The state is on track to collect about $400 million more in revenue in the current and upcoming budget cycles, giving legislative budget writers a boost as they attempt to negotiate a deal in the remaining 10 days of special session.
The Economic and Revenue Forecast Council expects the state to collect $327 million more in the 2015-17 cycle than previously projected. It also projects an additional $79 million more in the current 2013-17 budget cycle.
Construction, real estate and marijuana taxes are among the biggest drivers of the revenue increase, according to state economist Steve Lerch. He said the state is also enjoying a strong labor market.
“People continue to move to Washington. This is a desirable place to be,” Lerch said. “So we have seen more labor force growth than the U.S. That is helping to drive our economy at slightly stronger rates than what we’re seeing nationally.”
Economists are forecasting $1.1 billion in marijuana excise taxes and license fees through 2019, partially due to the passage of a Senate bill this year that overhauls the state’s medical marijuana system.
The House’s lead budget writer, Rep. Ross Hunter, raised concerns Monday about the “river of money” economists expect to flow from the state’s legal marijuana stores.
“If we write budgets assuming that and it doesn’t come true, I’m concerned what actions we have to take,” Hunter said.
Budget writers say they are continuing to talk as the state approaches the final stretch of the 30-day special session, which ends on May 28. If they don’t complete the budget by the deadline, lawmakers must go into another special session.
Lead Republican budget writer Sen. Andy Hill said the latest forecast makes their job easier than it was at the start of session in January.
“At some point you have to say, ‘Holy Cow, we have a lot of money.’ We should be able to get this job done very quickly. We are well beyond what you would think you would need to get out of town,” Hill said.
The forecast was scheduled to be released in June, but was moved up to May to help lawmakers as they continue budget negotiations.
Latvia’s ambassador to the United States made his first-ever official visit to Washington state’s Capitol late last month with a message for state leaders: Latvia is an independent country, free from Russia’s grip and eager to trade.
Latvian Ambassador Andris Razans and President Barack Obama.
“Europe is not only five countries,” Ambassador Andris Razans told TVW during his visit to Olympia. “There are other countries in Europe – smaller, but with great potential, great opportunities.”
Part of the former Soviet Union, Latvia was under Russian occupation from 1940 to 1991. In the more than 20 years since, the small country of barely more than 2 million people has grown into its independence, now serving in the Presidency of the Council of the European Union, the leadership role that rotates among 28 member countries.
Now, for the first time, the Baltic state is reaching out to Washington state as part of a larger effort to encourage trade with other nations. “Our problem is we have been hidden behind that double Berlin wall from during Cold War times – a small wall in Berlin, a huge Soviet border in our case,” he said. “That’s past, that’s history, I think now it’s really important to engage.”
Razans was in Olympia to promote the Transatlantic Trade and Investment Partnership, a controversial proposal that would create the world’s largest free-trade zone between the EU and United States.
The deal would merge regulatory standards, allowing the two economic superpowers to trade freely and in higher volumes, covering nearly half of the world’s gross domestic product. Razans said it’s a win for both sides. “It will determine development in the next decade, not only on our side of the Atlantic, but here as well,” he said.
But the proposal has faced opposition on both continents. Critics worry the proposal would undermine democracy, allowing big business to take legal action against laws that threaten free-trade or lead to smaller profits – laws like minimum wage.
Washington state has a role in the economic relationship between the two continents, Razans said. “Washington definitely is among that states that do trade with Europe in very big volumes, with great companies and products every European kid knows,” he said.
That’s part of what Razans told Washington’s Lt. Gov. Brad Owen during his visit to the state, which included a tour of the Boeing Co. and meeting with University of Washington students.
He said it’s part of a new effort for Latvia. “We come from 50 years of situations where nobody really tried to develop our exports,” he said. “I’m trying now to understand as Ambassador where we have these intersections.”
One of the products Razans hopes Latvia and Washington will intersect: wine. “We are not the greatest nation on Earth at producing wine,” he said. “Latvian wine is undrinkable, I think. It’s just for fun and personal pleasure. Washington is a great wine-producing state.”
