The Associated Press
Gov. Gary Locke answers questions Friday after signing and vetoing parts of the state's supplemen-tal budget.

Iovanne

Tax help for Washington Center vetoed

$37 million cut from state budget; home health care workers won't get 25-cent raise

PATRICK CONDON, THE OLYMPIAN

Originally published Saturday, April 6, 2002

OLYMPIA -- Gov. Gary Locke trimmed $37 million from the 2002 supplemental budget Friday, protecting money for state worker health costs but vetoing a $300,000 fund that would have protected The Washington Center for the Performing Arts from a hefty tax bill.

Locke's signature finalizes the Legislature's effort to bridge the state's $1.6 billion budget shortfall.

The budget cuts $685 million from state government and contains no general tax increase. Locke's vetoes leave the state with a $308 million emergency reserve.

"We have vetoed some appropriations contained within the budget to ensure that we have an adequate savings account, adequate funds in reserve," Locke said.

Legal settlements

In his biggest line-item veto, Locke chopped $25 million from the state's legal settlement fund, leaving $4.4 million in a fund intended to cushion the state from costly jury verdicts.

"The governor feels that's more than adequate," spokes-man Pearse Edwards said.

Locke also cut $6.3 million from a recruitment and retention program at the state's colleges and universities.

Perhaps most controversial, he eliminated $4.2 million that would have provided a 25-cent-an-hour pay raise for home health care workers, who make $7.68 an hour.

"We value the services home care workers provide for the disabled and the elderly," Locke said.

But state workers and college employees will get no raise in 2002, he said. "Why are we singling out one particular group of individuals, who albeit do good work?" he said.

Home care advocates argued the raises should have been protected since salaries for those workers lag behind most public employees.

"It's wrong that the state keeps this work force in life-threatening and abject poverty," said David Rolf, secretary-treasurer for the Service Employees International Union.

Health care costs

State worker groups, though, breathed a sigh of relief that Locke did not veto $6 million set aside in the final hours of the legislative session to help keep down rising health care costs for employees.

The $6 million was viewed as a concession in the absence of a salary increase.

"It's a little ray of light in an otherwise pretty sad state of affairs in state employee compensation," said Lynn McKinnon, lobbyist for the Washington Public Employees Association.

Locke also retained $13 million in state grants to some of the state's poorest counties and cities, the last vestiges of the so-called "I-695 backfill" instituted when that initiative cut off a main source of local government revenue. Mason County is among the municipalities that will benefit from those dollars.

Washington Center 'not of wide interest'

The $300,000 fund that would have shielded The Washington Center from back taxes was one of several dozen relatively small spending items that Locke lined out to reach $37 million in savings. He said The Washington Center's situation was "not of wide interest" and said legislators left him with no choice.

"Again, we all said -- we all agreed -- that we needed over $300 million in reserves, and the vetoes on a whole host of programs and studies and special projects basically amounted to $40 million that was not passed by the Legislature on the final night," Locke said.

The Washington Center's tax problems were unearthed by a recent Department of Revenue audit of the city of Olympia, which found the center was subject to the state's leasehold excise tax.

The Washington Center appealed that finding, but could still face a hefty bill that includes back taxes and penalties.

"That's unfortunate," Tom Iovanne, the center's executive director, said when told of Locke's decision. "We had no warning."

Other performing arts centers around the state are likely to face the same circumstances in the coming months, Iovanne said, and the $300,000 fund was intended to protect them as well.

While holding out hope that a settlement can be reached with the Department of Revenue, Iovanne said the center simply wouldn't be able to sustain any kind of sizable economic hit.

373 bills signed

Locke's decision on the budget and signature on several other bills brought a resolution to the 2002 legislative session. In all, Locke signed 373 bills, but budget deliberations and the attempt to craft a statewide transportation revenue package dominated the session.

In addition to the $685 million in cuts, the budget fix incorporates several revenue sources, including $30 million from enrolling in The Big Game multistate lottery, and $450 million diverted from the state's tobacco settlement.

The budget also counts on the receipt of $150 million in Medicaid reimbursements from the federal government, which is not yet assured.

Locke administration officials said attorneys retained by the state are still negotiating with the federal government for the Medicaid dollars, and members of the state's congressional delegation are exerting pressure as well. At least 10 other states are in similar negotiations.

Wolfgang Opitz, deputy director of the Office of Financial Management, said the federal government continues to be receptive to negotiations.

"They're talking to us. ... It's proceeding," Opitz said. "I think there has been a specific willingness to talk."

Patrick Condon covers state government for The Olympian. He can be reached at 360-753-1688 or at pcondon@olympia.gannett.com.

On the Web:

- Gov. Gary Locke

- Washington State Legislature

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