Welcome to Week 24 of the 2015 legislaitve session!

Week 24 and counting!  We are closing in on the final days of the second special session, and, as of this writing, the legislature has not reached agreement on the budget.  11:59 PM on the 27th will mark the end of the special session, and it remains to be seen what will happen after that.  In 2013, the legislature was very, very close to finishing up the budget at the end of the second special session, so it went into a really short third special session (hours, not days!).  We will know soon what will happen after this session ends, so stay tuned!  

On June 22nd, the House released and heard their third budget.  It was a no-new-revenue budget, which means a number of items that had been funded in their previous budget(s) were no longer funded... Or they were funded at a lower amount.  A few examples: $4M for the Early Support for Infants and Toddlers program was part of the previous House budget but not in the June 22nd budget; the previous budget had 107 new FTEs for the Children's Administration while the June 22nd budget included only 43.1; and the previous House budget included 6,300 new slots for the Early Childhood Education and Assistance Program (the state-funded version of Head Start), but the June 22nd budget did not include any new ECEAP slots.  

It should be noted, however, that in addition to releasing a new budget on the 22nd, the House introduced and hear HB 2269, which, through closing a number of loopholes, generated revenue to 'buy back' a number of items that had been in their previous budget but not in the June 22nd budget.  Below is a summary of the tax loophole closures/revenue generated, as well as a list of items that would be funded with the additional revenue.

The revenue package (HB 2269) includes the following elements:

  • Eliminates the preferential B&O tax rate of 0.138 percent for resellers of prescription drugs.

  • Repeals the sales and use tax exemption for bottled water.

  • Changes the nonresident sales and use tax exemption for tangible personal property into a remittance program.

  • Narrows the use tax exemption for extracted fuel.

  • Eliminates the preferential B&O tax rate of 0.484 percent for royalty income.

  • Establishes a nexus standard for out-of-state sellers that derive income from making retail sales into the state through agreements with Washington residents.

  • Establishes an economic nexus standard for wholesale transactions attributable to Washington by out-of-state businesses.

  • Limits the availability of a real estate foreclosure exemption.

  • Requires local governments that issue building permits to supply subcontractor information to the Department of Revenue.

  • Increases late payment penalties for state excise taxes.

The following funds would be generated from the above loophole closures and appropriated for the 2015-17 biennium:

  • $159.2 million from the ELTA for K-12 programs and compensation.

  • $103.6 million from the ELTA for higher education institutions and financial aid.

  • $32.0 million from the Building Construction fund for the University of Washington.

  • $28.3 million for the Department of Early Learning (would include 1600 ECEAP slots and funding for ESIT)

  • $37.2 million from various funds for debt service. 

The Senate also released and heard their third budget on June 25th, SSB 6052.  They also introduced a revenue bill, SB 6138, that addressed a few tax exemptions and generated a bit over $150M in new revenue... and, although it will not be heard, SB 6057 was passed by the Ways and Means Committee, providing a number of new tax exemptions - roughly $116M worth.  The net additional revenue proposed by the Senate is around $35M.

Another bill, just introduced by the Senate, is SB 6051, a bill that would keep government operating for 30 days, in the event there is not a budget on July 1st.  Otherwise known as a Continuing Resolution, this is a bill that would be precedent-setting - the state has not introduced or passed such a bill previously (or to our knowledge), and it was made very clear that it would absolutely be a last resort.  We'll see...

Timing for passage of any of the new House and/or Senate budgets and revenue bills is unclear.  There are many balls up in the air, and limiting speculation is probably wise.  Our hope is that agreement is reached on the budget bills soon, that the budget is passed by June 30th, and that we don't have to resort to a Continuing Resolution or shutdown.  If this is indeed what happens, we will put out a very brief update and a more complete update after having the opportunity to review and digest the budget (and related) bills that passed.  So again, stay tuned!  And... think positive thoughts!!

Please note: This update will provide information about the status of a number of bills that are still active; however, will not review/summarize all of the various budget/revenue bills identified above.  Information about the bills can be found at leg.wa.gov.

If you have any questions, email us at info@partnersforourchildren.org. Also, please like us on Facebook and follow us on Twitter for updates on our work during the legislative session and throughout the year.

Have a good weekend!

Laurie Lippold

Public Policy Director