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.

Tags: Budget

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.

Tags: Budget

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

Tags: Budget, health care, pension

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.

Tags: Budget

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.

Tags: Budget, Reform

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.

Tags: Budget, pension

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.

Tags: Budget

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.

Tags: Budget

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.

Tags: Budget, Reform

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.

Tags: Budget