Senate passes $325 million budget supplement

OLYMPIA — Washington's Democratic-controlled Senate on Thursday approved a $325 million supplemental budget increase that preserves a savings account of more than $750 million, but sets off some fireworks with House colleagues and the governor.

Next stop: negotiations with the House, with Gov. Christine Gregoire keeping a close watch. Meanwhile, Republican critics, including gubernatorial challenger Dino Rossi, are heading to the campaign trail, complaining of overspending and warning of higher taxes ahead.

House Speaker Frank Chopp, D-Seattle, declined to take taxes off the table, but told reporters that wouldn't be the Democrats' preference when they deal with next year's budget difficulties.

"We'd obviously rather not do that," he said. "But we've done that in the past when we've had good justification for it and when we've needed to make investments."

House budget Chairwoman Helen Sommers, D-Seattle, noted that the two chambers have tentatively agreed on the size of a "very substantial" savings account, hoping to ease next year's budget pinch. She conceded, however, that the two houses have significant budget disagreements to iron out before the March 13 adjournment deadline.

A case in point is the House's desire to give teachers an extra 1 percent pay boost, beyond the already budgeted 3.9 percent. The Senate hasn't included the extra cost of about $39 million, and a move to add it on the Senate floor failed Thursday.

The Senate also has flatly refused to go along with the House plan to freeze or at least delay phase-in of daylong kindergarten over a 10-year span. The House had curbed spending for the program, saving about $8 million.

The Senate also has a much lower budget increase for state housing programs — roughly $50 million instead of the House's $90 million.

Still, House and Senate budget leaders downplayed the potential for an impasse in budget talks. Top leaders met with Gregoire Thursday after the Senate vote, and staff began working on areas of disagreement.

"We're going to be able to get together very easily," Sommers said.

Lawmakers and Gregoire are dealing with a large dip in revenue projections for the next two years, along with higher costs for teacher salaries and other unavoidable expenses. A new Senate projection shows a potential deficit of nearly $2.4 billion in the upcoming two-year budget cycle and more than $5 billion in the 2011-13 cycle.

Before recent adjustments created a budget hole of more than $500 million, lawmakers and Gregoire had hoped to keep $1 billion in savings. The House fallback position is $750 million; the Senate's level is $753 million. Both chambers said they hope to keep the $750 million level intact, even though budget negotiations typically result in a compromise that is higher than either chamber's budget level.

The supplemental budget adds to the current two-year $33.4 billion spending plan. The latest revisions mostly apply to the fiscal year that begins July 1, and amount to midcourse corrections.

The Senate version would add about $325 million, compared with the House-passed $297 million. That's a small difference in terms of actual dollars, but the policy differences could prolong the negotiations.

The Senate budget passed the upper house on a party-line 31-17 vote after sharply partisan debate.

Minority Republicans erected huge placards just off the Senate floor that read "33!" That was a reference to the percentage increase Democrats have approved in the past four years.

Senate Republicans' budget leader, Joseph Zarelli of Ridgefield, said Democrats are boosting the budget far faster than revenue is growing — a $1.7 billion revenue gap in this budget cycle alone. He said that's not sustainable, particularly with the projected deficit of $2.4 billion in the next biennium.

Sen. Mark Schoesler, R-Ritzville, scoffed that the budget is forward-thinking — about as far as the next election. After that, he said, look for tax hikes, no property tax relief and deep deficits. But Senate budget Chairwoman Margarita Prentice, D-Renton, called the plan "both frugal and responsive," preserving a huge savings account and providing more money for mental health, long-term care, developmental disabilities services, flood aid and other vital services.

"Ours is a sound fiscal approach," said her vice chairman, Craig Pridemore, D-Vancouver.

The Senate also unanimously approved a proposed construction budget of $107 million, including $50 million for housing and $50 million for the Chehalis River basin flood-control project.