Central to this year’s budget debate is exactly how much additional revenue is needed to balance the State’s biennial operating budget, while also meaningfully addressing the State Supreme Court’s mandate to fully fund K-12 education. The question that is yet to be answered by this Legislature is whether the new revenue captured through increased tax collections from a rebounding state economy will be enough to fill the void or if there will be a need to authorize additional taxes. 

To be clear, the question isn’t whether the State will spend more money, both budgets agree they will. The Senate Operating budget proposes to spend roughly $43 billion dollars over the two-year period and the House Operating budget proposes to spend $44.6 billion; increases of $5 billion and $6.4 billion respectively over last biennium. 

Lawmakers will not know if, or how much, new revenue is needed to complete their task when the next economic forecast is released by the State’s Economic and Revenue Forecast Council, slated for June 7th. It has been speculated that this forecast will report an uptick in tax collections of approximately $300 million - $500 million. Increases in revenue collection by the State mean less need for new taxes. That said, no one knows for sure exactly how much of an increase in collections there may be until that report is announced, thus putting off any real resolution to the situation until then. 

Once a final agreement has been struck, the entire State Legislature will return to Olympia and take the requisite votes to approve a balanced, two-year state budget. This will likely not occur until mid-June. 

 

 

 

 

2017 saw the introduction of two proposals aimed at repealing or reducing the Aerospace Tax Incentives. For the first time, one proposal saw sponsorship by a prominent Republican, Richard DeBolt of Centralia (HB 2146). A separate proposal was introduced by Democrat Noel Frame of Seattle (HB 2145).

 

Both measures set employment targets (75k in the Republican bill, 70k in the Democratic bill) that if Boeing employment falls below those targets, the incentives no longer apply or are reduced. The money is instead diverted to K-12 funding and small business tax incentives (in the Democratic bills) and small business tax incentives, state need grant and career/technical training (in the Republican bills).

 

Neither measures where considered during the Regular Session, although it is technically possibly for both of these measures to be heard in their House Committee during the upcoming Special Session. AFA will be working closely with Legislative Leadership to prevent this from happening.  

 

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Negotiations continue into the Special Session with business representatives, labor groups and legislators on the future of paid family leave. Sen. Fain (R) and Sen. Keiser (D) have co-sponsored a “title only” bill, meaning the body of the bill is blank. The title only bill has left a lot of room for stakeholders to negotiate. Topics of discussion include portability, options for small businesses, wage replacement, employee training credit and more. These measures have been brought forward to head-off an expected ballot initiative this year sponsored by the Labor community that would be more burdensome on businesses. These proposals would also pre-empt local governments from adopting future ordinances or enforcing current ordinances.   

 

To date, Seattle is the only local government that has adopted a paid family leave measure, which is set to go into effect on January 1, 2020.  Spokane, Tacoma, Bellingham, and Olympia, among others, are thought to be considering their own proposal.  

 

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From a process perspective, the State’s Constitution allows for “special” sessions of the Legislature to last for 30 days. Given the Governor’s announcement that he will call lawmakers back to work on Monday, April 25, it is expected most will not return to Olympia at this point and will instead rely on a small group of their leaders and budget writers to work behind-the-scenes to broker a deal. This is commonly referred to as a “rolling recess” where no specific work is completed during public hearing or voting sessions on the floors of the House or Senate.