawmakers failed to come up with a transportation package that would pay for major road projects in the last session, but said that going forward, the state needs to consider what projects would make the greatest economic impact to the state as a whole.

“We got to take this limited amount of money and use it to address our problems,” he said. “Bike and ped paths are not our problem… They are nice to have, but not our problem.”

King, who was in the panel with Marc Scribner, a research fellow at the Competitive Enterprise Institute, also criticized cities that make local decisions without considering how transportation will be affected, such as in Seattle, where several projects in the South Lake Union area will bring 44,000 people to the area to live and work and bringing further congestion to the area, he said.

“Because Seattle said, ‘Hey, we’ll let you build those towers,’ is that the state’s problem?” King asked.

Governor signs budget, calls for new revenue

By | May 2, 2012 | 0 Comments

Gov. Chris Gregoire signed the final operating budget of her career Wednesday, saying she was pleased that it makes no cuts to education — a feat achieved “by the skin of our teeth.”

But that won’t be possible in the future without a new revenue source, Gregoire warned. It will cost about $1 billion to meet constitutional and “moral” obligations to the K-12 education system alone, she said at the bill signing.

“If anyone understands the harsh reality of the future, it’s me,” she said. “We cannot properly fund education in this state without more money.”

Gregoire said she was disappointed the Legislature didn’t eliminate more tax breaks after she gave them a list of options “as long as the room.” In the end, the Legislature ended a tax deduction that big banks can claim on first-time mortgages. That’s expected to generate about $15 million a year in new revenue, and another $12 million is expected to come from taxes added to roll-your-own cigarettes.

Many lawmakers opposed the roll-your-own measure, saying that it would put store owners out of business who have invested as much as $30,000 in the machines. But Gregoire said it is only right that people pay taxes on the product because “in the end, taxpayers pay the health care costs.”

The budget included several partial vetoes that will bring the ending fund balance down to $311 million. The original budget left about $320 in reserves.

Watch the full bill signing ceremony here.

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Gov. Gregoire says this year was her ‘most difficult’ legislative session

By | April 12, 2012 | 0 Comments

As the Legislative special session spilled into 7-and-a-half hours of overtime over the last 31 days, Gov. Chris Gregoire said she was as “angry” as she’s ever been in her tenure as governor.

“Temperatures were high, emotions were high,” as lawmakers attempted to break a stalemate over the budget, Gregoire said. “It was my most difficult legislative session,” she said.

But in the end, Gregoire said they accomplished something notable: A budget with broad bipartisan support.

In the state Senate, the budget passed with a 44-2 vote; Republican Senators Mike Padden and Cheryl Pflug both voted no. The vote was 64-34 in the House, with eight Republicans joining the Democratic majority to vote yes.

“I don’t recall having a budget passed out of the Washington state Senate with only two no votes,” Gregoire said today at a press conference. “The end product for people of the state of Washington is significantly bipartisan.”

Democrats did not want to cut education or social safety net programs like Disability Lifeline, while Republicans wanted reforms that would make the budget more sustainable long-term, Gregoire said. The budget that the Legislature passed in the early morning hours Wednesday encompasses both demands.

The budget makes no cuts to education and leaves the social safety net largely in tact. It incorporates a handful of reforms, including a constitutional debt limit, changes to the health insurance system for K-12 public school employees, ending some early retirement benefits for state workers and a four-year balanced budget requirement. It uses an accounting maneuver that holds onto the sales tax revenue collected from local governments about a month longer, which boots the state’s cash flow to the tune of about $238 million.

Gregoire said she regrets the state was unable to put more money into funding K-12 education, and she would have also liked to see a larger transportation investment.

Watch video of the full press conference below.

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Watch the special session edition of Legislative Review right here

By | April 11, 2012 | 0 Comments

Miss the late night action during special session? We cover all the highlights on this 15-minute special session edition of Legislative Review.

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Legislature passes supplemental budget

By | April 11, 2012 | 0 Comments

The state Legislature passed a supplemental budget and adjourned at 7:30 a.m. this morning after pulling an all-nighter. The Senate passed the budget on a 44-2 vote, while the House voted 64-34. Read more in the AP story here.

