The 60-day session of the Legislature looks so far to be one of the more difficult sessions in recent history with the collision of budget, tax and reform interests.
Keep in mind this is an election year so do not expect the same outcomes as 2011, when a few moderate Senate Democrats allied with Republicans to pass some very controversial laws. One of the leading moderates is running for Congress and two others are running for statewide office. They are not likely inclined to alienate key Democratic constituencies by voting with Republicans on controversial reform proposals. Furthermore, all of the House and a third of the Senate are up for election, a few of which will be doing so in new districts (given the work of the redistricting commission) and in an early August primary. This will give legislators even more incentive to complete their work as quickly as possible.
The key issue is passing a budget to address a $1.5 billion deficit. There are many different ways to get there and just as many ideas as to which method is the best to use.
In its December special session, both the Senate and House completed hearings on the governor's budget and listened to stories on the devastating impact of an all-cuts approach to our schools, colleges, the poor and seniors. These cuts hit the essential services of the state, leaving the safety net in tatters. There is a growing consensus in Olympia, and I might add, in the state, that we must address this budget deficit by raising new revenue.
In her budget document the governor proposed a temporary ½ cent increase in the sales tax to buy back the cuts to education, raising $500 million for schools and colleges this year, and $1 billion in the next biennium. This would be the first time the sales tax has increased since 1983, but would still require a $1 billion cut in programs such as K-12 education, higher education, corrections and many safety net programs.
Many legislators feel that voters will not agree to an increase in sales taxes, unless such a proposal is accompanied by additional proposals to address the inherent unfairness of our regressive tax structure. Anticipating this, the governor did propose additional revenue options of approximately $400 million addressing closure of tax loopholes and a tax on windfall profits.
More populist minded legislators believe that a high earner income tax must be included in a revenue package. We will probably see a millionaire's tax proposal in some form, accompanied by a constitutional amendment to ensure that such a tax would not be extended to the middle class without a vote of the people. A second interesting proposal is a tax on capital gains earnings that reach certain benchmarks.
It is unlikely that a sales, income, capital gains or any other tax or loophole closure could pass with the required two-thirds majority vote in the Senate or House, given the fact that many Republican legislators have signed a no new tax pledge. This most likely means that you, the voter, will see a referendum that would allow you to decide whether we should create new sources of revenue or if we should continue to rely solely on cuts to balance the books.
Many legislators have indicated they will not consider revenue options without further reform in state government. These proposals include privatizing the lottery, reforming teacher evaluations, charter schools, eliminating the liquor board, creating a new state pension system, and the list goes on and on.
The politics of reform are equally challenging. Keep in mind that the Legislature has already cut roughly $10 billion from the budget over the past three years and initiated many reforms in government. A topic worthy of special mention is the unemployment insurance system, where we actually were able to increase benefits and reduce taxes for most businesses in our state during a recession, one of the few states to do this.
A second major area of reform has been our corrections system, where through sentencing and prison reform we are viewed as a model in our nation. A recent Pew Research Poll rated our state's pension system as one of the best funded in the nation. This is also the result of reforming the system.
Certainly the Democratic majorities in the Senate and House will not pass further reforms that harm their constituents. This likely will mean reform agendas must be limited in nature unless there is a bipartisan revolution in the Senate and House, which is unlikely, especially in the House during an election year. Furthermore an aggressive reform agenda that alienates Democratic Senators and House members would make it more difficult to pass a budget or revenue referendum package.
I predict that revenue proposals will be limited in scope and that Democratic majorities in the Senate and House will send a revenue package to the voters and a proviso in the budget to embrace many of the governor's cuts if rejected. So prepare yourselves for a referendum in the spring.
All members of the Senate and House, Democrat and Republican, agree on the need for a jobs package in this session.
State Senator Steve Conway (D-Tacoma) represents the 29th Legislative District.
