Late Wednesday night, the House Democrats offered a last-minute budget amendment. Among the elements of the House Democrats’ plan is the one-day delay in the payment of approximately $340 million in state funds to K-12 schools – putting that payment into the 2013-15 budget. Senate Republicans did not include it in their budget proposal and continue to say they will not support it. This will be one of the main issues as deliberations continue in the upcoming special session.
As of Friday morning, here are the issues of importance to local governments, as included in the two budget proposals:
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House Democratic proposal (passed 3-8-12)
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Senate Republican proposal (passed 3-3-12)
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Liquor Excise Taxes
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Reduces by $29M (Temporary beginning 7/1/12.) City portion is approx. $23M.
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Reduces by $29M (Permanently eliminates after 7/1/12.) City portion is approx. $23M.
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Liquor Revolving Fund (Profits)
Under I-1183, local gov’ts will continue to receive their current liquor profit distribution (identified as a "comparable period") plus a proportional share of an additional $10M per year (for public safety).
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Reduces by $42M – diverts to state general fund what is not guaranteed in I-1183. (Temporary beginning 7/1/12). City portion is approx. $34M.
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Reduces by $42M – diverts to state general fund what is not guaranteed in I-1183. (Permanently eliminates after 7/1/12). City portion is approx. $34M.
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Solid Waste Tax
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Permanently diverts from Public Works Assistance Account to state general fund ($71M).
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Permanently diverts from Public Works Assistance Account to state general fund ($71M).
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Pension Contributions
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Slight reduction to the PERS and PSERS contribution rates for FY 2013. Would revert back to existing rates at end of biennium.
- PERS: Beginning 4/1/12, an employer contribution rate of 7.08%.
- PSERS: Beginning 4/1/12, an employer contribution rate of 8.74%.
There would be some savings for local governments.
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Reduces state, local gov’t and employee contribution rates to the LEOFF Plan 2 by 80%. Beginning July 1, 2012:
- Member: 6.53% of pay
- Employer: 3.92% of pay
- State: 2.61% of pay
An approx. savings of $25M to cities and counties.
Also, state intends to skip the PERS, TERS, and SERS Plan 1 unfunded liability payment for 2013 FY (per SB 6378). A $118.7M savings to local gov’t (cities and counties are approx. 85%).
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We’ve been asking you to contact your legislators throughout this session. Now the discussion comes down to permanent reductions versus temporary reductions. As legislators come into this special session, they need to be reminded how important these revenues are to cities and that we cannot support any permanent cuts. Here are some points to make when contacting your legislators:
- We understand that cuts to local government are inevitable. Cities empathize with the difficult choices the Legislature is facing. Cities already made and continue to make difficult choices too.
- Please make these cuts temporary, not permanent. Cities need a chance to recover from their own significant budget reductions. Many cities face immediate service cuts and layoffs in some cases. Permanent losses in state-shared revenues, combined with service and program cuts cities are already facing, make it even harder for cities to recover. In addition, permanent cuts mean the fund could never grow. Cities would be capped at a “comparable period” for the liquor revolving fund distribution.
We will continue to provide updates on the budget negotiations throughout the upcoming special session.
For more information, please contact Victoria Lincoln or Sheri Sawyer.