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Published on Friday, June 21, 2013

Prelude to wrapping up a deal and going home - finally

All signs point to legislators and the Governor agreeing on a state operating budget before
July 1. Less clear is what size capital budget they will agree to and whether they can reach agreement on a new transportation revenue package before adjourning.

House and Senate leadership have publicly stated they are getting close to an operating budget agreement. Still in play are differences (apparently narrowing by the hour) about how to spend some of the revenue (more or lots more for K-12 Education) and what narrow list of other bills, if any, might one or the other chamber need to reach final budget agreement. 

One of the issues still in play is the telecommunications tax parity bill, which would remove the sales tax exemption for all residential phone lines, require retailers to collect E911 taxes on prepaid wireless phones, and make other changes related to telecommunications. The bill is needed to address the issues raised in the 2011 Sprint Spectrum v. Washington State Department of Revenue case. If the Legislature fails to pass a bill and a court requires the state to issue sales tax refunds, the impact for the next two years is estimated at $430 million for the state and $161 million for local governments.

The Governor’s office has crafted a preparedness plan in case a budget is not adopted and spending authority ceases. Consequences for failure to act become even more real on Monday, June 24, when thousands of temporary lay-off notices are distributed to state employees due to notice requirements in many employment contracts.  

Few people know the details of what is being worked out in the negotiations. We continue to hope, and share with whoever will listen, that further cuts will not be made in revenues shared with cities and that the cuts made last year in shared liquor excise taxes needed to fund local public safety are restored. Along with numerous public and private interests recognizing the need to maintain infrastructure funding and the jobs it creates, we are expressing our concerns about sweeping funds from the Public Works Trust Fund and spending them instead on K-12 education. Both are important.

We expect to see most legislators back in town early next week – if not sooner. Most of them did not plan to be here this late in the year, and many have other work or family obligations that make it likely that they will buckle down and complete whatever they can by sometime next week. We will very soon thereafter report on how it all works out for cities.