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Monday night, the Senate concurred with House
amendments to
SB 6130 (amending Initiative 960 tax-raising
provisions) and adopted the bill on final passage. The
bill was immediately transmitted to Gov. Gregoire and
she signed the bill this afternoon. This action clears
the path for a simple majority tax vote on tax increases
in the Legislature. And tax discussions have begun in
earnest with
budget
proposals coming from both House and Senate
budget-writers yesterday. Even though the House budget
includes $857 million in new revenue as part of the
solution to the state’s current $2.8 billion budget
problem, it is unclear where that new revenue will come
from. House budget-writers were expected to unveil a
revenue package today; however, it was announced this
afternoon the revenue plan would not be coming today —
with no indication of when it will be released. The
House Democrat caucus apparently still remains split on
a solution. There is growing support for a temporary
sales tax increase; however, many still advocate for a
menu of taxes on “discretionary” items, similar to the
governor’s revenue solution. The tax issue was a topic
of discussion at many of this past weekend’s legislative
town hall meetings and in some areas of the state the
response to a sales tax increase was
less-than-supportive.
In the Senate today, the Senate Ways & Means
Committee began movement on its tax package released
yesterday. The Senate’s “$2.8 billion budget solution”
relies on $918 million in new revenue coming from three
places. Each piece of the revenue pie has been
introduced as a separate bill and each bill (SB 6873, SB
6874 and SB 6875) was heard in Committee today.
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SB 6873 would eliminate a series of tax
loopholes or tax exemptions, raising an expected
$518 million.
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SB 6874 would increase the cigarette tax from
$2.25 per pack to $3.25 per pack, raising an
expected $86 million. The new revenue would go into
a “Basic Health Plan stabilization account.” The tax
would go into effect June 1, 2010. The bill only
makes the appropriation to the stabilization account
for 2011 — meaning the Legislature could use the
money for other purposes beyond that, according to
Committee staff.
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SB 6875 would temporarily increase the state
sales tax by three-tenths of a cent, raising an
estimated $313 million. The sales tax “surcharge”
would be imposed from June 1, 2010 to June 30, 2013,
with revenues being used to maintain funding for
Local Effort Assistance, state-funded all-day
kindergarten and state higher education need grants.
The bill includes a new Working Families Tax Credit,
which would offset the tax increase for low-income
citizens. Like the increase in the tobacco tax in SB
6873, the revenues would be required to fund the
education items listed above through this biennium,
then the revenue would go into the General Fund and
could be used for other purposes.
The House Ways & Means Committee met this afternoon
to take executive action on the House budget proposal (HB
2824) released yesterday. At the time this Update
was being prepared, Committee members were meeting in
their respective party caucuses discussing amendments
and had not yet returned. If tradition holds, they will
remain in caucus for quite some time, then return and
enter into a vigorous debate over a slew of amendments
and will likely continue well into the evening. We’ll
provide details of any education-related amendments in
tomorrow’s Update.
This afternoon, the House Capital Budget Committee
met and took executive action on the House Capital
Construction budget proposal (HB
2836). Following a fairly quick debate and the
adoption of four amendments (none of which were related
to K-12), the Committee adopted the bill, with a vote of
10-4. Of course, given the crush of events yesterday, we
have not yet provided any information on the Capital
Budget. Here are the details:
The current 2009-11 Capital Construction Budget
included $1.84 billion bond-funded expenditures, plus
another $1.43 billion is other funds. The House’s 2010
Supplemental Capital Budget would reduce the current
bond appropriation by $31 million. The reason?
There is a constitutional debt limit of nine percent —
that is, state debt can not exceed a total of nine
percent of state revenues. Because of the possibility of
revenue declines, rising interest rates and the need to
plan for emergencies or unforeseen circumstances, the
2009-11 Capital Budget assumed an unofficial “working
debt limit” of 8.75 percent. The current $1.84 billion
bond-funded appropriations exceed the working debt limit
by over $72 million. To reach the $72 million savings
mark, the House proposal would reduce overall bond
appropriations by $31 million and would direct the
Office of Financial Management to work with state
agencies to achieve $42 million in savings by reducing
allotments or by withholding allotment approval for
projects that have not demonstrated substantial progress
toward contract execution by November 30, 2010. While
the House proposal would reduce state general obligation
bond appropriations by $31 million, the proposal also
includes an increase in almost $300 million in
appropriations.
Major K-12 education details in the House Capital
Budget:
- The allocation to OSPI for the School
Construction Assistance Grant Program would be
reduced by $110 million. This reflects revised
assumptions regarding eligible K-12 public schools
expected to request construction reimbursement for
the remainder of the biennium. This reduction is not
expected to impact any current school district
projects.
- There is a $200 million appropriation for a new
Jobs Act for K-12 Public Schools. This funding would
be provided to create jobs through energy efficiency
improvements in K-12 public schools. School
districts could apply to OSPI for grants for energy
efficiency projects that lead to energy and
operational cost savings. This program is similar to
the job-creation program embodied in
HB 2561, which was adopted earlier this session
by the House, by has had no movement in the Senate.
- $5 million is provided for Distressed
Communities School Grants. OSPI is directed to
develop a competitive grant program for school
districts demonstrating the most need to renovate or
replace major building systems. Grants may not
exceed $500,000. A school district must show a
school facility need that directly affects the
health and safety of students. School districts will
receive priority based on, but not limited to, the
following criteria: (1) The financial resources of
the school district; (2) the inability to pass a
capital bond measure; and (3) the condition of
current facilities and the district's ability to
maintain them.
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