Changed climate as session begins in Olympia

Taxes are out, fees are in. Government reforms are sounding more stylish, while pay raises for public employees are quite out of fashion.

Once-sacred cows are off to the slaughterhouse. Interest groups have thrown away their wish lists and adopted damage control as their motto.

Things have changed in Olympia as lawmakers arrive Monday for a 105-day session. As they work to fill a $5 billion budget hole with few options for raising new revenue, their new mantra is spending cuts.

Drowning in red ink, with no more lifeboats from the other Washington in sight, it has rarely looked so grim for state government, most of all for the Democrats who presided over an era of rising state spending and an expanding social safety net.

Democrats held on to their majorities in last fall’s election, but their reward could be responsibility for shredding the net, disappointing their allies and dismantling programs they and their predecessors created.

“Democrats are going to have to say ‘no’ to their friends. There’s just no way of getting around that anymore,” said Rep. Chris Hurst, a conservative Democrat from Enumclaw.

Here are five things that are newly fashionable in a changed Olympia.

READING VOTERS’ MESSAGE

Lawmakers are gearing up to close the $5 billion spending gap with cuts – on top of $5 billion that has been cut over the past three years.

The budget cuts cover the waterfront and leave few people – including the elderly and disabled – untouched. Public schools and universities stand to see reductions, and state employees will see pay cuts in the form of furloughs.

Gov. Chris Gregoire said voters’ rejection of a 2-cent tax on soda pop in November – and their approval of Initiative 1053’s restrictions on tax increases – sent a clear message: Write “all-cuts” budgets.

The Tim Eyman-backed initiative does allow tax increases if two-thirds majorities in the House and Senate approve, or if the proposal is sent to voters in November, but Gregoire is ruling out both, and so are Republicans.

But Democrats hold majorities of 56-42 in the House and 27-22 in the Senate, and they haven’t ruled out some kind of ballot measure for November that could raise revenues.

Senate Majority Leader Lisa Brown says it’s too early to talk about what might be done. But Rep. Larry Seaquist, D-Gig Harbor, wants to ask voters to approve the closure of tax exemptions that could raise money for schools.

Labor groups are targeting tax exemptions that don’t promote job creation, and some Democrats, such as freshman Rep. Connie Ladenburg of Tacoma, come in having told voters they would tackle unfair tax breaks.

“Some of us are very concerned about even talking about cuts to people who are least able to help themselves,” Ladenburg said.

Sen. Brown and House Speaker Frank Chopp have strongly resisted Gregoire’s call to take scissors to the safety net’s key pieces.

Chopp wants to preserve the scaled-back Disability Lifeline program that helps temporarily disabled people with cash, medical care and retraining. The leaders also are resisting an early closure of the state’s subsidized Basic Health Plan that provides subsidized health insurance to almost 60,000 people in low-wage jobs. Gregoire has proposed eliminating both.

Gregoire has suggested the Legislature eventually will learn what she already has: that there aren’t options except to cut programs.

“They’re just several months behind me; I went into this with exactly the same attitude,” Gregoire said of state legislators. “I’m really sympathetic to the learning curve they’re going to be on over the next several months.”

HURRY UP, THEN WAIT

Lawmakers started chipping away at the budget shortfall early during a special session Dec. 11. They grabbed federal money from school districts, agreed to close McNeil Island Corrections Center, reduced Disability Lifeline cash grants, extended furloughs for state workers and made other cuts.

The budget that ends in June remains unbalanced by several hundred million dollars. Lawmakers’ early taste of budget-cutting could help prepare them for those hard decisions.

“I think legislators are more in tune with the budget earlier,” said Gregoire’s legislative director, Jim Justin.

They will need to make the decisions fast. Many of Gregoire’s suggestions for cuts would have to be made by early February to allow the state to notify social services recipients before cutting them off March 1, Justin said.

Then the waiting starts.

While key lawmakers will immediately start writing a budget to run through June 2013, it is unlikely to take shape until late in the session.

For one thing, they will hope for a sunnier revenue forecast on March 17 that might give lawmakers financial options they don’t have now.

State bean counters release predictions four times a year for the economic outlook and how it will affect the state’s revenue collections. No one is yet predicting a windfall, but there’s no missing the symbolic hope for green on Saint Patrick’s Day.

If the forecast improves, there will be temptation to leave town and put off decisions to see what the next forecast brings in June.

On the other hand, if it remains bleak, lawmakers could deadlock over what to cut. Either way, it is possible they will work beyond the scheduled end of session April 24.

“I think that it is fairly certain we’re going to be here beyond 105 days,” said Sen. Jim Kastama, D-Puyallup.

Overtime sessions of the Legislature had become rare in recent years – only a single day since 2001 – before last year brought two. Lawmakers needed a month to resolve an impasse between the House and the Senate, and a day for the historic post-election or “lame-duck” session.

The rest of the Legislature won’t wait idly while budget writers work. As always, there will be hundreds of ideas for changes in the law.

Despite the gravity of the budget choices, Sen. Karen Fraser of Thurston County, the new chairwoman of the majority Senate Democratic Caucus, said she doesn’t think lawmakers should limit themselves. Fraser sees opportunities for lawmakers to weigh in on many smaller issues such as changing small policies or rules that lower operating costs for cities and counties.

But Fraser acknowledged it’s a big question how much legislators actually tackle.

“The first question on any bill is, Does it cost money? If so, it’s under suspicion. … It’s under doubt right away,’’ she said.

