Washington Gov. Jay Inslee (right) greets Rep. June Robinson, D-Everett, in the wings of the House chamber at the Capitol in Olympia after the Legislature approved a new two-year state operating budget. (AP Photo/Ted S. Warren)

Washington Gov. Jay Inslee (right) greets Rep. June Robinson, D-Everett, in the wings of the House chamber at the Capitol in Olympia after the Legislature approved a new two-year state operating budget. (AP Photo/Ted S. Warren)

‘Bipartisan’ state budget averts partial government shutdown

Earlier: In historic change, state property tax climbing to fund schools

OLYMPIA — Gov. Jay Inslee signed a new two-year state budget late Friday night, ensuring no state agency is closed or state worker laid off when the new fiscal year begins Saturday.

He signed the $43.7 billion spending plan at 11:15 p.m., surrounded by House and Senate members from each party involved in the intense negotiations to produce the product.

It will put another $1.8 billion into public elementary and secondary schools to comply with the demands of the Supreme Court in the McCleary case. It also will provide state workers and teachers with pay hikes, increase funding for mental health programs, launch a new paid family leave program and create a new department focused on children.

On the other side of the balance sheet, lawmakers agreed to the largest-single increase in the state’s property tax in Washington history. More money will come from collecting sales taxes on bottled water and online purchases and through tapping reserves.

“Tonight, we are signing a truly historic budget,” Inslee said before affixing his signature to the 600-plus-page bill. “I believe this budget at long last will meet our constitutional obligation to fully and fairly fund public education. It is a great reflection of what people can do on a bipartisan basis.”

The signing marked the culmination of a months-long budget battle that had pushed Washington to the brink of its first-ever government shutdown.

The 616-page bill reached the governor around dinner time after passing in the House on a 70-23 vote and in the Senate by a 39-10 margin.

“It was a long and arduous and difficult process but in the end we have a budget I am very proud of,” Rep. June Robinson, D-Everett, said in the House floor debate. She was one of a handful of lawmakers in budget negotiations.

Seven Snohomish County lawmakers voted against the bill: Democratic Sens. Marko Liias of Mukilteo, John McCoy of Tulalip, Guy Palumbo of Maltby and Maralyn Chase of Edmonds, Republican Reps. John Koster of Arlington and Mark Harmsworth of Mill Creek and Rep. Derek Stanford of Bothell

Koster said the level of spending is unsustainable and he worried what might happen if there is a downward tick in the economy.

“It doesn’t take much,” he said. “Who knows what gets cut? It won’t be education.”

Friday’s votes came on the last leg of a marathon that began in January with a 105-day 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, conflict on the questions of taxes and spending surfaced early.

They differed on how much more money to put into schools and where it would come from. When conversations turned to the budget, House Democrats and Senate Republicans could not agree on the level of spending nor the source of the money to make it balance.

House Democrats pressed for $3 billion in new revenue from taxes on capital gains and carbon emissions, a boost in the business tax rate and a reform of the real estate excise tax. They wanted the money not only for schools but also for additional investments in an array of health care, social service and mental health programs.

Senate Republicans countered with an increase in the state property tax of $1.80 per $1,000 of assessed valuation. All those other programs could be handled with the growth in tax receipts generated by the economy, they maintained.

The two sides struck a deal early Wednesday, the eighth day of the third special session.

To pay for the increased spending, the budget counts on $1.6 billion from hiking the state property tax to $2.70 per $1,000 of assessed valuation, an 81-cent increase from the current level. It also counts on $456 million in revenue from a new tax on online purchases made through eBay and similar firms, and ending the sales-tax exemption on bottled water and extracted fuels, which affects oil companies.

Lawmakers also use $898 million of the state’s reserves and a transfer of $254 million from the Public Works Assistance Account to balance the budget.

The actual budget document didn’t become public until early Friday and received no public hearing before lawmakers voted.

“It’s ridiculous to get this far down the road (to a shutdown) to get people to sit down,” said Koster, who is in his second stint in the state Legislature. “In the end we’ve got to get this done. It’s governing. That’s our job.”

Rep. Mike Sells, D-Everett, said lawmakers couldn’t get Republican senators to the table for serious talks until recently. He said he thought concern that they might be blamed for a shut down of agencies motivated them.

Sells is a former labor official with plenty of experience with difficult negotiations. House Democrats conceded on many points, including a larger property tax increase than desired.

“When you’ve got a government to keep running, at some point you have got to cut bait,” he said.

What transpired the last six months, he said, isn’t totally unexpected given the composition of the Legislature.

“I don’t think it’s anybody’s fault,” he said. “We are a very true reflection of the people of this state.”

The budget will put an additional $1.8 billion into public schools as part of a comprehensive plan to satisfy a state Supreme Court mandate on education funding.

Justices ruled in 2012 that the state system of funding public schools was unconstitutional. In what is known as the McCleary case, they made clear the state needed to provide ample funding from a reliable and sustainable source and to ensure school districts no longer rely on local property tax levies to pay employee salaries and other basic education expenses.

Most of those new education dollars will cover the portion of teacher salaries that school districts are now paying.

The proposed budget also includes $618 million to pay for new state worker contracts and $75 million for higher education, two-thirds of which will go to provide financial aid to nearly 900 more college students.

There’s also $102 million to improve Washington’s mental health system. Some of the money will be used to make changes at Western State Hospital which are necessary to avoid a cutoff of federal funds to the psychiatric hospital.

Another $26.7 million is provided for crisis centers and community long-term inpatient beds, and $17.7 million is provided to increase the number of beds available in community treatment settings for patients discharged from state psychiatric hospitals.

Under this budget, a new Department of Children, Youth and Families will be created, combining the Department of Early Learning and the Children’s Administration, a division of the Department of Social and Health Services.

There’s $25.1 million to expand the Early Childhood Education and Assistance Program by 1,800 slots, as well as money to increase cash assistance grants to needy families and fund services for the homeless.

Overall, the $43.7 billion in spending in the new budget is $5.2 billion more than the one that ended Friday.

Full details of the budget can be found online at www.leap.leg.wa.gov or fiscal.wa.gov.

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

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