Gov. Gregoire released a statement this morning praising lawmakers for their work, saying they came together to balance the budget and on reforms. Gregoire called for an additional one-day special session at midnight Tuesday after the clock ran out on the 30-day special session before lawmakers had come to an agreement.

We’ll have all the highlights of the night’s legislative activities tonight at 6:30 p.m. on a special session edition of Legislative Review.

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Lawmakers continue to pass bills as deadline nears

By | April 10, 2012 | 0 Comments

Lawmakers working toward a midnight deadline cleared another hurdle when the House voted to pass a four-year balanced budget measure with a 79-19 vote.

The bill changed in negotiations from the version that the Senate passed on Monday, which would have required the budget to be in line with the four-year revenue forecast prepared by the Economic and Revenue Forecast Council.

Instead of relying on the revenue forecast — which critics said was too unpredictable — the bill assumes 4.5 percent revenue growth each year. That’s a figure that has remained fairly steady since the ’80s, said Rep. Ross Hunter, D-Medina.

“This will enable us to do solid regular planning and not get whip-lashed by large changes in the forecast,” Hunter said.

Rep. Mark Miloscia, D-Federal Way, said he hopes the bill will end the Legislature’s habit of going into multiple special sessions by forcing lawmakers to “look four years into the future for long-term solutions.”

UPDATE: The Senate passed the balanced budget bill with 38-9 vote following remarks by bill sponsor Sen. Jim Kastama, who said it was a good compromise.

Meanwhile, the Senate passed a bill that repeals Initiative 728. Voters approved the initiative in 2000 as a way to reduce classroom sizes, but without a way to fund it. The Legislature has regularly suspended the measure during economic downturns. It also establishes a task force focused on funding basic education.

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UPDATED: Senate passes pension reform bill, 27-22

By | April 10, 2012 | 0 Comments

The state Senate returned to the floor Tuesday evening to pass one of the key measures responsible for the budget stalemate — a pension reform bill that eliminates some pension benefits for state employees who retire early. It would apply only to new state workers hired after May 2013.

Republican Sen. Joe Zarelli said during the debate that the bill is a compromise that will save the state money, while still providing a “decent benefit” for retiring state workers. Employees who retire before the age of 65 will lose a percentage of their pension benefits for each year that they retire early.

But Sen. Karen Fraser, D-Olympia, said the bill will keep state workers on the payroll longer than they should — particularly teachers, or those with physically demanding jobs. “Public service should be a higher calling and I think this bill undermines that,” Fraser said.

The measure is expected to save the state $1.3 billion over the next 25 years.

UPDATE: The House voted to pass the bill around 11 p.m. with a vote of 56-42. The chamber had taken up the issue earlier in the evening, then deferred it.

Republican Rep. Gary Alexander said it was one of the “trifecta of reform bills” that will put the state on sound financial footing. Rep. Ross Hunter, D-Medina, urged members to vote for it as a way to move forward on the budget.

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Still no budget deal as day ends, but lawmakers continue to negotiate

By | April 10, 2012 | 0 Comments

Gov. Chris Gregoire said just before midnight Monday that lawmakers have not yet struck a budget deal, despite a marathon 11-hour negotiation meeting. Gregoire presented a compromise budget to legislative leaders early Monday afternoon that she said included “a whole new set of offers.”

“We’ve made progress over 11 hours, but we’re not done and everybody is still working,” Gregoire said at a late night press conference (video).

Lawmakers have been at odds over a series of reforms, including changes to health insurance benefits for K-12 employees, ending some pension benefits for new state workers, and a four-year balanced budget requirement.

Gregoire did not say what was in her proposal, but said she believes it is politically doable with “no unintended consequences.”

The 30-day special session comes to a close at the end of the day Tuesday, and lawmakers will be facing another special session if they don’t have a budget deal. Gregoire said she doesn’t want to go into special session — even for a day  — because it takes everything “back to square one.”

“Nobody will convince me to talk about a special session until I have to, and that’s at 12:01 tomorrow night,” Gregoire said.

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Gov. Gregoire proposing new budget compromise

By | April 9, 2012 | 0 Comments

Gov. Chris Gregoire is proposing a compromise budget to legislative leaders behind closed doors in the hopes of ending the logjam before the clock strikes midnight on Tuesday, the last day of special session. Rachel La Corte of the AP has more on the meeting here.

