Washington state budget (2012-2013)

Note: This article was last updated in 2013. Click here for more recent information on state budgets and finances.

The supplemental budgets enacted in spring 2012 to the operating, construction and transportation budgets can be found here.

Pensions

In July 2012, state budget director Marty Brown announced a $390 million increase in the state's contribution to numerous public pension plans in 2013-2015, about $51 million more than the Office of Financial Management had been assuming.

Corrections

Lawmakers cut funding for the Department of Corrections by more than $300 million, requiring the department to reduce its work force by 20 percent and close three prisons.

2012 Special Legislative Sessions

When lawmakers failed to address the $1 billion budget shortfall in the state budget during their regular 60-day legislative session, Governor Chris Gregoire called a 30-day special session to begin on March 12, 2012. When that special session expired on April 9, 2012 and lawmakers failed to complete their work, Gov. Gregoire called lawmakers back into a second, one-day special session at midnight on April 10. Lawmakers passed the supplemental state budget on April 11, 2012. The Washington State Senate passed the measure on a 44-2 vote and the Washington House of Representatives earlier passed the negotiated agreement on a 64-34 vote. Lawmakers also approved a $1 billion capital budget package that supporters said would lead to 18,000 construction jobs.

Highlights of the supplemental budget passed in April 2012 include:

• No cuts to education;
• Implementing an accounting change by which the state will claim control of local sales taxes before they are redistributed back to jurisdictions at the appointed time, usually a month after they are collected. The change is expected to generate $238 million for the state;
• Increasing taxes, generating $14.5 million by eliminating a tax deduction for some large banks, and changing rules on roll-your-own cigarettes to generate an expected $12 million;
• Leaving some $320 million in reserves.

Republicans criticized Democrats for wanting to push a payment to schools into the next budget period, and Democrats criticized the Republicans' budget plan to skip a payment to underfunded pension plans. Gov. Gregoire proposed a third plan under which sales-tax revenue collected by the state on behalf of local governments would stay in the state's general fund longer, giving the state an additional $238 million to spend elsewhere. Local governments would lose a relatively small sum in the form of interest but the state said they would pay the governments those funds.

House Democrats abandoned their initial proposal delaying a payment to schools into the next budget cycle and instead adopted the governor's plan to use an alternative accounting maneuver regarding local sales taxes. That plan includes a two-year balanced budget measure that would require an outlook for a four-year budget. Republicans want a four-year requirement in statute that is more than an outlook.

The Special Session ended April 30, 2012. The governor signed the supplemental budget into law on May 2, 2012.

Regular 2012 Legislative Session

After addressing only a portion of the state's $1.5 billion shortfall in a special session at the end of 2011, the Washington State Legislature took up budget issues during the regular session in 2012 which began on January 9, 2012. On March 7, 2012, with one day left until the end of the regular session approaching and no deal in sight, Gov. Gregoire predicted that a special legislative session would be necessary to address the roughly $1 billion budget shortfall in the state budget. She was correct. No budget deal was reached, and the governor called a special session.

Transportation budget

The Senate passed a transportation budget on March 6, 2012, with $48 million in new spending over the next year for freeway projects, transit, the state patrol and the ferry system. The House transportation budget passed on March 5, 2012, has $9 million more in new spending. The Senate budget had a more modest set of driving-related fee increases. A joint-chamber conference was needed to draft a compromise. The biggest issues preventing agreement between the Republican and Democratic budgets were provisions to skip or delay certain payments.

Senate general fund budget proposals

On March 2, 2012, Republicans in the Senate, joined by three Democrats, used a rare procedural move to take over the budget plan on the Senate floor. After midnight, the budget was narrowly approved 25-24 and sent to the House. A summary of the Senate Republican proposed budget can be found here. It appropriated more for K-12 and higher education combined than any other budget proposal.

Senate Democrats released their budget on February 28, 2012, and it can be found here. Both chambers, along with the governor, crafted a compromise. The legislative session is scheduled to end on March 8. A comparison of the plans is shown in the table below:

Source	Spending	Reserves	% of Spending in the Reserves
Senate Democrats	$30.8 billion	$369 million	1.2%
House Democrats	$30.7 billion	$504 million	1.6%
House Republicans	$30.5 billion	$651 million	2.1%

Proposed Tax Increase

Sen. Ed Murray, the Senate's chief budget writer, introduced a plan on February 6, 2012, that would place a temporary sales tax increase on the ballot that year, as well as a permanent capital gains tax that would be dedicated to paying for education for the long term. The plan would have also raised some business and occupation preferential rates, upped the cigarette tax and reduced the sales tax break for cars purchased from auto dealers, which Murray said were necessary to prevent cuts to education. The revenue votes that Murray wanted to take up in the legislature required a two-thirds vote.

