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Senate Majority Passes Budget That Budges, Just a Bit — Holds Firm on Reforms

Some New Taxes May Come in Follow-Up Bills, But All Depends on Dealmaking With House – Rhetoric Runs Wild

Scene in the Senate Saturday as state Sen. Andy Hill, R-Redmond, makes a pitch for the Senate Majority Coalition's new budget plan.

Scene on the Senate floor Saturday.

See also: Senate Passes Reform Bills, Makes Negotiating Position Clear

OLYMPIA, June 9.—It was the Senate’s turn Saturday to advance its latest budget proposal, responding to a split-it-down-the-middle offer from House Democrats with a plan that – at least on first glance – doesn’t seem to have changed much. But the Republican-leaning Senate Majority Coalition seems to be signaling its willingness to accept some new taxes, if the House Dems are willing to accept sweeping government reforms. 

The Senate’s new $33.4 billion budget bill passed 25-23 after a wild debate Saturday afternoon. The budget itself still has as its first principle no new taxes. But in a move toward compromise the Senate promises more bills to come, and some of them deal with that most taxing three-letter word. What makes it all complicated is that in the unusual and somewhat messy situation created by the House Democrats’ bold move last week, to ditch the usual back-room negotiations and take the dickering public, Senate leaders have decided to play the same game.

They’re talking about passing separate bills that enact a handful of tax hikes – some $300 million worth. But they expect the House to deal. They’re saying they are going to hold back until they get what they want – big-picture reform measures on K-12 education, workers’ comp, state-employee health benefits, and sustainable spending practices in the future.

“We will not be passing these ‘trailer bills’ off this floor until we get the reforms we’ve been asking for,” said state Sen. Andy Hill, R-Redmond. “And in the simplest way, I’m all for putting more money and new money into the system, but I am not going to put it into the broken system that exists now. We need to fix that system.”

So exactly how big and how much movement toward a budget deal is occurring right now at the statehouse is a bit hard to say, and it appears there are plenty more public volleys to come as the House and Senate come ever-closer to a session-ending deal. In broad strokes it looks like the two chambers are about $200 million apart, if the Senate tax bills are included, but the gulf looks bigger when you begin comparing details. And that might be the simplest way to way to explain the current chaotic state of affairs at the Capitol, where the traditional way of doing business has been upended in recent days. Normally House and Senate each pass a budget and then their negotiators disappear into the conference room, emerging to express unspecified dismay or a vaguely encouraging statement, until finally the team captains emerge with a deal. Not so this time.

By announcing an offer Wednesday that appeared a big move toward compromise, House Democrats threw down the gauntlet and essentially challenged the Senate to do the dealing in public. And what might be seen as a conciliatory gesture might also be seen as an effort to prove one side is more interested in compromise than the other. The result is to force the nittiest and grittiest of debates into public view, allowing the rhetoric to roar and showing how complicated budget-making can be, even in a year when the state has $2 billion more to spend than it did the last time it wrote a two-year budget. “Frankly I would rather be doing this behind closed doors,” Hill said.

Senate Contemplates Three Tax Bills

Ways and Means Chair Andy Hill, R-Redmond, makes a pitch for Senate's new spending plan.

Ways and Means Chair Andy Hill, R-Redmond, makes a pitch for Senate’s new spending plan.

Both chambers passed budget bills in April that Gov. Jay Inslee accurately termed “light years apart.” The Senate wanted no new taxes, the House wanted more than $1.3 billion. Negotiators, as usual, went behind closed doors. But there were few noticeable signs of activity until the House Democrats went public with their new plan last week. Democrats appeared to be offering a unilateral compromise, lopping about $800 million from their proposed spending, and cutting their proposals for tax increases by a roughly equal amount. The public move wasn’t the only unusual thing about it. Instead of putting all the spending in one bill and all the taxes in one or more separate bills, the Democrats placed some of their education spending in a tax bill — essentially making a portion of their education spending contingent on the passage of a tax measure.

Most of the spending is contained in the $33.6 billion House budget bill, HB 1057. But there is also a separate bill that raises roughly $200 million by whacking tax exemptions, HB 2036, and which earmarks that money for education. When the two bills are considered together, the House would provide nearly $900 million to implement the state Supreme Court’s recent McCleary decision, which held that the state isn’t spending enough money on basic education. And with that tax-exemption bill and a series of other measures, some of them counted in the budget bill and some of them not, the House is proposing a little over a half-billion in new taxes.

So now the Senate Majority Caucus is configuring its counter-offer in sort of the same way. It has a $33.4 billion base budget that doesn’t raise taxes and allocates $1 billion for basic education – no separate bill is required. But it is contemplating the passage of three other bills that do raise taxes and would provide more money for non-education spending. Hill said Saturday that the Senate is prepared to embrace an estate-tax measure, somewhat revised from a measure passed by the Senate Ways and Means Committee last week, and a bill that revises telecommunications tax policy. A third measure appears to embrace a proposal that emerged from the House last week that would make it more difficult for Oregon residents to obtain an exemption from the state sales tax, by requiring them to apply to the Department of Revenue for refunds, rather than simply flashing a driver’s license at the cash register. All told the three tax measures would raise a bit over $300 million, and all, at least in general concept, have been embraced by the House.