Latvia can offer music in return. “Latvia definitely punches high, high, high above our weight in music,” he said. “Among the top ten opera stars these days, top four or five are Latvians. Out of 2 million people, is not that bad.”
Washington leaders have not voiced concerns about the international trade agreement, Razans said, but supporters in the EU face one powerful opponent: Russia.
Latvia’s neighbor that occupied the country for more than half a century has been “financing and working against this deal,” Razans said. He said Russia is behind campaigns and non-governmental organizations that aim to “make sure there is no agreement between Europe and the United States.”
Russia’s threat to Latvia
Russian military activity is increasing in the Baltic region, and after the country’s annexation of Ukraine’s Crimea region, some say that could have troublesome implications for Latvia. The country is made up of 26 percent ethnic Russians – more than Ukraine.
But Razans said the threat is exaggerated. “We don’t have a direct military threat,” he said. “When I read that we might be the next target, I think it’s stupidity at a high level, it would be the same thing to say one country has quite many Muslim population, it doesn’t mean that all will fight in Syria or Iraq in ISIS.”
Russia has impacted Latvia’s political and trade relationships in the past, but now, his country is part of the EU and things are different, Razans said. That’s what he hopes Washington leaders will come away with after his visit.
“I wish that they put a pin on European map with the name Latvia,” he said. “Latvia might look small on a map, but if you take into account that we are part of the EU internal market, it’s not that small at all.”
Latvia will serve in the six-month rotating EU presidency until July, when Luxembourg will take over.
Watch an edited portion of TVW’s interview with Razans below:
The Washington State Legislature’s 2015 session begins Monday, Jan. 12. Opening ceremonies start at noon, but tune in to TVW early to catch exclusive interviews with lawmakers, who will discuss key issues for the coming months.
Starting at 10 a.m., The Impact’s Anita Kissee will host the live show from the Capitol rotunda. Gov. Jay Inslee will stop by to talk about his budget proposal and more.
Guests include House and Senate leadership from both sides of the aisle, including Senators Sharon Nelson, Mark Schoesler, Andy Billig, Linda Evans Parlette and Representatives Dan Kristiansen, Pat Sullivan, Joel Kretz and Eric Pettigrew.
Hear about key issues including education, transportation and mental health from Senators Jeannie Darneille, Doug Ericksen, Curtis King, Steve Litzow, Rosemary McAuliffe, John McCoy and Steve O’Ban, plus Representatives Judy Clibborn, Hans Dunshee, Richard DeBolt, Cary Condotta and Sharon Wylie.
We’ll also get insight about the session from Capitol reporters Jim Camden of The Spokesman-Review and Jordan Schrader from The News Tribune.
TVW will carry gavel-to-gavel coverage of opening ceremonies beginning at noon.
Stay tuned to TVW throughout the session for coverage of the state Legislature. Starting opening day of session, Legislative Review will air nightly at 6:30 and 11 p.m. “The Impact” airs Wednesdays at 7 and 10 p.m. and Inside Olympia with Austin Jenkins is Thursdays at 7 and 10 p.m.
It wasn’t quite a debate, but the differences were clear in presentations on state legislative priorities given by Sen. Andy Hill (R-Redmond) and Rep. Reuven Carlyle (D-Seattle) at the Washington Policy Center’s Solutions Summit in Bellevue on Wednesday.
Rep. Reuven Carlyle (D-Seattle), seated, and Sen. Andy Hill (R-Redmond) speak at the Washington Policy Center's Solutions Summit in Bellevue on Wednesday.
Hill made the argument that the surplus in the state revenues would allow for an additional $1 billion in education spending and cover existing expenses over the next biennium.
However, Hill, the Senate Ways & Means chairman, criticized Gov. Jay Inslee‘s proposed new capital gains tax in his $39 billion, two-year budget, which the governor introduced last month.
“We do not have a brutal deficit,” Hill said. “It’s a false choice to say you raise taxes or you make cuts.”