BIPARTISANSHIP, A FIVE-SYLLABLE WORD

Republicans and Democrats joined hands to make cuts in the lame-duck session, and lawmakers from both parties have said they want to keep working on the rest of the budget solution in the same way.

Of course, most legislative sessions start with pledges by leaders of both parties to work for common solutions. And just as often, bickering breaks out within days.

Gregoire says this year is different and a coalition of Democrats and Republicans will be needed to pass a budget.

She told The Olympian editorial board in December that there will be members of both parties who balk at voting for the kind of compromise budget the Legislature will be forced to adopt.

Last year, moderates were a stumbling block to approving a budget. Democratic leaders allowed their members from swing districts, seen as vulnerable in the November election, to break away and cast ‘no’ votes on nearly $800 million in tax increases and the state spending plan that depended on them.

This year, it could be members from liberal districts who are seen as vulnerable if they vote for a budget that dismantles social service programs. They could be the ones protected from taking tough votes.

Rep. Hurst predicted that the most liberal Democrats wouldn’t support the budget, putting moderates in the driver’s seat.

Rep. Gary Alexander of Thurston County, the top Republican on the budget-writing committee, said it’s not clear how much common ground the parties can find, with Chopp and Brown trying to keep the Basic Health Plan that Alexander has proposed eliminating for two years.

Alexander said new House budget chairman Ross Hunter, D-Medina, “wants to start early and work together.”

“But if he’s going to take the sensitive issues off the table early, it’s going to be difficult to do something meaningful,” Alexander said. “I am ready to work together as cooperatively as we can, and I think we have a better solution when we work together.”

The special-session cuts, which came after a bipartisan deal, represent the easiest places to find common ground, said Rep. Bruce Dammeier of Puyallup, the top Republican on the House Education Committee. “The next half will be more difficult,” Dammeier said.

FEES – THE NEW TAXES

While avoiding new taxes, Gregoire is unabashedly promoting fee increases.

Gregoire wants the state parks system and other natural-resource agencies to lean more on users of their services, such as the people who visit state parks or apply for permits.

Fees under consideration would make it more expensive to hunt, fish, camp, kayak, water crops or develop land.

The most controversial could be Gregoire’s pitch that drivers would pay $10 when they renew their car tabs for an annual parks pass. Those who opt out would pay $5 at the gate every time.

Even with the fees, some of the state’s 119 parks would likely still be closed or shifted to local governments.

House Republican Leader Richard DeBolt of Chehalis has spoken against even fee increases. Senate Republican Leader Mike Hewitt said Senate Republicans aren’t ruling out fees, but are worried they would be diverted to the general fund as other dedicated revenues have been.

While they are out of fashion in the main budget, taxes remain a possibility to fund transportation, where they work much like fees for using the state’s roads.

Gas taxes, or some other tax dedicated to transportation, would need to go up to pay for “megaprojects” such as the extension of state Route 167 to the Port of Tacoma.

Money raised by increases in the gas tax last decade, first by a nickel and then by 91/2 cents, has funded hundreds of projects and is now mostly spoken for.

Sen. Brown said she is open to asking voters for a revenue package to fund roads, mass transit and other transportation projects around the state. She left open what taxes could go up.

Other legislative leaders aren’t crazy about the idea. “You just need to go to the pump and look at the price of gas,” DeBolt said. “Are you going to ask people to pay more?”

Chopp said House Democrats are open to considering transportation taxes, but are focused first on the operating budget.

That may be the big hurdle: Lawmakers have enough troubles on their hands trying to fix the budget shortfall.

SINCE THERE’S NO MONEY: REFORM

Still, lawmakers have a full plate to digest besides the budget mess. Gregoire, a second-term Democrat, laid out a series of major reform proposals that could vastly reshape the bureaucracy.

They are sweeping and bold, touching large areas of state government. They won’t save a lot of money, and Gregoire says she’s not yet sure how much a proposed overhaul of education might actually add to costs in the short term.

Among her ideas:

Merging pieces of the public education system from preschool through college and eliminating the Office of the Superintendent of Public Instruction.

Merging several natural-resources agencies.

Creating a new enterprise agency that can manage state-owned properties and back-office services provided to other government units.

Breaking off the state ferry system from the Department of Transportation and farming its duties to a new regional authority.

Lawmakers are just beginning to soak up details about Gregoire’s reform ideas. Their responses have been mixed.

“I encourage those big ideas and suggestions going forward,” Alexander said. “But they are not going to have the immediate impact to solve our budget challenge. … This session should be only on two issues: Those issues should be the budget and (creation of) jobs.”

Labor and business agree on the need to boost job creation, though they will go about it in different ways.

Businesses will be on the defensive against new regulations and on the offensive to roll back old ones. The Washington State Labor Council wants lawmakers to expand a loan fund for manufacturing, create a new infrastructure fund and start a state community investment bank, among other goals.

At least one fact of life in Olympia won’t change: Labor, business and other interest groups will be out in force trying to influence the agenda. More than 960 lobbyists registered with the state in 2010.

Spending on lobbying totaled $53 million last year, including some money donated during campaigns, according to the Public Disclosure Commission.

Jordan Schrader: 360-786-1826
jordan.schrader@thenewstribune.com

Brad Shannon: 360-753-1688
bshannon@theolympian.com
www.theolympian.com/politicsblog

Editor's note: This story was edited to correct the amount of money spent on lobbying last year.