WA lawmakers pass budget, adjourn special session

Washington's Legislature finally wrapped up its tax and spending work early Tuesday morning, adjourning a special session just short of the deadline after passing a new state budget and sending a green-jobs measure to the fall ballot.

Majority Democrats struggled for three months to solve the state's projected $2.8 billion budget deficit, pushing past their regular work session and nearly consuming the entire 30-day overtime meeting.

In the end, they spread the budget-balancing task around: Cuts to certain programs, another shot of federal bailout money, one-time accounting maneuvers and higher taxes.

"We believe that the approach we've taken is balanced - that we did cut, that we did some reforms and we did have to raise some revenue. We see this as a job completed," said House Ways and Means Chairwoman Kelli Linville, D-Bellingham.

Republicans were energized by their opposition role after several years mired in the minority. The GOP criticized the Democratic budget plan as unsustainable and hazardous for the state's economy - particularly in the aftermath of the Great Recession.

"There is virtually no original thought in any of this," said Sen. Mike Carrell, R-Lakewood. "It's just, 'What do we have to do to get by this year?' To heck with next year, the year after that, it'll have to take care of itself."

A nearly $800 million revenue package was the biggest roadblock that kept Democrats from finishing their budget-balancing task on time.

Legislative leaders and Democratic Gov. Chris Gregoire negotiated the details for weeks, with Senate leaders favoring a state sales-tax increase and the House and Gregoire backing a "menu" of targeted tax hikes. Both sides gave up some proposals in the end.

The final package relied on a long list of tax increases and closed exemptions, including a temporary surcharge on service businesses such as attorneys and real estate agents.

Consumers will pay higher taxes on tobacco products, bottled water, pop, candy, gum and mass-produced beer, with the beer, pop and water taxes slated as temporary. A rewriting of the tax code will capture more taxes from out-of-state businesses, mostly banks.

Voters may see a business-financed fall campaign to overturn some or all of the tax increases, with the Democrats' political supporters tapped for the opposition campaign.

Heeding Gregoire's call for one kind of job-spurring project, the Legislature also asked voters to approve a package of energy-efficiency upgrades at public universities and K-12 schools.

The ballot measure carries about $500 million in bond sales, with the money dedicated to retrofitting and renovating aging school buildings. The temporary sales tax on bottled water purchases would be extended to help finance the projects.

Rep. Hans Dunshee, D-Snohomish, said the bonds would end up costing about $900 million over roughly 25 years, once interest is added. But he said the energy savings to schools - which rely on the state for financing - would amount to about $130 million per year.

Minority Republicans, however, were skeptical of the promised energy savings and said they worried about adding more to the state's debt load.

"This is about further indebting the people of the state of Washington for marginal gain," said Rep. Jay Rodne, R-Snoqualmie. "This is insane fiscal policy."

The new operating budget approved Monday night makes changes to the two-year spending plan lawmakers approved in 2009. Spending was driven by higher costs for current programs and added policies, including payments to property-poor school districts and additional worker retraining at community and technical colleges.

The updated budget cuts about $755 million from state programs. Another $780 million comes from higher revenue, mostly tax increases. The budget also counts on about $625 million in more federal aid and roughly $600 million in fund transfers and reserves.

State government's main checking account will be about $31 billion. Some $480 million is left in reserves to guard against higher-than-expected state costs or drops in tax collections.

Gregoire said more difficult work is still to come.

"Anyone who thinks that it's over and it's done, there's another story here," Gregoire said. Once the budget is signed into law, "there will be real cuts, there will be real people losing jobs."

The Legislature also passed a $3.7 billion construction budget that finances projects around the state, including $122 million for Puget Sound cleanup and other environmental programs.

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AP Writer Rachel La Corte contributed to this report.

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The operating budget is Senate Bill 6444.

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On the Net:

Legislature: http://www.leg.wa.gov

Governor: http://www.governor.wa.gov