Carlyle, the House Finance chairman, was critical of Washington’s taxing system as a whole, which he says squeezes middle- and lower-income taxpayers as well as small businesses. But Carlyle was also skeptical of the idea that the spending side of a budget should get the most scrutiny. He said many of the state’s tax exemptions to businesses have not been revisited since they were passed.
“I believe the best tax structure would be low rates, broadly applied with few exemptions,” he said.
The Washington Policy Center, a pro-business think tank, hosted Hill, Carlyle and Sen. Curtis King (R-Yakima) and others in a half-day summit that prepared attendees and other supporters for the 2015 Washington state legislative session. The Bellevue event, which drew 400 people, was the second day of a two-day summit on legislative issues. The first day was held in Kennewick on Tuesday.
Other speakers at the Bellevue event included former Attorney General Rob McKenna, former New York Gov. George Pataki, Forbes columnist and former health care policy advisor to Mitt Romney Avik Roy and a small business panel that included former Starbucks president Howard Behar and restaurateur Taylor Hoang, who owns Pho Cyclo restaurants.
Sen. Curtis King (R-Yakima) speaks at the Washington Policy Center's Solutions Summit in Bellevue on Wednesday.
In a transportation forum, King, the Senate transportation chairman, declined to discuss in detail why lawmakers failed to come up with a transportation package that would pay for major road projects in the last session, but said that going forward, the state needs to consider what projects would make the greatest economic impact to the state as a whole.
“We got to take this limited amount of money and use it to address our problems,” he said. “Bike and ped paths are not our problem… They are nice to have, but not our problem.”
King, who was in the panel with Marc Scribner, a research fellow at the Competitive Enterprise Institute, also criticized cities that make local decisions without considering how transportation will be affected, such as in Seattle, where several projects in the South Lake Union area will bring 44,000 people to the area to live and work and bringing further congestion to the area, he said.
“Because Seattle said, ‘Hey, we’ll let you build those towers,’ is that the state’s problem?” King asked.
Eight months after the deadly Oso mudslide, people in the community continue to suffer from post-traumatic stress disorder and are struggling to move forward, local officials told lawmakers Thursday.
There is also a “tenseness” because of the uncertainty of what will happen to the Stillaguamish River during the flooding season, said Arlington mayor Barbara Tolbert at a meeting of the Senate Natural Resources and Parks Committee.
“We have very resilient people in the community,” said Tolbert, who said the region’s next challenge is recovering economically from the disaster. A federally-funded economic review is underway, and the report should be completed early next year, she said.
The Oso mudslide on March 22 killed 43 people, burying dozens of homes and part of State Route 530. The road reopened to two-way traffic in September.
The committee also heard testimony from people involved in the recovery effort at the mudslide. Retired forest service member Peter Selvig listed several problems he encountered in the days after the mudslide as he helped organize efforts on the Darrington side of the disaster.
He said he was twice denied flood lights, and he also received pushback on the number of portable toilets and body bags he ordered. Communications were focused on the Arlington side of the disaster, he said, leaving the Darrington side with minimal services.
“These are some of the confusions that just rip your gut apart thinking that this was happening and there was nobody there to respond,” Selvig told the committee.
Economic forecasters said Wednesday the state is on track to collect $36.9 billion in the next two-year budget cycle, about $275 million more than they previously forecasted.
But it is still not enough to cover current government services and K-12 education obligations. Lawmakers will be facing about a $2.2 billion dollar shortfall for the 2015-17 budget.
Initiative 1351, a new measure approved by voters to reduce class sizes, added a significant cost to the budget projections — costing about $2 billion during the same budget cycle.
“If you look at the outlook as it stands today, we’re $2 billion short which matches pretty close to 1351,” said Sen. Andy Hill, R-Redmond.
“Overall, 1351 creates a problem. But if you take that out of the equation, it is kind of what we expected,” Hill said.
He said it is “too soon to tell” if the Legislature will vote to suspend the initiative. It would require a two-third supermajority vote of the Legislature to change a voter-approved initiative.
