State Senate passes new state budget, tax cuts

OLYMPIA, Wash. – The state Senate narrowly approved a new state supplemental budget on Friday after a partisan dustup over whether majority Democrats are spending too much.

Senators also began passing a $50 million tax-cut package, extending tax breaks to the timber industry and aerospace suppliers.

The new supplemental spending plan adds about $600 million to the $26 billion two-year budget approved last spring, and keeps $956 million in reserves.

The Democrats' budget passed on a mostly partyline 26-19 vote after some testy floor debate. Two Republicans, Don Benton of Vancouver and Pam Roach of Auburn, put the vote over the top, joining 24 Democrats in favor. The budget required 25 votes.

Two Democrats, Jim Kastama of Puyallup and Tim Sheldon of Potlatch, crossed over to join 17 GOP critics.

House Democrats tentatively plan to produce their counterproposal next Tuesday. Negotiators, in consultation with Gov. Chris Gregoire, will iron out details.

Adjournment is now less than three weeks off.

The Senate spending plan is about $100 million higher than the governor's level.

The Senate's extra spending and the record reserve account are possible because of the state's surging economy, particularly the housing and construction sector.

The last five quarterly revenue updates have boosted tax projections by $2.1 billion. Subtracting for previous spending, the projected surplus currently sits at nearly $1.6 billion.

The new budget plan would pump millions into education, health care, social services and other priorities, while abiding by the governor's demand for at least $900 million in reserves.

The plan allows for more than $50 million in assorted tax cuts and eliminates the $5 day-use parking fee at state parks.

Colleges would get some new enrollment slots, the Basic Health Plan for the working poor would be increased by 5 percent, and teachers would get a larger raise and a new planning day. Millions are appropriated to help students pass a high-stakes graduation test.

The budget would provide about $200 million to maintain current programs and about $400 million on new policy initiatives. Gregoire had proposed $281 million to cover current level costs and $223 million in new spending.

Minority Republicans didn't argue with specific budget additions, but said the overall level is perilously high and cannot be sustained in the next budget.

"Most of it is good stuff," but the state simply can't afford to balloon spending," said Sen. Joe Zarelli, of Ridgefield, the Republicans' budget leader. "It is completely unsustainable.

"Today we are choosing to spend every dime in the can. That's not a good thing, folks."

State revenue is expected to rise by 10 percent in the next two years, but the Democrats' budget is growing by 17 percent, he said. The budget shreds the voter-approved spending limits and does nothing to preserve the surplus from a spending spree next year, he said.

Sen. Cheryl Pflug, R-Maple Valley, said the Democrats' 2005 and 2006 combined budget represents the largest dollar increase in history and the largest percentage increase since the liberal Mike Lowry was governor a decade ago.

That brought a furious Majority Leader Lisa Brown, D-Spokane, to her feet.

"It's not a spending spree. It's not a free-for-all," she said.

A big part of the increase was to restart two expensive education initiatives that were suspended during the recession two years ago, she said. One finances lower class size and the other provides an annual pay boost for teachers.

The 17 percent increase also includes a big new pension payment to restore earlier skipped payments, she said.

The new supplemental budget also proposes defensible new spending for education and health care for children, Brown said.

"It's a fantastic budget for schools and kids," she said.

The Senate leader said the Democrats showed unusual restraint in leaving almost $1 billion unspent.

Senate Budget Chairwoman Margarita Prentice, D-Renton, called it "a fiscally and morally responsible budget that invests in our families and our future." The plan fills some gaps from the budget-cutting in recent sessions and prepares the state for big spending pressures next year, she said.

Her vice chairman, Mark Doumit, D-Cathlamet, called it the most responsible budget in years.

Democrats were openly irritated by several Republican amendments they saw as attempts to embarrass the majority party. Democrats acquiesced to a GOP amendment to bar the use of Medicaid for sex change operations for poor people.

But Democrats didn't accept an amendment to cut back an appropriation for minor league baseball fields in order to finance more aid to breast and cervical cancer patients.

The budget provides $7 million for ballfields, prompting Sen. Mark Schoesler, R-Ritzville, to quip that Democrats were "leaving no ballfield behind."

Democrats agreed to consider adding more dollars for cancer patients during the final budget reconciliation with the House.