WASHINGTON STATE

Washington State House Democrats

HOUSE DEMOCRATS

Session update from Ross

Session Update

domeAs always, thank you for allowing me to serve you in the Legislature. It’s an honor and a privilege. This year the “privilege” part got a little weak towards the end of 6 months in Olympia, but the we finally got a budget done.

It’s a budget I’m pleased with, mostly. This newsletter has a number of sections – I’ve included the top couple of paragraphs in this email, with the remainder of the stories on my web site so you don’t have to scroll through all my stuff to get to the juicy bits.

I started out this session saying that there were three things that had to get done:

  1. Balance the budget over both 2 and 4 years. We have the strongest balanced budget law in the nation. This forces us to make decisions and compromise, unlike the behavior in the other Washington where they have not had a budget at all in 4 years, and haven’t had a balanced one since the Clinton administration.
  2. Comply with our constitutional requirement to amply fund public education as laid out in the McCleary decision from the Supreme Court.
  3. Do a responsible implementation of the Affordable Care Act (Obamacare,) providing healthcare for almost 300,000 additional Washingtonians at federal expense and setting up the Healthcare Exchanges, allowing low-income working people to purchase insurance in a consolidated way, with federal tax credits that limit the cost to 4% of income.

We were able to do all three, though it took us until 3 days from the day we would have started to shut down state government. I am not happy about this, and hope that it does not set a precedent for future negotiations.

We did not get a transportation package done, despite the entire business and labor community pushing us to do so. The House passed a package (that I have some concerns about – more later) over to the Senate, but the Senate never took it up, nor did they propose a package on their own.

Budget

BudgetCoins700x350We passed an operating budget with broad bipartisan support. We had over 80 votes in the House, something I have never seen in my decade in the Legislature. The Senate vote was equally lopsided. It took us some time to come to a compromise that worked for both sides. The budget we finally passed is very similar to the one the House proposed during the regular session, but with significantly different revenue assumptions.

We plan to spend about $33,491 million ($33.4 billion) in the 2013-15 budget. Tax revenues in that period are expected to be $33,147 million, a little bit less than the spending plan. How does this work?

  • We start out with some money in the bank – $95 million.
  • We take $308 million off the top and put it in the rainy day fund, something we call the “Budget Stabilization Account” or BSA.
  • We re-purpose $355 million that would have been spent in the capital budget, paying for curbs, sewers, and other local construction projects around the state.
  • We use $165 million in “other funds,” mostly money that would have been spent on environmental cleanups.
  • Tax changes accounted for about $70-80 million in new funds. This is a complicated mix of changes, including
    • Repairing the estate tax, which a court decision made only apply to single people, with married couples exempt.
    • Updating telecom taxes to level the playing field between cellular, VOIP and traditional telecom providers. The bill took us three years to write and had the support of the entire industry, including those who would lose existing tax exemptions.
    • Establishing a diversion of premium taxes on new healthcare plans purchased through the new healthcare Exchange to support its operation.

This mix of changes brings in about $394 million of resources, for a total resource line of $33,539 million. This is larger than the expenditure plan, balancing the budget. We leave $578 million in the rainy day fund and have a working reserve of just $48 million. (This went up $72 million in the August revenue forecast, where we brought in more than we had expected.)

Instead of re-purposing money from the capital budget I would have preferred to close a number of tax exemptions that have outlived their usefulness. The capital expenditures we delayed are needed – cities and counties need to do work on their infrastructure and this is a key part of how we typically pay for it.

Our 4-year budget picture is also balanced, based on the assumptions we use to do forecasting. More later, after I crow a bit about what we were able to do.

With this, we are able to

Kids Getting on School Bus

  • Add over $1 billion in new money to K12 education, doubling the number of low-income children who will have access to all-day kindergarten, lowering class sizes in Kindergarten and first grade for thousands of low-income kids who need it most, and fixing some of the structural problems around transportation and materials and supplies funding that the court identified.
  • Significantly increase our funding for early learning, adding thousands of new slots in our program for 3 and 4 year olds, and stabilizing our low-income childcare program, a key element of our strategy to help improve graduation rates for low-income kids.
  • Provide enough funds that for the first time in a very long time our colleges and universities do not have to raise tuition. We also create hundreds of new computer science and engineering graduates at UW, WSU and WWU, a key request from the business community.
  • Preserve, but not expand, key social service programs like foster care and mental health care. Republican proposals from the Senate would have made devastating reductions in care for our most vulnerable populations which we were able to avoid.
  • Cover almost 300,000 more low-income Washingtonians with healthcare, completely at federal expense. We expect to reduce the number of uninsured people in Washington by 70% over the next few years as the Affordable Care Act rolls out.
  • Continue to be one of the most responsible states in the nation in meeting our long-term financial obligations for pensions, healthcare costs, etc.

I have deep concerns about the long-term stability of the state’s financial picture. We have avoided some needed expenditures as we have worked our way through the economic crisis of the great recession. Our four-year planning exercise does not include some costs that we are going to have to face.

