The legislative session is proceeding at an exceptionally active pace. Legislators have been busy finalizing and introducing bills, participating in legislative hearings on important issues, considering options to address the revenue and budget crisis, and meeting with and hearing from constituents on a wide variety of issues.

With the "Snowmageddon" storm last week, in spite of transportation and electrical power problems, the Legislature did continue to meet and make progress. The snow and ice storm was definitely disruptive, but also added some special beauty to the Capital Campus. Employees of the Department of Enterprise Services and the Legislature did great jobs keeping the Campus as accessible as possible and helping visitors. Legislative staff did outstanding work keeping the legislative process progressing in spite of all.

Here’s a representative photo of what the Campus looked like.   

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Thank you to each of you who have contacted me on issues before the Legislature.  I appreciate very much your caring about the future of our community and state, your opinions, and your helpful information.  Be assured that I get all of my messages every day, thanks to my capable staff.  It’s essential to doing my job to know what constituents think.

You might be interested to know on which issues I’ve received the greatest amount of input from constituents.  They include:  the need for revenue to reduce devastating budget cuts; making the tax structure more fair for middle and lower – income people; preserving Basic Health Plan and other health care support for low-income people; marriage equality; fair treatment for state employees; K-12 education funding; ending the death penalty; dental practitioners licensing; and banning plastic bags.

The Headline Issue:  Budget and Revenue

The headline issue for this session is how to address a $1.5 billion gap between revenues and our current state budget. We will have to cut the state budget to match the declining revenues stemming from the state’s economic decline. 

I am among those who cannot stomach the human devastation that will result from projected health and human services cuts, and who opposes undermining our economic future by underfunding K-12 and higher education. 

I am also among those who feel we should increase revenues by an amount more than the Governor proposed.  Late last year, she proposed that the then $2 billion gap be addressed ¼ with tax increases, and ¾ with public service cuts.

As I believe is now well understood, the Legislature will probably not be able to approve a revenue increase by itself.  It will have to go on the ballot for the voters to decide.  This is because voters approved an initiative, twice, requiring that any tax increases, including elimination of tax exemptions, must receive a two-thirds vote in the Legislature.  This is virtually impossible.  Some of us are exploring the possibility of putting a revenue ballot measure before the voters in May of this year. 

I would greatly appreciate your thoughts about revenue—the size of a revenue package, and the types of taxes that would appropriately be included. The state’s major revenue sources are:  sales tax, property tax, and Business and Occupation (B&O) gross receipts tax.  Washington is among about a dozen states without an income tax.  The Legislature could enact an income tax of up to 1%, per the state constitution and State Supreme Court interpretations.  Any larger percentage income tax would require a constitutional amendment approved by the voters.

Economic Outlook

Dr. Arun Raha, the State’s outgoing Economic and Revenue Forecast Council Director, reported to the Senate Ways and Means Committee recently that the basic economy of the state is essentially sound.   

The strongest sectors are:  aerospace, software, exports, and agriculture. 

? Boeing is a net positive for our economy, particularly due to all their new contracts.  In recent years, they laid off 6,000 people, but have now hired back more than that—8,000. 

? The software industry has now hired back 2/3rds of the people they laid off, with salaries there increasing due to a shortage of software engineers. 

? Exports, last year, grew by “gangbusters”.  However, with the Asian economy slowing down, and being the recipient of 50% of our exports, Washington’s rate of export growth is likely to slow, he said.  The recent Free Trade Agreement with South Korea has been a positive for the state.

However, he reported that there are two major sectors negatively affecting economic recovery:  fewer construction projects, and the decline in state and local government employment.    

He says that, currently, the biggest risks to the state’s economy are forces external to Washington State:  the European debt crisis; political gridlock in Washington DC; and, most recently, tensions with Iran in the Strait of Hormuz.  This latter might affect the price of oil and, therefore, the price of gas at the pump.

You can read the Council’s full report here.

Jobs

We are actively working on the development of a jobs package.  The main outline is to bond for a variety of capital projects against several streams of special revenue that does not go into the General Fund.  More on this in the near future.

