State budget talks continue, but agencies starting to think about worst-case scenarios

THE OLYMPIANJune 3, 2013 

— Washington lawmakers have skittered past their June 1 legal deadline for approving a state government operations budget for the next two years, and Gov. Jay Inslee's budget staff says it must look at options for running agencies if the political stalemate at the Capitol continues much later.

July 1 is the start of a new budget year. Most agencies can't spend money after that date without a budget.

Monday marks the 22nd day of a 30-day special session that ends June 11. The top issue dividing negotiators since they began a regular session in January has been the Republican-led Senate's opposition to taxes and the Democrat-controlled House and Inslee wanting more than $1 billion in new revenue for public schools and social services.

There was a glimmer of movement Friday when the Senate Ways and Means Committee approved an estate tax bill that would keep the state from losing $160 million in tax receipts over the next two years due to a court ruling. But the Republican approach cuts new holes in the state estate tax after 2015 and is only one piece among dozens that need to be resolved if lawmakers are going to get done on time.

"I'm not sure passing June 1st is especially legally significant other than the fact it means we are getting awfully close to June 11," state budget director David Schumacher said late Friday. "In the sense we spend days not moving toward each other (it) is concerning.''

The state Treasurer's Office has decided to postpone a bond sale amid the uncertainty. Treasurer Jim McIntire is making plans to set up payment for July bond debt in late June in case lawmakers fail to pass a budget in time.

Schumacher said he is not yet worried about missing the July 1 target for a budget. But he can't rule out the worst-case scenario of some kind of government shutdown.

"I can imagine by the middle of June if it doesn't look like we are on a path to get (done) we will have to give state agencies guidance where to go — how to start thinking about this," Schumacher said.

Late passage of state budgets has happened before — three times since 1991 and most recently in 2001, according to Senate records. It was in 1991 that teachers went on a statewide strike and Gov. Booth Gardner did not call lawmakers back for a special session until mid-June, just averting a crisis.

Gardner ended up signing the budget bill late at night on the final day of the month, according to the Office of Financial Management.

Historical accounts show the state actually stopped paying bills for about 10 days in August 1951 when a state Supreme Court ruling tossed aside that year's budget in part because it contained a corporate income tax ruled unconstitutional.

The divided Legislature scrambled back to Olympia to pass a new budget that Gov. Arthur Langlie could sign.

That event is partly documented in Don Brazier's "History of the Washington Legislature: 1854-1963," and another book soon to be published by former state Revenue Department director Don Burrows.

Burrows' book quotes Langlie as saying the court ruling had "invalidated millions of dollars' worth of state warrants already issued" and that no more warrants, or payments, could be issued by agencies until a new budget bill was enacted.

Even under that emergency, it took lawmakers nine days to get a new budget done.

This time around, Democratic and Republican negotiators have agreed not to talk publicly about the content of their negotiations, making it hard to assess where the pivot points are — other than the obvious differences on taxes and the Democrats' wish to invest about $300 million more into K-12 public education.

The Senate Majority Coalition Caucus, which is the alliance of 23 Republicans and two maverick Democrats that seized control of the Senate in January, has been holding firm against any taxes — even a continuation of temporary taxes enacted in 2010.

The death of Republican Mike Carrell last week has thinned the coalition's ranks to 24, leaving a tie in the Senate that could potentially be broken by Democratic Lt. Gov. Brad Owen. But such a scenario is considered a long shot.

Senate Majority Leader Rodney Tom, a Democrat who sided with the Republicans this year, said talks continued Friday.

"We're all focused on getting out by the end of this special session. Obviously with the passing of Sen. Carrell, that has thrown some unique wrinkles in the situation," Tom said. "We've been negotiating all day. We'll continue to do that."

Neither Tom nor House Speaker Frank Chopp, D-Seattle, would comment on the possibility of talks sliding into late June. But Chopp said: "House Democrats have offered good-faith compromises. We'll see how the Senate Republicans respond."

Other Democrats are starting to grumble at what they see as slow movement to the middle by the Senate majority coalition.

Sen. Karen Fraser, the Thurston County Democrat who chairs the Senate Democratic caucus, said she was not at the edge of her seat yet, "but I'm starting to inch forward."

"I'm concerned because in order for us to pass a budget by June 11 we really need to have agreements from negotiators by the middle of next week," she said.

If lawmakers fail to get done by June 11, that opens the door to a second special session that could drag lawmakers closer to the new budget year.

Dennis Mahar, executive director of the Lewis-Mason-Thurston Area Agency on Aging, is watching the budget stalemate. Mahar said his community service agency, which helps manage and coordinate services and programs for the elderly and disabled, needs to know soon what level of funding it can assume and whether it will have funding on July 1.

The agency enters into contracts that include care for the elderly and disabled who get help to stay in their homes, and Mahar won't be able to execute contracts without an assurance from the state that money is in the bank to pay for the work.

"I think we have another week or so before we get nervous," Mahar said. "I think the real heartache is when I get to that third week of June and I need to sign a contract. … You just don't want to see your clientele on a roller coaster."

Reach Brad Shannon at 360-753-1688, or Read his Politics blog at

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