A House budget committee scheduled for this afternoon was delayed twice to accommodate the meeting, and is now on hold indefinitely. We’ll keep you posted.

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Senate passes K-12 health insurance bill, balanced budget bill

By | April 9, 2012 | 0 Comments

The state Senate passed two reform bills Saturday that have been key to budget negotiations. The bills now head to the House, which is set to consider some of the reform bills in the budget writing committee on Monday.

The first measure changes health insurance benefits for K-12 public school employees. It requires all employees to pay some portion of their health insurance premiums, capping the cost of family premiums at three times that of a single individual.

School districts must offer a high deductible health insurance plan with a health savings account – if they don’t, their employees will be automatically moved into the state system.

“For 22 years we have had an inefficient health care system for K-12 school employees,” said bill sponsor Sen. Steve Hobbs, D-Lake Stevens. He said the inefficient system “must end or be accounted for.”

The bill passed 29-17.

The other reform bill is a balanced budget requirement proposed by Sen. Jim Kastama, D-Puyallup. It requires the state to craft a budget that is in line with the four-year revenue forecast by the Economic and Revenue Forecast Council.

Senate majority leader Lisa Brown said during the debate that revenue forecasts are a craft, not a science. She showed legislators a letter from former state economist Arun Raha, who said it would be “unwise” to tie budgets to an unpredictable number.

“No other state does a four-year budgeting requirement because we can’t see the future,” Brown said.

Sen. Kastama said the requirement has some built-in flexibility because it will be in statute and not a constitutional amendment, as he had originally proposed. It allows for a variance of 5 percent from the revenue forecast, he said, which amounts to $1.5 billion dollars up or down.

“The public is tired of this roller coaster ride on budgeting,” said Kastama. The bill passed 30-16.

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Heated exchange about working Easter weekend

By | April 6, 2012 | 0 Comments

Will the Senate work over Easter weekend? It remains unclear Friday night, following a heated exchange that happened on the Senate floor earlier in the day.

Friday afternoon, Sen. Mark Schoesler, R-Ritzville, moved that the Senate adjourn until Monday morning.

Senate majority leader Lisa Brown rose in opposition, saying “I do not appreciate being treated with disrespect.” Brown said bills related to the budget are moving through committee and need votes soon if the Legislature is to finish by Tuesday, the final day of special session.

“This is a ploy to drive us into another special session,” Brown said.

Schoesler responded by saying there were “rampant rumors of a call of the Senate that would take people away from their families during Easter.”

Some members have already gone home to be with their families, Schoesler said. Two other lawmakers rose to say they were attending baptisms on Saturday.

In the end, they voted to recess for the hearing, but not adjourn. Watch the exchange below.

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House passes supplemental budget, 54-43

By | April 5, 2012 | 0 Comments

The House voted to pass the latest Democratic budget proposal with a 54-43 vote Thursday afternoon.

It now heads to the Senate, where Republicans and the moderate Democrats who are siding with them on budget matters said Wednesday that the offer doesn’t have strong enough reforms for them to support it.

During the House debate, lead budget writer Rep. Ross Hunter, D-Medina, said that “despite tremendous financial difficulties,” the budget does not cut education.

It also saves the state’s safety net “in the best way possible,” said Rep. Pat Sullivan, D-Covington.

But Republican Rep. Gary Alexander of Olympia said the budget isn’t sustainable. Nor is it helpful, he said, adding that he believes it “detracts” from the negotiation process.

“Buried deep inside this budget are scary details,” said Rep. Charles Ross, R-Naches. “I don’t believe it is ready for prime time.”

The Senate budget writing committee has a hearing scheduled for Friday to consider reforms related to the budget proposal. Special session ends next Tuesday.

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House expected to vote on latest budget proposal today

By | April 5, 2012 | 0 Comments

The House today is taking up a number of bills, and is expected to vote on the Democratic budget proposal this afternoon. Watch live on TVW or the web, and we’ll post updates on the blog.

First up, the House debated a bill that would add state cigarette taxes to roll-your-own cigarettes. Rep. Steve Kirby, D-Tacoma, said roll-your-own cigarettes are a way for customers and stores to sidestep taxes, and it isn’t fair to those who play by the rules. 

