Senate budget plan will cut deeper than governor's

Slim chance of sales tax increase

BRAD SHANNON, THE OLYMPIAN

Originally published Sunday, March 3, 2002

OLYMPIA -- Those hoping for tax increases and fewer cuts to social services might be in for an unpleasant surprise Monday when the Senate starts rolling out its plan for covering a $1.6 billion gap in the state operating budget.

Cuts to state programs overall will be deeper than the nearly half-billion dollars proposed earlier by Gov. Gary Locke, said Sen. Lisa Brown, D-Spokane, who is writing the first legislative response to Locke's December plan.

One reason for the deeper cuts is that Brown is relying on $200 million less than Locke from a windfall federal reimbursement to the state for Medicaid nursing-home costs.

Brown refused to say Saturday whether her budget will include a general tax increase, but the chances of even a temporary sales tax surcharge are slim at best.

That's the assessment of Sen. Jim Hargrove, a Hoquiam Democrat who had offered the temporary "patriot tax" as a response to the revenue problems triggered by Sept. 11.

Locke has said repeatedly that he doesn't think a general tax increase is needed.

The House, meanwhile, is trying to prepare its own budget proposal for release by Friday, said Rep. Helen Sommers, D-Seattle, chairwoman of the House Appropriations Committee.

Sommers declined to offer any details, but Brown said she expects deeper cuts to medical services in the House budget and deeper cuts to higher education in the Senate.

A few other proposals are considered likely in the Senate budget: cuts to some K-12 education grants, increases in college tuition rates, an end to certain subsidies for local governments' health and criminal justice programs and cuts in medical care for poor people.

Also on the table are a new Big Game multistate lottery contest, an expansion of nontribal gambling that might generate additional taxes and other closures of some of the state's nearly 450 tax exemptions.

Unpleasant options

Small pay raises, if not a pay freeze for state employees, also are considered likely, with job cuts hitting many agencies.

Only teachers, protected by Initiative 732's cost-of-living increases, appear poised to emerge unscathed.

"A lot of good programs are going to be cut," predicted Sen. Karen Fraser, D-Thurston County, who said she hasn't had any advance word on budget details but knows the options for budget writers aren't good. "There's no way if you have a $1.6 billion gap."

Fraser's top concerns are that the mentally ill and others who get state services will become the burden of local governments, families and private groups.

She also expects a cut in subsidies to local governments, which could eliminate up to $2 million for jurisdictions in Thurston County alone.

Republicans, meanwhile, expect Democrats to gloss over the seriousness of the state's financial situation, which includes a severe revenue drop over the past year that will result in less tax revenue in 2001-03 than was received in the previous two-year cycle.

Tax exemptions

Hopes by labor groups that the state could avoid a lot of cuts by closing so-called tax loopholes appear to be a pipe dream.

"We will be eliminating tax exemptions as part of our budget proposal," said Sen. Erik Poulsen, D-Seattle, who had the task of reviewing about 450 exemptions for Senate Democrats to consider eliminating. "I think you'll be underwhelmed (by the) number of exemptions where we feel it's politically possible to move forward."

One sure proposal is to close the sales tax exemption enjoyed by out-of-state junk-mail producers, worth about $4 million a year.

Another was already sought by Locke to raise $20 million by extending the use tax to shipping and freight charges for items sold and shipped here from other states.

Brown's budget announcement will end the guessing, but it will come on the 50th day of a 60-day session, leaving lawmakers precious little time to review and adopt a budget.

"I think there's a possibility we could handle it rather quickly because of the discussion that's going on," Brown said, referring to several new policy bills that will accompany the budget. Those will target the state's role in setting tuition rates, she said, as well as changing sentencing law and the staff mix of K-12 schools.

"So we're not whacking indiscriminately," Brown said. "If we're going to reduce, how can we change policy to reduce in a thoughtful way? I think you'll see bipartisan support in all those policy bills."

Brad Shannon, political editor for The Olympian, can be reached at 360-753-1688 and at beshanno@olympia.gannett. com.

What's next

Members of the Senate Democratic Caucus will get a briefing on the proposed 2001-03 supplemental budget Monday morning.

An overview of the budget will be offered to reporters later in the day by Senate Ways and Means Committee Chairwoman Lisa Brown.

Copies of the formal budget will become available at 9 a.m. Tuesday morning from the committee or on the Internet at www.leg.wa.gov/senate/scs/wm.

A public hearing on the budget is set for 3:30 p.m. Tuesday before Ways and Means in Senate Hearing Room 4.

A committee vote will follow at the same time Wednesday, and a floor vote could occur by week's end, although the week of March 11 is more likely, said Senate Majority Leader Sid Snyder, D-Long Beach.

On the Web:

- Washington State Treasurer

- Gov. Gary Locke

- Washington State Legislature

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