Reforms

We are actively seeking out proposals for “reform” of state and local governments.  By “reform” we mean providing services more cost-effectively, with better outcomes, and more accountably.

  • Some of the Reform concepts we will be considering:        
  • A “laboratory” approach to help schools with problems, rather than penalizing them. 
  • A more cost-effective approach to K-12 employee health insurance.
  • Improving the state system for purchase of, and contracting for, goods and services.
  • Reduce fraud and abuse in the Medicaid system.
  • Streamline development permitting, without lowering environmental standards.
  • Improving student achievement by reducing the need for remediation classes.

You can see a lengthy list here of reform suggestions we have received. You will note the list includes many “reforms” we have made in the past which we need to be careful to protect, as they have both saved taxpayers billions of dollars and improved peoples’ lives. I welcome your comments on any of these, and suggestions for others.

While many of these ideas are excellent, they will not provide enough savings in the short run to cover the $1.5 billion budget shortfall which we have to address this session. At the most, they will save about $300 million over the next 3 years, with most of the savings in the 2013-2015 biennium.

Senate Committee on Energy, Natural Resources and Marine Waters

As a member of this committee, I am privileged to be involved in these policy issues of such great importance to the state and our local area.

A couple of significant issues on which the Committee has had hearings are these:

Pacific Northwest Energy Surplus. How should our NW region respond to the fact that we currently have a “surplus” of electrical energy, due to two factors:  an unusually high water year on the Columbia River; and a rapidly growing quantity of wind energy.  Because the operation of the electrical grid requires that both a) the electricity used by consumers and b) the energy supplied to the system must be equal at all times, the question becomes:  which energy source should be curtailed?  Some think wind should be curtailed.  Others think hydropower should be curtailed.  The discussion rapidly becomes quite complex.

Governor’s Shellfish Initiative.  This is a major initiative coming from the Puget Sound Partnership and the Office of the Governor to promote the shellfish industry in Puget Sound and along the Coast. This is of great importance to the South Puget Sound area, as we are one of the more productive shellfish areas of the Sound. 

Key elements of the Initiative that should be of interest to South Sounders include:

a) Improved permitting coordination between federal, state, and local governments.

b) Strategies for improving water quality.

c) A “targeted goal of upgrading 10,800 acres of harvestable shellfish beds by 2020.”

d) There is apparently a proposal associated with this Initiative that would allow shellfish farming in “Aquatic Conservation Areas” approved through the Department of Natural Resources.  I’m looking forward to learning more about this, as a large Area is being proposed for such designation between Nisqually Delta, Anderson Island, and McNeill Island.

Senate Ways and Means Committee

Basic Education Decision. The biggest long run fiscal issue facing the state is the recent State Supreme Court Decision in McCleary v. State. This decision ultimately will require the state to increase appropriations for K-12 by billions of dollars. 

In contrast to this mandate, the Supreme Court, a few years ago, made it very difficult for the Legislature to implement such a decision.  A few years ago, the Supreme Court let stand the statutory requirement that the Legislature can raise revenue, or eliminate tax breaks, only by a two-thirds vote in each Chamber.  This is virtually impossible.  Fortunately, there is a new lawsuit heading to the State Supreme Court asking the same constitutional question.  Perhaps it will be decided differently this time?

In the McCleary decision, the Supreme Court found that the State has failed to meet its duty under Article IX, Section 1, of the state constitution to amply fund basic education, which is the “paramount duty” of state government. 

The Court said it will retain jurisdiction over this matter until 2018.  The Court affirmed the “broad constitutional guidelines” for basic education it issued as part of the 1978 Seattle School District decision on a similar issue. 

The Court directs the Legislature to figure out how to fund the basic education program such that it will provide all children the opportunity to compete adequately in our open political system, in the labor market, and in the market place of ideas.  Funding for basic education cannot come from local levies, because they are not dependable and regular. 

Here are LINKS to a copy of the decision and a summary of the decision.

Please stay in touch!