House budget plan in line with others

OLYMPIA — Democratic leaders yesterday predicted quick agreement on a state budget after the House released a roughly $26 billion proposal that would raise taxes on liquor and cigarettes and would bring back an estate tax.

The House Democrats' plan largely mirrors the Senate budget released last week, in terms of money spent and taxes raised over the next two years. The House proposal brings in about $476 million through taxes and one-time deals such as liquidating unclaimed property, only slightly less than the Senate's tax package.

Democrats control the House, the Senate and the governor's office. Leaders from both houses will negotiate with Gov. Christine Gregoire to reach a compromise.

Gregoire released a $25.8 billion budget last month with a tax package that's smaller than the House and Senate proposals. Yesterday, she praised the competing plans. "It's amazing at this stage that we're as close as we are," she said.

In fact, worries about an ugly budget fight have largely evaporated. Democratic leaders from the House and Senate have been meeting regularly with representatives of the Governor's Office for months to iron out differences before releasing their budgets.

"I've been around a long time, and this is the best I've ever seen it," House Speaker Frank Chopp said yesterday.

For example, though the House plan includes money for teacher pay raises, the state teachers union was not satisfied. The Washington Education Association has been urging lawmakers also to include money to pay teachers retroactively for income they lost during the two years since the Legislature suspended Initiative 732, which called for raising teachers' salaries.

Republicans argue that the Legislature can write a budget without raising taxes and that the Democrats' proposals are bound to leave the state with another budget shortfall two years from now.

"This budget is no more sustainable than the governor's budget or the Senate's," said Rep. Gary Alexander, R-Olympia, the ranking Republican on the House Appropriations Committee.

The state routinely faces budget shortfalls because government expenses are growing at a faster clip than tax revenue. The House proposal represents about a 12 percent increase in spending over the current budget.

House Finance Chairman Jim McIntire, D-Seattle, said the trend of expenses growing faster than revenue will continue. The Governor's Office already is projecting another shortfall, of nearly $1 billion, in the next two-year budget cycle under Gregoire's proposed budget.

"The underlying revenue system is broken," said McIntire, D-Seattle. "We damn well better do something."

The House budget includes $150,000 to pay for a new joint legislative "committee on fiscal sustainability." Made up of six Democrats and six Republicans from the House and Senate, the committee's mission would be to spend the rest of the year looking for ways to line up state revenue and spending.

McIntire floated the same proposal two years ago, but the Senate, then controlled by Republicans, wouldn't go along. "Hopefully, a Democratic Senate will be a little more cooperative," McIntire said.

In general, there are more similarities than differences among the three budgets.

All of them include pay raises for teachers and state workers and largely avoid major cuts in services. All of them fully fund Initiative 728, aimed at reducing school-class sizes. And all of the budgets use a combination of taxes, one-time fixes and fund transfers to help close a budget shortfall projected at more than $1.5 billion.

The main differences in the three budget proposals are policy ones. The House budget, for example, put more money into higher education, creating a "Legacy Trust" dedicated account outside the state general fund with more than $100 million that would be used for things such as increasing enrollment at colleges and universities.

"Those differences will get worked out," Chopp said. "There are a lot of ways to reconcile these budgets."

Sen. Margarita Prentice, chairwoman of the Senate Ways and Means Committee, agreed.

Times staff reporter Ralph Thomas contributed to this report. Andrew Garber: 360-943-9882 or agarber@seattletimes.com