Lawmakers start haggling budget, again

OLYMPIA — State lawmakers eased into special session Monday with majority Democrats still divided on what taxes should go up in order to balance the budget.

It’s the same problem that confounded them in the regular session that ended Thursday and forced the extra session the governor wants ended in a week — but could last up to a month.

“We’re getting close,” said House Majority Leader Lynn Kessler, D-Hoquiam. “I don’t know if we can get done in a week but we’ll try.”

Sen. Ed Murray, D-Seattle, thought a week to 10 days should be enough.

“We’ve had movement. We’re closer together on the revenue amount. We’re willing to compromise and I’m sure the House is, too,” he said.

There was no pomp or fanfare Monday as the Senate arrived and reapproved its budget proposal then sent it to the House to get the legislating process formally underway. House Democrats, meanwhile, spent the afternoon talking behind closed doors and House Republicans were told not to come in until today when votes are scheduled.

Legislators are working to fill a $2.8 billion hole in the state budget that runs through June 30, 2011.

House and Senate Democrats have each approved a blend of spending cuts, new taxes and use of reserves, fund transfers and federal dollars to plug the hole. No Republican in either chamber has voted for a budget or tax package put forth by majority Democrats.

Democrats in both chambers do agree on a few tax exemptions they want to end, as well as boosting the cigarette tax and adding sales tax to bottled water.

The sticking point is Senate Democrats’ desire for a hike in the sales tax to bring in $313 million. It’s something the governor and House Democrats oppose.

Gov. Chris Gregoire said Monday she’s developing what she thinks will be a politically palatable sales tax-free formula for netting the same sum of money. It will be come from a variety of “targeted taxes,” though she declined to say which ones.

“I think we can show them there is such a package that will meet their needs in terms of a budget,” Gregoire said Monday.

Until something is crafted, she said, “I don’t think there’s enough votes in the Senate without one (a sales tax) and I don’t think there are enough votes in the House with one.”

No matter what lawmakers wind up approving, they may be doing it all over again in just a few months because another deficit looms in the two-year budget cycle beginning July 1, 2011.

“This just gets us through to January,” Senate Minority Leader Mike Hewitt, R-Walla Walla, said Monday.

As of now, the governor’s budget office predicts the deficit will be in the neighborhood of $2 billion. It could be higher or lower depending on what decisions are made on cuts and taxes and what amount of economic recovery occurs in the state.

“It’s going to be a bigger challenge no matter what we do now,” said Sen. Margarita Prentice, D-Renton, the powerful chairwoman of the Senate Budget Committee. The recession has pushed the state deep into a hole and “there’s not an easy way out of it.”

Republicans acknowledge that the recession choked off consumer spending and dried up the flow of tax revenues into the state. But, they say, the situation might not be as bad had Democrats not spent more than the state collected as the downturn worsened.

For all the talk of cuts, Republicans said Monday, spending is set to rise in the budget now getting negotiated.

“This budget spends about $350 million more in new policy than the budget we passed last year,” Sen. Joe Zarelli, R-Ridgefield, said before the Senate re-voted on its budget. “That math simply doesn’t work for me.”

Senate Majority Leader Lisa Brown, D-Spokane, countered that some of the money covers the increased number of students, prisoners and people receiving state-subsidized human services. Another chunk is for retraining workers.

“It is a necessary budget for the difficult times we’re in and it will be a balanced budget when we get through all of this,” she said.

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