Budget plan erases budget deficit without tax increases

OLYMPIA — House Democrats on Tuesday laid out a scheme for erasing the state’s budget deficit without having to hike the sales tax.

As a result, their plan may force cities and counties to do so.

Democrats propose to solve a $1 billion problem by cutting spending, closing tax breaks, hiking fees and delaying payment of $405 million to public schools until the next budget cycle.

They also want to stop sending money to local governments to help pay for salaries of municipal court judges, training of local law enforcement officers and operating of drug task forces in rural counties.

To offset that cut of $82 million, cities and counties throughout Washington would be allowed to boost their local sales tax by a 10th of a penny without voter approval.

Rep. Ross Hunter, D-Medina, chairman of the House Ways and Means Committee, said over the past 20 years local governments have kicked some of the costs of these duties to the state and the state can’t afford to share the tab anymore.

“We’re trying to focus on what the state’s responsibility is,” he said.

Snohomish County Council Chairman Brian Sullivan, a Democrat and former state lawmaker, said it’s too soon to predict how the county will respond.

“We have to know what the whole hit is,” he said. “Losing money for the judges’ salaries would concern me. We are counting the nickels and dimes here as well.”

Snohomish County’s economy is faring better than in most other counties, he said, and that may avert the need for them to consider a higher sales tax.

“Even with the state cuts it is not an insurmountable challenge,” he said.

The House proposal plugs a $500 million hole then creates a $504 million reserve for the budget which runs through mid-2013.

To accomplish that, Democrats cut roughly $400 million in spending, more than half of which comes from health care and human service programs. There is $65 million peeled away from higher education, however, the net loss for colleges is less as Democrats spend $14 million to add slots for engineering, science, technology and math students.

Another $23.8 million is pared from the Department of Corrections of which $15.8 million comes from shortening the length of time convicted criminals are on community supervision, or probation. DOC spokesman Chad Lewis said about 3,700 offenders could be supervised for less time under the change.

There is some new spending for the department including $3.1 million to equip corrections officers with new radios and safety gear and $311,000 to help them buy uniforms made by someone other than inmates. And there is $1 million for reimbursing Snohomish County for costs of the trial of Byron Scherf, who is accused of murdering correctional officer Jayme Biendl in 2011.

The single biggest savings in the Democrats’ proposal comes from delaying $405 million in payments to public schools until the next budget cycle begins in July 2013. Of that total, $330 million is for apportionment and $75 million for levy equalization.

Given there had been talk of slashing levy dollars, Tuesday’s news sounded good to some educators.

“A delay is better than not getting the money,” said Marysville Schools Superintendent Larry Nyland.

House Democrats also count on $54 million in fund transfers and collecting $18.1 million from the elimination of a tax break out-of-state banks can claim on interest earned on first mortgages.

Hunter called the spending plan a workable solution that “really doesn’t damage the state over the long run but gets us through the worst economic downturn since World War II.”

Republicans disagreed, saying postponing payments to public schools means lawmakers are certain to face another shortfall in the next budget, she said.

Rep. Barbara Bailey, R-Oak Harbor, who serves on the Ways and Means Committee, called the maneuvers “the type of gimmicks the public has grown tired of and led to unsustainable budgets.”

The House budget doesn’t contain the most disliked elements in the budget put forth in November by Gov. Chris Gregoire when the deficit hovered around $2 billion.

School days are not reduced, levy equalization payments are not lowered, prisoners are not released early and a subsidized health insurance program for poor families is not eliminated. Gregoire suggested all of those things in her budget.

And the governor’s idea of putting a half-cent sales tax increase on the ballot isn’t figured into the mix of the House plan, Hunter said. Instead, he said, revenue is its own topic House members can debate in the coming days.

Bailey, who said she dislikes the proposed cuts to community supervision, expressed concern the door is not closed to putting a tax measure on the ballot.

On the positive side, she said she appreciated that Hunter’s plan does not release prisoners early and continues to fund pension obligations.

The House could vote on the budget by the end of the week. Senate Democrats are expected to release their version next week.

Budget writers and caucus leadership in both chambers plus the governor will then set about negotiating a compromise before March 8, the last scheduled day of the legislative session.

Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com.

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Budget proposals can be read online at www.leap.leg.wa.gov.