The Gig Harbor Chamber of Commerce’s annual capital program gave business leaders, city government officials and others a chance to hear what legislators — both Democrats and Republicans — had to say about the state budget, jobs and a host of other important issues.

An all-day event held in the Legislative Building’s Senate Rules Room of the Capitol Campus in Olympia, the Capital Program featured a who’s who of lawmakers, including representatives from the 26th Legislative District: Sen. Derek Kilmer, D-Gig Harbor, Rep. Jan Angel, R-Port Orchard, and Rep. Larry Seaquist, D-Gig Harbor.

Other lawmakers on hand were Sen. Majority Leader Lisa Brown, D-Spokane, House Majority Leader Pat Sullivan, D-Covington, Sen. Mike Hewitt, R-Walla Walla, Sen. Linda Parlette, R-Wenatchee, and Rep. Joel Kretz, R-Wauconda, second in command for the Republicans in the House.

State Auditor Brian Sonntag also addressed those in attendance, as did Gary Chandler, vice president of the Association of Washington Business and a former state legislator.

Surprise appearances were made by Washington State Supreme Court Justice Charles Johnson of Gig Harbor and Lt. Gov. Brad Owen.

Among Gig Harbor city officials in attendance were Mayor Chuck Hunter and city council members Ken Malich, Michael Perrow and Derek Young.

Representing the Peninsula School District were Superintendent Terry Bouck and Deputy Superintendent Chuck Cuzzetto.

State budget
The main topic of discussion was the state budget. Lawmakers are grappling with a $1.4 billion gap between revenues and spending plans during the 60-day legislative session.

“Obviously, the big issue is the budget,” Sullivan said. “The action will be pretty fast and furious once we get to the budget,” referring to the state revenue forecast due Feb. 16.

Views on the progress the Legislature is making in dealing with the budget sometimes broke down along party lines, although everybody recognized the need for producing a sustainable budget.

Democrats, the majority in both the House and Senate, were slightly more optimistic than their Republican counterparts.

“We’re meeting every day and going line by line in the budget,” Sullivan said, noting their work is not getting much play in the press. “We have to get this done in 60 days. There is no magic bullet.”

Reforms are needed that improve the long-term budget outlook and protect the social safety net, Brown said.

“We’re trying not to take hostages to the ballot,” she said. “We want it to be a responsible budget everybody can live with.”

She was cautiously optimistic about producing a budget during the regular session.

“We’re hopeful to get done on time,” she said.

The tone from some on the other side of the aisle was less hopeful.

Hewitt made no secret about his frustration at what he perceived as a lack of action on the budget.

“It could be a long session,” he said, an oblique reference to the possibility of a special session if legislators can’t finalize a budget before March 8. “This state is not being properly run.”

Kretz shared those sentiments.

“I promise you, we haven’t cut to the bone,” he said of the notion of major state spending reductions, adding the state needs to prioritize and fund core government functions, like public safety, first.

“I would argue the safety net has gotten far too wide,” he added, citing state medical assistance expanding up the income scale beyond low-income households with children.

He also questioned the wisdom of waiting for the state revenue forecast before lawmakers get serious about the budget.

“That just gives us three weeks to get the budget done,” Kretz said.

Likewise, some in the business community remain unimpressed by the state’s handling of the budget, as represented by Chandler. Describing Olympia as “the land of Oz,” he said the state budget needs to mirror the reality of revenues.

Business owners are cutting back during hard times, Chandler said, and the state has to do the same thing.

“Budget reforms aren’t going too well at this time,” he said.

Seaquist recommended a package of budget reforms before putting any tax increases on the ballot, acknowledging the reality of the tough fiscal situation the state finds itself in.

“We’re in the business of strategic downsizing,” he said.

Several other legislative issues important to the Gig Harbor Chamber of Commerce were discussed as well, including the Tacoma Narrows Bridge tolls, the state’s minimum wage, state pension reform, business and occupation taxes and education.

Bridge tolls
The Gig Harbor Chamber supports exempting the Tacoma Narrows Bridge from the sales tax on construction of the span, a move that would shave about $58 million from the cost to tollpayers over the next 10 years.

Kilmer, who has long argued the state shouldn’t have to pay sales tax on the construction of the bridge, has proposed legislation to have it completely removed.

“You can’t refinance, but you can restructure,” he said of having the state treasurer’s office look into those efforts, which he compared to having a longer-term mortgage on a house.

Regarding the current state Transportation Commission rules requiring a fund balance of 12.5 percent of the annual debt service, Kilmer described that as “stupid by all accounts.”

Minimum wage
Washington state’s minimum wage, $9.04 per hour, is the highest in the nation.

The Gig Harbor Chamber takes the position that a freeze on the minimum wage is needed, with the creation of another form of entry-level pay — a “training wage” — as many businesses are no longer able to afford to hire employees new to the workforce.

The state Department of Labor & Industries calculates the minimum wage each year as required by Initiative 688, approved by voters in 1998, based on the Consumer Price Index that covers the costs of goods and services needed for day-to-day living.

Brown said she believes any change to the minimum wage would be overturned by a vote of the people.

“The training-wage idea has more momentum,” she said. “I don’t see it this year.”

State pension reform
“We have to start addressing the retirement system,” Chandler said, predicting that local governments like Gig Harbor would be hit first if the state’s pension system goes down.

Two of the state’s pension plans — closed in the 1970s — have unfunded liabilities that total about $3 billion.

State Sen. Joseph Zarelli has introduced Senate Bill 6378, which aims to reduce the state’s pension costs for new hires.

For the past decade, most new state employees have been able to choose from two retirement plans. The first option is a defined-benefit plan that has been offered since 1977, so called because it guarantees a specific benefit when an employee retires.

The second option, offered since 2002, splits retirement benefits between a defined portion based on employer contributions and a portion defined by contributions from the employee — a so-called hybrid system.

Private-sector pension plans are more commonly the defined contribution type.

Zarelli’s bill, which the chamber supports, would scrap the older plan, meaning new hires would automatically be enrolled in the hybrid system. It also would eliminate the early-retirement benefit for new hires.

Those moves could save state government and local governments an estimated $2.3 billion over 25 years.

“In the short run, a defined-contribution plan doesn’t save money,” Brown said, “but current options won’t be available to future workers.”

B&O taxes
Chandler agreed with Gov. Chris Gregoire’s efforts to have the state collect the business and occupation taxes and pass the local portion back to cities, like it does with the sales and use tax.
The state B&O tax is a gross-receipts tax measured on the value of products, gross proceeds of sale, or gross income of the business.

Chandler said the AWB supports the governor because many cities collect B&O taxes independently using their own rules, penalties and fees, which creates a significant burden for small businesses.

Education
There was a consensus that higher education funding had been slashed about as much as possible, with any further cuts damaging the state’s labor pool.

The state’s higher education system has been nearly cut in half, Seaquist said.

Brown agreed: “Higher education has taken more than its share of hits so far. That’s clear.”

“If you don’t have an educated workforce, you’re going to struggle,” Sullivan said.