Barely in time, state budget signed; gas-tax increase passed

OLYMPIA — Gov. Jay Inslee signed a new two-year state budget a few minutes before midnight Tuesday, ensuring no state agency is closed or state worker laid off when the new fiscal year begins Wednesday.

He signed the $38.2 billion budget surrounded by House and Senate members from both parties involved in the intense negotiations that produced the final product.

It will put another $1.3 billion into public elementary and secondary schools to comply with the demands of the Supreme Court in the McCleary case. And it will provide state workers and teachers with pay hikes, cut tuition for college students and increase funding for state parks, mental health programs, early learning and human services.

“Quite frankly, this is a darn good budget for the people of the state of Washington,” he said before affixing his signature to the 500-plus-page document at 11:39 p.m. “It’s forward-thinking, it’s responsible and it’s fair.

“It’s taken a long time to get here, but the final result is a budget that does respond to the fundamental needs of the people of our state,” he said. “This budget really is an amalgam of ideas that represents the totality of our state.”

With a new budget in place, state agencies on Wednesday begin the process of rescinding temporary layoff notices sent to workers and assuring vendors that payments will be made.

Before acting on the operating budget, Inslee signed the $3.9 billion capital construction budget. It too had to be in place before midnight to avoid any work stoppage.

The House passed that budget on a 96-2 vote with Rep. Elizabeth Scott, R-Monroe, casting one of the dissenting votes. The Senate approved it on a 44-1 vote.

It will provide up to $7 million to Marysville School District to replace the cafeteria at Marysville Pilchuck High School where a deadly shooting occurred in October.

Washington State University would receive $54.6 million to construct a future home for the University Center consortium it manages at Everett Community College. The proposed four-story structure would be built in the parking lot of the College Plaza shopping center that is owned by the community college.

Also included is $500,000 to replace turf at Kasch Park in Everett, $300,000 for Stanwood to study possible sites for relocating its city campus, $592,000 to Skate Darrington for development of a skate park, and $250,000 to help repair the roof on the Edmonds Center for the Arts.

The fate of a 16-year plan of transportation improvements, meanwhile, was unclear Wednesday.

Both the House and Senate have passed bills to raise the state’s gas tax by 11.9 cents a gallon to pay for the $16 billion package. But separate bills that spell out how the money will be spent and allow the sale of bonds to finance construction had not been approved by both chambers.

The package would spend about $8.8 billion on new projects and $602 million for Washington State Ferries, a portion of which a portion would go to build a new 144-car vessel and a new ferry terminal in Mukilteo. There is roughly $670 million allotted for road, transit and ferry projects in Snohomish County.

Lawmakers also labored on what to do with a bill to suspend Initiative 1351 requiring smaller class sizes and another dealing with high school assessments supporters say is needed to help 2,000 seniors receive diplomas.

Both passed in the House and were stalled in the Senate.

Tuesday’s tumult came on the last leg of a marathon that began in January with a regular session, continued through two month-long extra sessions, and now into a third extra session.

With power in the Legislature divided between Democrats in the House and Republicans in the Senate, conflicts erupted early.

The most significant was on the budget, where House Democrats and Senate Republicans could not agree on the level of spending and the source of the money to make it balance.

House Democrats pressed for new taxes to restore social service programs to their pre-recession level. Senate Republicans resisted, saying the state could amply fund those programs with existing resources.

The two chambers reached a compromise early Saturday and on Monday it passed by overwhelming margins in the House and Senate.

This two-year budget signed by Inslee spends $38.2 billion on government operations and public schools which is $4.4 billion more than the budget that expired Tuesday.

It puts another $1.3 billion into public elementary and secondary schools to comply with the ruling of the Supreme Court in the McCleary case. The funds will go to expand all-day kindergarten statewide, reduce class sizes in grades K-3 and pick up most of the cost for materials, supplies and operating expenses of schools.

Thousands of state workers will receive a 4.8 percent pay raise spread over the next two years in this budget.

Nearly 80,000 teachers will receive a 3 percent cost of living adjustment — 1.8 percent increase this fall and 1.2 percent next year — which is their first state-funded COLA in six years. Also teachers will receive a temporary 1.8 percent salary bump spread over the next two years that, like a bonus payment, will disappear on Aug. 31, 2017.

There’s also increased funding for early learning and child care programs, state parks, mental health programs, and human services.

And an estimated 200,000 college students will pay less tuition. It provides for a cut of 5 percent at community and technical colleges, 15 percent at the University of Washington and Washington State University, and 20 percent at the four-year regional universities.

Sen. Barbara Bailey, R-Oak Harbor, championed the reduction as chairwoman of the Senate Higher Education Committee.

“Quite frankly, I’m ecstatic. It is exactly what we needed and what we wanted for middle class families,” she said. “This will lower costs and it will mean less debt for college students.”

Overall, the state will spend $4.4 billion more in the next budget than the past. Lawmakers are banking on the recovering economy to generate $3.2 billion of that sum through increased collections of existing taxes and fees and a growing recreational marijuana industry.

To make ends meet, lawmakers also use some reserves and assume $178 million in transfers from other government accounts into the general fund. Among them is a shift of $73 million out of the capital budget from an account that provides loans to local governments for public works projects.

There are no new taxes. However, there is roughly $185 million in new revenue raised by eliminating four tax preferences that will result in some businesses paying higher taxes.

Standing in the wings Tuesday, Sen. Steve Hobbs, D-Lake Stevens, said he didn’t expect the Legislature to take this long to settle its budget.

In early April, after the House and Senate had each passed their initial budget proposals he predicted “a brief period of each side beating on its chest and telling the whole world their budget is the best” before sitting down to talk.

“The chest thumping took a little longer than I expected,” he joked Tuesday.

“The whole role of a democratically elected Legislature is you have to represent your district,” he said. “Those on the extreme left and the extreme right have to represent their districts. That means you can’t cave in on the first offer.”

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