The $33.6 billion operating budget was the key item among more than a dozen bills signed by Inslee, just a day after the Legislature adjourned for the year after two overtime legislative sessions.
"We've done some good things in tough times, and I'm glad we found compromise so that the work of the state of Washington will continue," Inslee said before signing the budget.
His signature came just hours before the end of the current budget cycle. Thousands of state workers had been warned last week that they could face temporary layoffs because much of state government would need to shut down if a budget plan wasn't in place by midnight Sunday.
It's been more than 20 years since a governor signed a budget this late in the process. Lawmakers were supposed to complete the spending plan in April but got delayed by a series of disputes over tax, spending and policy proposals.
The final operating budget added $1 billion to the state's education system and provided enough money to universities so that tuition would remain at current levels.
"We really are prioritizing education over other parts of government," said Republican Sen. Andy Hill of Redmond, who was the chief budget negotiator in the Senate.
A year ago, the Washington Supreme Court ruled in what is known as the McCleary case that the state is not fulfilling its constitutional duty to pay for basic education and is relying too much on school districts to raise extra dollars through local levies. The justices want to see the Legislature pay for previously adopted education reforms and proof of yearly progress toward completing the work by 2018.
Inslee and other lawmakers noted that the money put toward education in this budget is only a down payment on that obligation.
"We have long-term funding challenges for education, and I hope we will address those in a more systematic way in the years to come," Inslee said.
The new budget, which runs through mid-2015, didn't include much of the new revenue options initially proposed by Inslee -- he had sought to limit or close a variety of tax breaks -- but it did save or raise some money by making changes in estate and phone taxes, largely in response to court rulings.
The budget includes some cuts, including another suspension of voter-approved cost-of-living increases for school employees, saving $320 million. Budget writers also booked $30 million in savings from the implementation of lean management practices.
About $500 million of the budget is funded by a variety of transfers, with the largest chunk coming from the state's public works assistance account that helps support local projects -- a shift that irked local government leaders.
The plan also creates or extends some tax breaks, benefiting the beekeeper industry, nonprofit gun clubs who purchase clay targets, dance venues and renewable energy. Those tax breaks were among the bills signed by Inslee on Sunday. Also signed was a measure to start a long-term effort to help manage water in the Yakima River Basin.
House Speaker Frank Chopp, D-Seattle, said he was most proud of the money put toward education, as well as a Medicaid expansion under President Barack Obama's health care law.
"This budget means so much to so many people's lives," Chopp said after the bill signing.
Inslee vetoed more than a dozen sections of the budget, including a handful of studies or reports from various agencies for which no funding existed, including the study of a the long-term effectiveness of a chemical dependency treatment program at the Department of Social and Health Services.
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