Rep. Cary Condotta, R-East Wenatchee, spoke in opposition to the bill, saying it will only put people out of business and won’t generate enough revenue to help with the budget deficit.

“Is this going to balance the budget? Are you kidding me?” Condotta asked. The bill passed 65-32.

They also took up a proposal to change the way the state handles sales tax revenue collected from local governments, a measure that was introduced by House Democrats in their latest budget proposal. The bill keeps the money in the state’s general fund longer, giving the state a boost in its cash flow every month.

Local governments are not opposed to it, and the accounting maneuver is done by a number of other states, said Rep. Ross Hunter, D-Medina. The bill passed 82-15.

Meanwhile, the Senate passed a measure that amends the Constitution to include the recommendations of the state debt commission. They then adjourned until Friday morning.

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Senate GOP: Latest budget proposal takes us ‘further apart’

By | April 4, 2012 | 0 Comments

The latest budget proposal by House Democrats “takes us further apart than brings us together,” said Senate Republican budget leader Joe Zarelli, adding that he didn’t see it as a “good faith effort” to reach a compromise.

Zarelli said at a press conference the proposed budget is not sustainable because it doesn’t leave enough money in reserves for the future, and it uses “one-time” money to pay for ongoing programs.

“They created a bigger hole structurally than their last budget that they passed in the dying days of regular session,” Zarelli said.

House Democrats introduced a new budget proposal this morning that leaves $335 million in reserves, and it boosts the state’s cash flow by holding onto sales tax money collected from local governments a month longer.

Sen. Rodney Tom, who was one of three Democrats to join the GOP to pass a budget during regular session, said that the budget proposal doesn’t go far enough in terms of reforms.

“It boggles my mind that we go to this ‘Washington lite’ model, doing the most minimum change possible,” Tom said.

Given the current situation, it is “highly unlikely” that the Legislature will adjourn with a budget deal by the time special session ends next week, said Sen. Jim Kastama, D-Puyallup.

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House Democrats new budget proposal: No delayed school payments, includes reforms

By | April 4, 2012 | 0 Comments

House Democratic leaders released a new budget proposal today, saying they are moving closer to the Republicans’ position by offering a number of reforms.

Rep. Ross Hunter, chairman of the House budget writing committee, acknowledged that he doesn’t know if the new plan has enough votes to break the impasse, but said it was time to get the process moving.

“If there’s any opportunity to be done by next Tuesday, we have to move some bills forward,” said House Majority Leader Pat Sullivan at a press conference. Special session ends two days after Easter.

The budget proposal does not delay payments to public schools — a major sticking point in previous budget debates. Originally, Democrats had proposed pushing back millions in school payments by one day so that the expenditure fell into the next two-year budget cycle, and Republicans criticized it as punting responsibility to the next Legislature.

Instead, the budget proposal would keep $238 million in sales tax revenue collected from local governments in the state’s general fund longer, giving the state a boost in its cash flow every month. Hunter said a number of other states do the same, and it would “modernize” the way the state handles its cash without delaying any payments.

The budget does not include any cuts to K-12 or higher education. It would, however, repeal Initiative 728, a measure passed by voters in 2000 as a way to reduce class sizes, but without a way to fund it. The Legislature has regularly suspended the measure during economic downturns, and Rep. Hunter said the money could be more effectively used elsewhere.

The plan includes a number of reforms, including one that would eliminate some pension benefits for new state employees hired after July 1. Rep. Hunter said the proposal does not go as far as the pension reform proposed by Senate Republicans, but “it’s as far as we can go to get the votes.”

It also includes a balanced budget bill with a 4-year “outlook,” and a bill that would consolidate health insurance benefits for K-12 public school employees. It removes a proposed 5 percent increase to the Temporary Assistance for Needy Families program, and would eliminate about 1,400 state employees.

The proposal leaves $335 million in reserves.

Senate Republicans and moderate Democrats held a press conference to respond, saying that they didn’t believe the reforms go far enough. Read more about their response here.

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House Democrats set to release new budget proposal

By | April 3, 2012 | 0 Comments

House Democratic leaders will put out a new budget proposal Wednesday morning and say they plan to take action on it later this week. TVW will be live with their press conference starting at 10 a.m.

