Positive revenue forecast may help avert state shutdown

OLYMPIA — Thanks to an improving Washington economy, legislative leaders sounded confident Tuesday an agreement on a state budget will be reached in plenty of time to avert a government shutdown.

Chief economist Steve Lerch ignited their optimism Tuesday morning with a forecast showing tax collections outpacing previous predictions for both the two-year budget expiring June 30 and the new one starting up the next day.

Overall, collections will be $231 million higher than Lerch forecast in March — $110 million for the current budget plus another $121 million for the next.

On top of those new dollars, lawmakers learned Tuesday the state will spend $90 million less than expected on public services because of a drop in demand for them.

The bump in revenues coupled with the savings may enable the House and Senate to strike a deal to erase a projected billion-dollar budget shortfall, satisfy a Supreme Court order to beef up public school funding, establish an adequate reserve and resolve several policy differences.

“It’s over $300 million of good news that we’ll have today which definitely closes the gap,” said David Schumacher, budget director for Gov. Jay Inslee on Tuesday. “Shake hands tonight? I would be surprised that we can get that far tonight. Hopefully by the end of the week there’ll be a budget deal.”

House and Senate budget writers echoed the sentiment.

“I expect us to negotiate a budget relatively soon,” said Rep. Ross Hunter, D-Medina, chairman of the House Appropriations Committee and the chamber’s lead budget writer.

His Senate counterpart, Republican Sen. Andy Hill of Redmond said Tuesday’s reports “should break the final logjams.”

But preparations will continue for a potential powering down of state government if no budget is in place by July 1 when the new fiscal year begins. Layoff notices could start going out Monday to some of the roughly 59,000 state workers, he said

“We’ll continue along until there’s a deal but I fully expect there will be a deal and at some point we’ll be able to stop,” Schumacher said of the contingency planning.

Lawmakers are entering the second week of their second special session still searching for the political sweet spot to end the discord between the Democrat-controlled House and the Majority Coalition Caucus in the Senate comprised of 23 Republicans and two Democrats.

On the budget, they’ve labored on how to erase a projected $1 billion shortfall and at the same time inject as much as $1 billion more into schools in response to the Supreme Court rulling in 2012 called the McCleary decision which found the Legislature failing to adequately fund public education.

From the outset, House Democrats have pushed for new streams of tax dollars by ending exemptions, extending temporary taxes and adopting new ones.

What began as a $1.3 billion revenue package is down to two items to raise roughly $135 million — revising tax laws governing the telecommunications industry and ending a long-standing exemption allowing out-of-state residents to skip paying sales tax if the state they live in, like Oregon, doesn’t have a sales tax.

In the Senate, the Republican-run majority has insisted on reforms before revenue. They had a laundry list in excess of 30 bills entering the first extra session. It’s now down to two — an omnibus package of reforms for public schools and an expansion of eligibility for structured settlements under the worker’s compensation program.

On Tuesday, the leaders of the Senate coalition said they’ll back off the reforms if Democrats back off the revenue.

“We’ll put those reforms off the table for now and wrap this thing up,” said Senate Majority Leader Rodney Tom, D-Medina, who joined the Republicans last year to form the coalition caucus. “We’ll continue those discussions next year.”

Last week, the Senate did approve an estate tax bill considered a legislative fix in response to a Supreme Court ruling. The decision saved $160 million for the budget plan lawmakers are currently trying to reach agreement on.

Coalition members figure that’s all they need to do because the new forecasts provide enough money to cover what House Democrats hoped to raise with their remaining tax bills.

But that’s a point of contention as Democrats argue money raised from ending tax exemptions is needed for education.

“This is good news, of course,” House Majority Leader Pat Sullivan, D-Covington said of the forecasts. “While it may move us closer to a short-term budget agreement, it doesn’t come anywhere near meeting our obligation to fully fund basic education under the McCleary decision.”

Sen. Jim Hargrove, D-Hoquiam, the lead budget writer for the Senate minority, sounded ready Tuesday to end the conversation on taxes if it enables a speedy finish.

“I want to get done,” he said. “It’s been a grueling session. I think the citizens want us to get done, too, so I think it’s time to wrap it up.”

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

More in Local News

Suspect sought in two Everett bank robberies

He’s described as 5-foot-10 to 6-foot-1, with dark hair and a goatee, and may have a neck tattoo.

Two missing men found, one alive and one dead

The man found alive was found in an apartment across the hallway and taken to a hospital.

Jogger unharmed after fending off attacker in Edmonds

Police released video of a man they believe to be the attacker.

Darrington School Board dealing with upheavals

The crux of the controversy seems to be the superintendent’s job.

Alaska Airlines has selected destinations for new service from Paine Field. (Alaska Airlines)
Alaska Airlines will fly from Everett to 8 West Coast cities

Two destinations that didn’t make the list were Spokane and Hawaii.

Three teens arrested for Marysville school vandalism

Windows were broken and a trash bin was on fire Sunday night at a Marysville middle school.

Langley mayor threatens newspaper with lawsuit

The mayor threatened to sue the paper over claims he withheld public records disclosure information.

Divers called to recover body after train hits pedestrian

The accident was reported by a BNSF crew near Woods Creek in Monroe.

FILE - This Tuesday, May 30, 2017 file photo, former Washington Gov. John Spellman, second from left, leaves a memorial service in Renton, Wash. Spellman, the last Republican governor elected in Washington, has died at age 91. Spellman’s son, Seattle attorney David Spellman, confirmed his death Tuesday, Jan. 16, 2018. (AP Photo/Ted S. Warren,File)
John Spellman was last GOP governor of Washingon

He had spent recent weeks “being very disappointed with the Cougs and the Huskies,” his son said.

Most Read