By tradition, it is the Democrat-controlled state House’s turn to write the state budget. House Democrats are expected to release their budget, ideally, on March 23—certainly, by that date, they would have had sufficient time to draft a budget. Comments made by top House Democrats have offered glimpses into what we can expect from the House budget. Rep. Ross Hunter, the top budget writer in the House, recently hinted that Democrats’ budget might include a state capital gains income tax.
Leading up to the release of the House budget, Republican state Sen. Andy Hill issued a primer (Windows Into The Budget) on what an honest budget looks like, with some budget rules to live by. It’s what taxpayers have a right to expect when lawmakers develop budgets—and it’s what to look out for when Democrats release their budget next week.
Hill starts with a basic principle: the importance of holding to a deadline. The 2015 legislative session is scheduled to wrap-up by April 26th. In order to ensure the Legislature adjourns on time, it is vital Democrats introduce and pass their budget next week, with the state Senate “following shortly thereafter.” Hill writes, “This timeframe allows adequate time for the two sides to resolve the differences between the budgets and adjourn on time.”
Hill goes on to emphasize the importance of each chamber passing “a complete budget, meaning not only the budget (spending) bill but also the bills necessary to implement the budget.” Hill writes,
“Olympia parlance labels these separate bills that make up the budget “Necessary to Implement the Budget” or NTIB. These bills include not just the spending allotments, but the necessary finance and revenue changes required by the spending allotments. It is not a real budget to simply pass a spending plan — you must also pass the changes in law assumed in the budget.
“Why does this matter? Simply put, unbalanced budgets don’t count. A budget that assumes taxes, but doesn’t pass the stand-alone tax bill that would finance that level of spending is not a real budget. Likewise, a budget that assumes spending cuts but doesn’t pass the stand-alone bills that makes those changes in law is not a real budget.”
According to Hill, instances where this principle may come into play in the coming weeks have to do with Democrats’ desire to raise taxes, Inslee’s proposal to raid the state’s rainy day fund even though our economy is growing, and the Washington Education Association’s (WEA) Initiative 1351. Hill writes,
- Tax Increases — In the 2003 session, with a 52-46 majority, the House Democrats assumed a $750 million tax package and wanted to begin negotiations without actually passing the tax bill. The Senate, at that time led by Ways and Means Chair Dino Rossi, insisted that the tax increases pass before negotiations commenced, otherwise there was no guarantee they would have the votes for a final completed budget. By the time the House was able to muster the votes for tax increases, they had been pared considerably along with the proposed spending level because they had been through a complete legislative process. Due to this pared spending level, the two chambers were able to negotiate a final budget that lived within the state’s means. For negotiations to proceed in a timely fashion this year, any spending plan that spends more than current revenue must include the necessary tax increases as well as the votes to support it.
- Rainy Day Fund – 60% Vote — The Governor’s budget proposes using the constitutional rainy day fund as $450 million of his budget solution. Since we are in a period of economic growth, this action requires a 60% vote of the legislature. It is questionable whether such a vote could be achieved and is a dubious fiscal strategy given the purpose of the account is to provide a cushion in economic downturns.
- Initiative 1351 — This initiative, passed by the voters in 2014, calls for $2 billion in additional spending over the next two years, and an additional $4 billion in the ensuing biennia. Simply suspending the initiative for two years, as the Governor proposes, doesn’t meet our state’s four-year balanced budget requirement, and would require a 2/3rds vote of the legislature. Any budget must address either funding the first 4 years of the initiative or correcting it in order to create a balanced budget.
Hill wraps-up by re-iterating the all-important “bottom line.” It is important for lawmakers and taxpayers to understand that the “budget is not complete just because the spending plan is passed.” For a complete, true budget that is able to commence negotiations, “the bills necessary to make that budget work must also be passed.”
Shift will keep you updated on Democrats’ budget progress. We wait to see whether or not Democrats will present a true budget by March 23rd.