The House budget writing will also hold a public hearing on a number of budget-related bills, including pension reform and consolidating K-12 public school employee health benefits.

“The length of time it takes to pass a budget through both chambers means we have to begin moving things now,” said House Majority Leader Pat Sullivan in a statement.

House Democratic leaders said they have not reached a budget deal with Republicans, but wanted to get the process moving. Special session ends on April 10th — two days after Easter. House budget chair Ross Hunter said the time has come to “act as well as talk.”

Other bills the House budget writing committee is set to hear on Wednesday include changing the way the state handles local sales tax revenue, creating a 4-year balanced budget requirement and a proposal to repeal I-728, the voter-approved initiative that reduces class sizes.

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UPDATED: McKenna pushes for reforms, says House Speaker is blocking bill votes

By | April 2, 2012 | 0 Comments

Rob McKenna today said a Democratic “failure of leadership” in the Legislature is at fault for protracted budget negotiations, and the Republican gubernatorial candidate urged adoption of reform bills that he says have bipartisan support.

McKenna said House Speaker Frank Chopp won’t allow a vote on the reform bills, despite offers from Republicans who are “ready to move quite a ways” toward a compromise.

“But they haven’t seen once inch of compromise from the speaker’s office,” McKenna said. “He will not allow any vote on any reform bill, even those that have strong Democratic support.”

McKenna said he supports a pension reform bill and 4-year balanced budget bill that were both part of the budget that passed the Senate with the support of Republicans and three moderate Democrats, then stalled in the Democratic-controlled House.

He also called for a number of long-term reforms during a press conference held in front of the newly built state Data Center building in Olympia,  which houses data and IT services. McKenna said the $268 million building is an example of government spending without oversight — rental space in the building costs double the going rate per square footage, McKenna said, and data storage could have been contracted out to “cloud” services for less money.

In addition to contracting out some state services to private businesses, McKenna called for reducing 5 percent of the state’s workforce through attrition, implementing a performance-based pay system, and giving the Legislature more power in negotiating labor contracts for workers’ pay and benefits. He outlined all of his ideas in a policy paper.

Update: Democratic Sen. Ed Murray, who chairs the Senate budget writing committee, issued a statement Monday evening saying McKenna is not part of the budget negotiations and his account of them “is not true and certainly not helpful.” Murray said House Speaker Frank Chopp has been working with budget negotiators daily.

“I’m surprised that McKenna, our state’s attorney general, thinks it’s constructive to insert himself into legislative negotiations as a political candidate,” Murray said.

Watch video of McKenna’s press conference below.

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Rumors about a third special session ‘abhorrent,’ Gov. Gregoire says

By | March 29, 2012 | 0 Comments

Budget writers are making progress on putting together an all-encompassing budget package, with about six major issues that remain to be resolved, Gov. Chris Gregoire said today at a news conference.

“Rather than piecemeal, I’m trying to put the whole agreement together,” so that party leaders can take it to their members and determine if it has enough votes to pass, Gregoire said.

Special session is now more than half over. Despite the closing window, Gregoire said she wanted to squash rumors that there would be a third special session, calling the idea “abhorrent.”

Her remarks came just before she was set to begin a marathon day of bill signing. Gregoire has been refusing to sign the vast majority of bills into law until lawmakers made progress on the budget.  That strategy worked, she said, and it forced legislators to come to the table.

“Their members were very upset,” she said. “We heard from them loud and clear.”

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Third alternative proposed to fix budget hole – could it break impasse?

By | March 22, 2012 | 0 Comments

Republicans and Democrats have been locked at an impasse in budget negotiations over two main sticking points: Republicans want to skip a pension payment, while Democrats would prefer to push back payments to school districts into the next budget cycle.

Jordan Schrader of The News Tribune has a story today about a proposed third alternative that could potentially break the logjam. The idea would keep $238 million in sales tax revenue collected from local governments in the state’s general fund longer, giving the state a boost in its cash flow every month. Read more about it here.

Although Gov. Chris Gregoire has said she put a third alternative on the table, she’s previously declined to say what it is. Earlier this week, Gregoire said the two ideas put forth by Republicans and Democrats had become so “toxic” that they needed a fresh proposal.

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