Special session confronts revenue crisis

By Mike Andrew

As The Advocate goes to press, the legislature goes into special session, still hoping to find a solution to the state’s ongoing revenue crisis.
The regular session of the legislature adjourned Friday, April 22. While lawmakers were in session for 103 days, just two days short of the constitutionally mandated maximum, they failed to agree on either an operating or a construction budget.

The challenge was to close a revenue shortfall in the 2012-2013 budget that is projected to be at least $5 billion. Some projections say the shortfall could be as much as $7 billion.

Unlike the federal government, which can and does borrow money to cover budget shortages, the state government is required to balance its budget.

The special session begins Tuesday, April 26, with most budget issues still up for grabs.

The legislature’s task will be more complicated because of Tim Eyman’s I-1053, which reinstated a burdensome 2/3 majority requirement for the legislature to raise taxes.

After I-1053 passed in November, Gov. Christine Gregoire abandoned any attempt to close the budget gap by raising revenues, and presented an all-cuts budget to the legislature.

Some very painful cuts have already been made, with many Democrats voting with Republicans to cut the state’s social spending.

SHB 2021, for example, gets rid of automatic COLA increases in pension payments to the state’s Teachers Plan 1 and Public Employees Plan 1 participants.

More than 108,000 people will see their pensions cut eventually, including more than 90,000 already retired who will lose pension increases immediately.
SHB 2021 passed the senate by a 28-17 vote with 18 Democrats and 10 Republicans in favor. The measure passed the House 52-45 on April 21 and now goes to the governor for her signature.

The Children's Health Insurance Program (Apple Health) and the Disability Lifeline Program are also slated for deep cuts, although they will not be totally eliminated as they were in the governor’s proposed budget.

If the Senate budget proposal is finalized by the special session, more than 16,000 of the 123,000 low-income children now participating in Apple Health will lose their medical coverage.

Cash grants for the disabled under the Disability Lifeline program are likely to disappear, to be replaced by a lower level of housing assistance payments.
The State Food Assistance Program (Basic Food) provides food stamps for low income and disabled people. If the state Senate has its way, some 1 million households would see their benefits reduced by 50%.

This program is also imperiled by federal budget cuts recommended by Rep. Paul Ryan.
Fortunately a federal judge has ordered the state not to reduce food stamps benefits pending the outcome of a lawsuit.

In contrast to the governor’s all-cuts strategy, freshman House members led by Reps. Laurie Jinkins of Tacoma and Chris Reykdal of Tumwater proposed to raise state revenues by closing some tax loopholes.

HB 2078, targets bank interest earnings that are not taxed in Washington and sales taxes that are not paid by out-of-state shoppers. The bill would raise an estimated $143 million for class size reductions in grades K-3 over the next two years.
HB 2102 provides mental health funding by targeting the same sales-tax exemption for out-of-state shoppers. HB 2087 for home-care also targets out-of-state shoppers and includes debt collectors.

None of these bills were acted on in the regular legislative session and may resurface in the special session.

Two bills that will make changes to the state ferry system are deadlocked because of differences between the House and Senate versions, and will also continue into the special session.

HB 1516 — approved April 26 by the House — establishes performance goals for the ferry system and requires ferry management to submit a series of performance reports. The Senate is sitting on that bill.

SB 5742 — approved April 26 by the Senate — would abolish the Marine Employees' Commission, which handles worker-management disputes in the ferry system. The House has now stalled that bill.

The ferry workers’ union, the IBU, is against abolishing the MEC, because workers see the MEC as a relatively fair and non-adversarial venue for settling disputes.
HB 1511, which would have restricted ferry workers’ collective bargaining rights, is considered dead in the water because its companion bill on the Senate side died in committee.

ESB 5566, the so-called “compromise-and-release” workers' compensation bill will also reappear in the special session, because the Senate has declared it "necessary to implement the budget."

The measure would undermine the state’s workers’ compensation system by allowing employers to offer injured workers one-time lump sum payments instead of the “sure and certain relief” that has always been guaranteed to workers by law.

ESB 5566 passed the Senate 34-15 – again with many Democrats voting with Republicans to pass it. It has been held up by the House Labor Committee.
Although I-1053 prevents the legislature from easily raising taxes, the measure does not cover state fees, and a total of 92 fees are slated to be increased if Democratic proposals pass in the special session.

Among them are a 25-cent ferry surcharge which would go to building new ferries, a 60% increase in driver’s license renewal, and a new $20 charge for a driver’s first Washington license plates.

Rep. Bob Hasegawa’s HB 1320, creating a state bank to be called the Washington Investment Trust, is considered dead and will not reappear in the special session.
Also likely to disappear are two bills to privatize state liquor stores.
SB 5942, which is backed by a private group called the Washington Beverage Company, would privatize only the wholesale distribution side of the liquor business.
SB 5933, supported by retail giant Costco, would completely close all state liquor stores.

At her press conference announcing the special session, Gov. Gregoire said the bills “don’t pan out” in terms of replacing state revenue that would be lost by turning liquor sales over to private companies.