  • We have not provided raises for our teaching corps in six years. They’ve lost 12-15% of their purchasing power in that time to inflation, as have the rest of our state employees. For teachers, they are often able to bargain increases from local funds, but this only works in areas (like ours) that approve local school levies. This increases the disparity with low-income areas and is a key element of the court’s concern about our education funding model.
  • We have three more years in our planning horizon to address the remainder of the McCleary decision on school funding, and my estimate is that the additional investment we will have to make is over $3.5 billion. This is not doable within the current revenue structure.
  • We have no long-term financial plan to provide higher education or early learning at a level that allows Washington to be economically competitive in the future, let alone a level that allows our children to compete for jobs that will support a family financially.

There will be much discussion of this in the interim as we try to work out the basis for bipartisan cooperation on budget for the next several years.

Projects for this Fall

I personally am working on a number of projects in the interim. I’d love to hear your thoughts on these as we work through where we are going.

DEL
Photo: WA Dept. of Early Learning
  1. Early learning re-design: We have a complex early learning system with multiple components that don’t work well together. Childcare is different than pre-school, we don’t manage the funding smoothly, and we have little quality control on what we pay for. We’re trying to ramp up the system, as almost all of the data out there points to this as the best investment we can make in improving outcomes for low-income kids.
  2. K-12 funding: I work on this all the time, as it is about half of our budget. We need to take the next step in meeting our constitutional obligation under the McCleary decision, and this will be a delicate negotiation with the Senate Republicans and everyone else who cares about school funding. This turns out to be a large group. ☺
  3. Transportation: As we have grown as a state, and particularly as a region, we incur additional need for investment in our transportation infrastructure. This means both road construction (finishing the 520 bridge, SR-167/509 improvements, I-405 widening, etc.) and a better way to fund transit in our urban areas. The urban counties face a crisis in transit funding given the huge downturn in sales tax revenue during the recession and we need to find a way to provide this funding, as our economy will not work without it.
  4. Re-working Medicaid and other social service eligibility testing: I’m trying to figure out how we can improve the hodge-podge of eligibility systems we have. Significant overlap, too much manual work, and outdated systems create an opportunity for a re-design that would improve customer experience and save significant money. This will be a big part of Gov. Inslee’s “Lean” management efforts. We are working together to try to streamline what we do.

Answers to Common Questions

I received a lot of email this session – well over 5000 individual items. Some were individual questions that I hope we got back to you on and some were part of bulk email blasts from all over the state. I’m still working my way through answering these.

During the interim I answer all the mail myself, but during the hard part of negotiating the budget I cannot, and depend on my terrific staff to handle doing the answers. We review all the questions every week and try to drive out answers, but I always fall behind at the end of session. Here are some common questions and the answers I provide.

Gun Safety

I recorded a video in mid-session that describes my disappointment at not passing HB 1588, a quite reasonable bill that would have required background checks on gun purchasers to ensure that we are not enabling felons or those with serious mental health or domestic violence issues to purchase guns.

The bill has been written about extensively in the press so I don’t want to recap that here, but the video will give you some sense of why members are concerned that people can carry assault rifles (or any firearm for that matter) into the galleries overlooking the House Chamber.

K-12 Discipline

I’m a big fan of doing what works, and taking kids that need to be in school and putting them out on the street is unlikely to result in anything positive. There is an emerging body of evidence that shows that a careful approach to changing the attitude and environment in a school can do more to improve safety and learning in a school than kicking kids out will.

For an interesting take on this in another part of the country, this article from the Atlantic Monthly about reducing violence in a school in Philadelphia resonated with me. It’s not exactly the same scenario, but is the same basic sea-change we need in how we think about kids, violence, and learning.

It’s from my old stomping grounds in Philadelphia – a much rougher neighborhood than anything we have in the state of Washington.

“Pay It Forward”

Pay It Forward college tuition
Photo: Katherine B. Turner, UW

This is an idea that Oregon is looking into – students would be offered “free” higher education with the expectation that they would pay a certain percentage of their income for some period of time after they graduate to pay for it.

The Economic Opportunity Institute here in Washington is pushing this idea as well. I think it’s worth looking into, but there are financial difficulties in doing an implementation that would have to be worked through.

First, in order for it to work you have to put a bunch of money in up-front. The money gets paid back at some point in the future, but in small bits over a couple of decades. The first 10 years or so would be pretty expensive, and we’d have to find the money.

Second, I’d really, really want to understand how we would do the implementation of what would look like an income tax. Some people would move to other states after graduation – could we still enforce the payback?

How would we interpret “income” to set the percentage of? In Oregon they already do this because they have an income tax. We do not, and it would be new infrastructure.

I’m open to the idea, but don’t want to do something without a serious look at how we would do the back-end work to make it possible. We will take this up as part of the normal work of the Appropriations committee.