So far, so good. But there are plenty of differences in the way the two chambers have constructed their budgets. Each uses budgeting techniques the other calls questionable. Democrats say they are interested in compromise while the Republicans are ready to fling the state off a fiscal cliff. And Republicans say the House move toward compromise wasn’t much of a compromise at all, because its plan now drains $394 million from the state’s Public Works Assistance Account – snatching money that is used for loans to cities, counties and other local governments. In the most memorable line of the day, Hill complained that the House proposal relies on “unicorn money” – meaning, of course, that it comes from the land of make-believe.

Accusations of Hostage-Taking

State Sen. Michael Baumgartner, R-Spokane, hints at "outside considerations" that delayed the start of this year's special session.

State Sen. Michael Baumgartner, R-Spokane, hints at “outside political considerations” that delayed the start of this year’s special session.

Arguments in the Senate Saturday demonstrated just how complicated things can get, because of the odd way both proposals are configured. Democrats complained that the Republicans are refusing to consider even modest tax increases – despite the fact that the Senate Majority Caucus’ “trailer bills” would provide hundreds of millions of dollars of new revenue. The Majority Coalition has “traded in a pragmatic attitude for a rather religious one, no new taxes, not now, not ever,” said state Sen. Adam Kline, D-Seattle.

On the other side, because a portion of the House proposal for K-12 education is tied directly to tax increases, members of the Majority Caucus argue that the other team is holding education hostage for taxes. “Ours is a fund-education-first budget, and theirs is a fund-education-last budget,” said state Sen. Don Benton, R-Vancouver.

Senate Majority Leader Rodney Tom, D-Medina, echoed the idea: “Our children’s education shouldn’t be held hostage to tax bills that may or may not have the votes to pass, just so that other areas of government can grow.”

Senate Democratic Leader Ed Murray, D-Seattle, takes umbrage at what he calls a "personal attack," and accuses the Majority Caucus of setting the stage for a government shutdown.

Senate Democratic Leader Ed Murray, D-Seattle, takes umbrage at what he calls a “personal attack,” and accuses the Majority Caucus of setting the stage for a government shutdown.

But those were really among the milder comments heard in the Senate Saturday. For instance, Sen. Michael Baumgartner, R-Spokane, said he hoped there were not “outside political considerations” that led Inslee, a Democrat, to call a two-week break in lawmaking last month before reconvening lawmakers in special session. Inslee’s move delayed resumption of the budget debate, but also allowed lawmakers to raise money for political campaigns. Sitting legislators are prohibited from raising money while the Legislature is in session.

Immediately Democrats took umbrage, seeing it as a veiled reference to the fact that Senate Democratic Leader Ed Murray, used the break to raise money for his Seattle mayoral campaign. Murray himself declared that “in my 18 years in the Senate I have never heard a more personal attack on the floor.”

Yet then Murray made a rather motive-impugning accusation of his own, declaring that the other team was engaging in a deliberate scheme to force government into a shutdown. “What we heard was, ‘we’re not going to do a budget, we’re not going to fulfill our constitutional obligation, unless we get reform bills.’ That’s called taking hostages. I think it’s immoral. We have an obligation under the constitution to pass a budget and to pass the bills necessary to implement that budget. And year after year, we’ve seen this hostage-taking technique grow and grow. And obviously it has one goal in mind, and that’s to bring us to July 1st and damage the people of this state.”  

Murray was referring to the only real hard-and-fast deadline the Legislature faces. Although the current special session is set to end Tuesday, the 30th day since it began on May 13, Inslee has already promised to call lawmakers back into session the next day if they fail to reach agreement. But if the solons can’t find a way to settle their differences by June 30 and pass a budget, state agencies technically will be unable to spend money when the 2013-15 biennium begins the following day, and government functions will be forced into shutdown mode.

Reforms the Big Issue

At a media availability following the debate, Senate Republican Leader Mark Schoesler, R-Ritzville, second from left, says the reform bills are worth the argument. He is flanked by Sen. Andy Hill, R-Redmond, Senate Majority Leader Rodney Tom, D-Medina, and Sen. Jon Braun, R-Centralia.

At a media availability following the debate, Senate Republican Leader Mark Schoesler, R-Ritzville, second from left, says the reform bills are worth the argument. He is flanked by Sen. Andy Hill, R-Redmond, Senate Majority Leader Rodney Tom, D-Medina, and Sen. Jon Braun, R-Centralia.

Senate Majority Caucus leaders said Saturday their reform bills are worth the argument. The Senate this year passed some 30-odd measures that aim to reshape state government, but while many passed with broad support from both parties, they have gone nowhere in the House. The common perception is that House Democratic leaders have blocked those as part of an end-of-session dealmaking strategy. But at a news conference Wednesday, House Majority Leader Pat Sullivan suggested that lawmakers might form a task force and study them after the session is over.

Senate Republican Leader Mark Schoesler, R-Ritzville, said the Senate majority coalition remains firm: The reform bills have to pass before the coalition will think about taxes. A task force? Forget it, he said. “That is not the solution the public is looking for.”