AWB Board of Directors - Budget Conference Call. GOAL: To provide details of the House and Senate budget proposals, shar
AWB Board of Directors - Budget Conference Call GOAL: To provide details of the House and Senate budget proposals, share what they mean for employers and how the debate is playing out in Olympia.
House & Senate Budget Overview: 2015-17 budget General spending Forecasted revenue growth Tax Increases Spending increase Percentage increase Total spending 4 yr budget 15-17 ending fund 15-17 total reserves 4yr budget ending fund 4yr budget total reserves
HB 1106
SB 5007
(Passed 51-46) 32 amendments
(Passed 26-23) 74 amendments
$38.8 billion $2.9 billion $1.5 billion $5.2 billion 15% $79.4 billion $344 million $1.2 billion $4.2 million $1.4 billion
$37.8 billion $2.9 billion Net reduction $4.2 billion 12% $77.7 billion $487 million $1.4 billion $35.8 million $1.5 billion SOURCE: WA POLICY CENTER
Similarities:
4 year balanced budget - Both the House and Senate budgets project to be in compliance with the 4yr balanced budget requirement by narrow margins (House by $4.2 million out of projected $43 billion 17-19 budget; Senate by $35.8 million out of projected $41.4 billion 17-19 budget).
Initiative 1351 – Both budgets fund K-3 classroom size reductions. Both the House and Senate do not fund I-1351 for the remaining class grades. The House proposes HB 2222, though no hearing is scheduled that requires a 2/3 vote to restore classroom sizes to pre-Initiative 1351 levels while the Senate under SB 6088 sends the question back to the voters.
Key Differences:
Education Funding– The House and Senate are not very far apart. Senate is a $17.98 billion and the House is $18.44 billion. The difference of $463 million is mostly on compensation adjustments. Both the House and Senate budgets fund all-day kindergarten and MSOC – Materials, Supplies and Operating Costs enhancements. 2015-17 budget K-3 Class size All Day Kindergarten MSOC Highly Capable Students Other Enhancements K-12 Total Spending
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House YES - $412 million YES - $180 million YES - $741 million NO - $0 YES - $69 million $1.4 billion
Senate YES - $350 million YES - $187 million YES - $741 million YES - $16 million NO - $0 $1.3 billion
Higher Education Tuition Levels - The Higher Ed number for the Senate is $3.52 billion and for the House is $3.48 billion. The House freezes higher education tuition levels for the 2015-17 biennia while the Senate adopts SB 5954 setting tuition at a percentage of the state annual wage.
Taxes - The House budget depends on HB 2224, $1.5 billion in tax increases to balance their budget. The Senate budget does not contain general tax increases.
“Taxation like amputation is the last resort.” Floor speech, Rep. Manweller, April 3, 2015
Revenue Impacts for the Omnibus Revenue Bill – HB 2224 (in millions) Part I II II IV V VI VII VIII IX X
Description B&O Tax Increase to 1.8% Travel Agents Bottled Water Nonresident sales tax 5% capital gains on individuals Prescription drug resellers Extracted Fuel Royalties Mainstreet Fairness 5-tier nexus REET Foreclosure TOTAL REVENUE IMPACT
Collective Bargaining Agreements - The House approves the state employee contracts Governor Inslee agreed to last summer ($384 million in COLAs and $203 million in benefits) while the Senate rejects them. The Senate does provides a $1000 wage increase per state employee and fully funds the home care ($115 million), child care, adult family home and language access provider collective bargaining agreements ($36 million).
Expenditure Limit – The House proposes to repeal the expenditure limit from Initiative 601 under HB 2218 and HB 2219. The Senate has not introduced this aspect into their budget.
Transfers & Fund Shifts – The House budget relies on HB 2223 to transfer funds from the extraordinary revenue gains from the budget stabilization account. This requires a 60% vote. Both the House and Senate transfer funds from a variety of accounts that only require a simple majority vote. The Senate budget also transfers money from the Public Works Assistance Account.
Fund Transfers (to GF-S) Public Works Assistance Account (SENATE ONLY) Tobacco Settlement Account SB 6089 HBE Sustainability Liquor Excise Tax Distribution Treasurer's Service Account
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2013-15 -
2015-17 200.0 51.4 29.0 24.3 20.0
Life Sciences Discovery Fund Balance Criminal Justice Treatment Account Fire Insurance Premium Tax Sharing Centennial Document Preservation and Modernization Account Liquor Revolving Fund SB 5093 Nuclear Education Fund Transfers (to GF-S)
15.9 11.4 9.6 7.6 6.0 (0.1) 375.1
Jobs & Economy – The House budget does not continue expiring tax incentives while the Senate budget has a healthy jobs plan that includes: SB 5665 SB 5698 SB 5827 SSB 5449 SSB 5112 SB 5382 SB 6001 SB 5257 SB 5878 SSB 5324
6.0 6.0
High Tech Research and Development - (72.2) Extends Food Processing - (13.2) Data Center Server Equipment Tax Exemption - (12.5) Creating Court of Tax Appeals - (3.8) Manufacturing Sales Tax Deferral - Invest in WA - (3.2) Aluminum Smelters - (2.7) Definition of Newspaper - (2.1) PUT tax for Log Trucks - (1.8) Nonresident Vessels - (1.6) Aircraft Excise Taxes - (0.6)
Marijuana – The Senate budget relies on $325 million in marijuana revenues.
Governor's concerns: Thursday marked a five corners meeting with the governor and republican and democrat leadership in the House and Senate. OFM has outlined the Governor’s concerns with the budget as follows: K-12 Senate & House Budgets: Special education New teacher mentoring K-12 Senate Budget Only: Teacher salaries Student and graduations support Preschool early childhood education slots Early achievers Revenues: • Carbon pollution. • Capital gains tax Closing tax preferences Other Budget Issues: Worker Safety at Western and Eastern State Hospitals 3|Page
Psychiatrist pay levels Child Protective Services staffing and compliance Health Benefit Exchange Prison capacity Justice Reinvestment Act Hazardous chemical incident prevention Toxics reduction initiative Oil by railLocal government infrastructure
Recent Elway Poll: The public is as divided as the legislature on how to address funding education and balancing the budget. According to the Elway Poll:
48% favored “Increase spending on public education using current revenue, then fund the rest of state government with the money remaining ‐ even if that means further cuts to other programs and services”; 43% favored “Increase spending on public education and avoid further cuts to other programs and services –even if that means raising some taxes.” Majorities of survey respondents favored the Republicans’ idea to divert marijuana taxes away from public health to education. But just as large a majority opposed the GOP plan to reduce the state employee raises negotiated last year. Slight majorities said that the Democrats’ taxes on capital gains and bottled water would be “acceptable.” Respondents split evenly on the Democrats’ plan to raise the Business and Occupation Tax for professional services.
Conclusion: Lawmakers remain optimistic in their abilities to bridge the billion dollar differences in the House and Senate budget before the end of the regular session on April 26. The next week is critical for negotiations on key differences such as state employee collective bargaining agreements, K-12 funding levels and economic development. If an agreement cannot be forged it becomes more difficult to adjourn on time.