“I think we have to figure out, do we have two-thirds to change an initiative that just got passed by the people? There’s typically a lot of reluctance to change those,” said Rep. Ross Hunter, D-Medina.
Hunter noted the budget doesn’t include collective bargaining agreements for state employees “who have had a 15 percent reduction in real salaries in last six years,” nor does it include half of the state’s McCleary obligations. Looking ahead, the state can expect a $4.7 billion dollar gap by the end of 2019, he said.
Gov. Jay Inslee will propose a budget in December. The House and Senate will each release budget proposals during the 2015 legislative session.
On this special one-hour edition of “Legislative Year in Review,” we recap the highlights from the 2014 session — from opening day to Sine Die. The show includes debate over issues such as the Dream Act, minimum wage, gun control, abortion insurance bill, death penalty, mental health, teacher evaluations, taxing e-cigarettes and the supplemental budget. Plus, a quick wrap-up of several of the bills that passed this year. Watch the show below:
Washington’s legislative leaders will adjourn the 2014 session Thursday, unless a special session extends the deadline. But before they go back to their districts TVW will air back-to-back live interviews with more than 20 lawmakers starting at 8 a.m. Thursday.
Anita Kissée reporting live from the capitol rotunda for TVW's special edition mid-session show Feb. 18.
Anita Kissée, host of The Impact, will sit down with Gov. Jay Inslee, House Democratic Majority Leader Rep. Pat Sullivan and House Republican leader Rep. DanKristiansen.
Other guests include Sen. Linda Evans Parlette, R-Wenatchee, Rep. Ross Hunter, D-Medina, Rep. Joe Fitzgibbon, D-Burien, and Sen. Steve Litzow, R-Mercer Island. The lawmakers will talk about a range of issues from education to the capital budget to the environment.
Plus, Austin Jenkins, host of TVW’s “Inside Olympia” and reporter for the Public Radio Northwest News Network, and Brian Rosenthal, a state government reporter for The Seattle Times, will stop by to talk about some highlights from the past 60 days and what to expect when the election process begins.
Coverage will be here on the blog, and you can watch live on TVW or via webcast.
State officials estimated that legalized recreational marijuana could bring in $51 million to the state’s general fund in the 2015-17 biennium.
It’s the first time that the state has included marijuana in its revenue projections, since Initiative 502 passed in 2012, which legalized recreational marijuana, according to the Office of Financial Management.
The Economic and Revenue Forecast Council discussed the estimate, and projections for the next six years at meetings broadcast on TVW Wednesday.
The forecast for the remainder of the 2013-15 biennium showed general fund revenue coming in $30 million higher than in the November forecast, according to the Office of Financial Management. The general fund revenue over this biennium is expected to be $33 billion.
The state’s general fund collections in the following biennium, 2015-17, are projected to be $35.7 billion, an increase of $82 million over the November projection and including the $51 million expected in marijuana taxes.
The rest of that increased forecast was due to slowly growing economy, said Steve Lerch, chief economist of the Economic and Revenue Forecast Council.
Lerch told lawmakers Wednesday that council staff has been reluctant before this forecast to include marijuana tax revenues in general fund projections because of uncertainties about the retail stores, including when the the stores would launch and the potential for marijuana businesses to have problems with banks.
The projection includes an assumption that marijuana retail stores would not start until June 2015, Lerch said. Initiative 502 earmarks other revenue from marijuana, such as licensing revenue, to a dedicated marijuana fund, which pays for social and health services and research, he said.
According to OFM, the next revenue forecast is scheduled for release June 18.
A bill that would allow people to perform community service to fulfill a requirement for unemployment benefits passed out of the Senate Commerce and Labor Committee Friday morning.
The Employment Security Department requires people collecting unemployment benefits to perform three job search actions a week — either applying to a job or attending an employment workshop. SB 6392 and HB 2690 would allow the option of performing two hours of community service as one of those three activities.
The Capitol Record is TVW's blog about state government. TVW is a non-profit network modeled after C-SPAN, airing gavel-to-gavel coverage of the state Legislature as well as independently produced shows. For comments or questions, e-mail Christina Salerno.