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Published on Friday, March 1, 2013

Supreme Court decision and its impact on budget discussions

The State Supreme Court ruled earlier this week, by a 6-3 decision, that it is unconstitutional for voters to tell legislators they need a two-thirds supermajority vote to raise taxes, unless the state constitution is first amended to embed that provision. For the constitution to be so amended, two-thirds of legislators in both the House and Senate would either need to: (1) approve such a measure to go to the voters, or (2) agree to call a Constitutional Convention where such a matter could be considered to be put before the voters. It is doubtful that either option will be able to gain the needed two-thirds approval this session, but we’ve heard there are legislators who plan to pursue this course of action.

This Court ruling adds one more twist to what was already expected to be a contentious budget discussion during this session. Here are a few of the issues that legislators will be grappling with over the next two months:

  • Legislators and the Governor agree that maintaining current state general fund spending will require additional revenue or budget cuts just shy of $1 billion, or some combination thereof. This assumes revenue projections remain stable and the next state revenue forecast on March 20 doesn’t indicate otherwise. Among the factors impacting the forecast will be effects of budget sequestration in the “other” Washington – including such things as possible reductions in military spending that will significantly impact a state like Washington.
  • The Legislature is under a court order to better fund K-12 education. House Democrats state this may cost $1.4 billion more, while the Senate leadership thinks the amount is less. This will mandate cuts to other things and/or new revenue. At risk are such things as city liquor revenues, public works loans, and infrastructure funding.
  • The state budget contains many things that can’t be cut – leaving fewer items that can. Several of the public health and social safety net programs many cities rely on to help citizens in need are potentially vulnerable to cuts. These programs also have strong and vocal advocates within the Legislature and lobbying from the outside. Cuts of any significance will be difficult to pass.
  • New transportation funding to help maintain our systems and economic vitality are being pursued by many interested parties, including individual cities and AWC. Whether or not a package – including new local funding options – can be passed and probably sent to the voters, likely depends first upon an agreement on how to balance and fund the state’s general fund. When that dust settles, there may not be any political appetite to address transportation needs.

Therefore, as some legislators focus on a constitutional amendment in response to the Supreme Court decision, others consider whether they can gather a majority of votes for tax increases, and numerous interest groups work to ensure their funding needs are addressed, we anticipate a particularly tough budget discussion during this session.

Categories: State budget