House general fund budget proposals

House Republicans released the first legislative budget proposal of the 2012 Session on February 17, 2012. It totaled $1.6 billion and included:

• $63 million in fund transfers
• $160 million in unspent agency funds (known as 'reversions')
• $64 million in local government distributions
• $336 million in savings from reduced caseloads
• $840 million in spending reductions
• $36 million from repealing three tax exemptions
• $26 million in the sale of surplus property
• $651 million left in reserves

In February 2012, lawmakers were told of a $200 million windfall due to reduced demands for state services.

The House Democrats released their proposed budget on February 21, 2012, and a summary of it can be found here. The full 233 page proposal is also available and can be found here. It delayed $405 million in payments to K-12 education. One significant difference between the House Republican and Democrat budget proposals was the amount spent and the ending fund balance. Republicans left a reserve of $651 million with $30.542 billion spent (reserve is 2.1% of spending) while Democrats leave a $504 million reserve with $30.661 billion spent (reserve is 1.6% of spending). For budget stability, a reserve of at least five percent is recommended. The Democrats' proposal does not propose raising sales tax but it permits local governments to boost taxes.

Special Session November-December 2011

Just months after passing a budget with $4 billion in cuts, the state announced that tax collections for the FY 2012-2013 two-year budget period were projected to be $1.4 billion less than expected through the end of FY 2013. Gov. Gregoire said she viewed the it as a $2 billion deficit, given the need to leave money in reserve. In light of the shortfall, the governor told state agencies to prepare for another round of cuts which could be up to 10 percent of the agencies' budgets and total $1.7 billion. but she also said that she would not make across the board cuts. The governor called a special session of the legislature that began on November 28, 2011.

Gov. Gregoire proposed $2 billion in FY 2012 budget savings on October 27, 2011, prior to the legislature's special session that began in November 2011. Although the governor had hoped the legislature would complete it's work by the end of December 2011, lawmakers said they would likely not be done until sometime in 2012.

The special session ended in December 2011 after the legislature approved a $480 million budget bill, known as the "early action bill" that made less than $200 million in actual cuts and relied on shifting funds to fill the budget gap. The Early Action bill made none of the cuts recommended by the governor but instead used money from a variety of sources, including:

• $82 million in unspent money from the previous biennium
• $50.6 million from quicker conversions of unclaimed property by the Department of Revenue
• $50 million in school-bus spending was delayed until 2013
• $38.4 million came from additional federal welfare aid allocated to the state
• $752,000 saved from limits that ended “over-the-counter” replacement of electronic-benefits cards for welfare clients
• $22.6 million came from a three-year delay in the law changing when people with mental-health disorders are detained or committed involuntarily.

The bill did not address the whole $1.5 billion shortfall as the governor asked the legislature to do. The governor's budget director, Marty Brown, said, "We're kind of disappointed."

Rep. Ross Hunter, the Democrat in charge of the House budget writing, said the funding could be revisited after lawmakers returned January 9 for a regular, 60-day session to close the remainder of the budget gap.

After the special session, the governor proposed that the state lottery be privatized to generate additional money for education. The lottery brought in roughly $523 million in revenue in fiscal year 2011, and approximately $150 million went to the state, mostly for education. The remainder went toward operation of the lottery.

State budget as initially passed

Gov. Gregoire signed the $32 billion FY 2012-2013 biennial budget on June 15, 2011. The budget cuts in the plan added up to $4.5 billion over the next two years. Gregoire did veto many small sections of the budget, including a study that would have examined the feasibility of requiring direct deposit for state employees and a $100,000 plan to create a commission examining whether state agencies were duplicating services. The budget eliminated $4 billion from spending and shifted money from various accounts.

Education Cuts

The spending plan reduced salaries for teachers and classified educational staff by 1.9 percent while slashing pay for administrative staff by three percent. It also suspended programs designed to keep class sizes low.

In January 2012, the Washington Supreme Court ruled that the state had violated the Washington Constitution by not properly fund basic K-12 education and ordered the legislature to come up with a new system by 2018.

The governor and legislators approved double-digit tuition hikes in each of the next two years to offset their $532 million cuts to higher education.

Other Cuts

The budget also included a three percent reduction in pay for state employees, enforced through unpaid leave. Some retired teachers and state employees no longer got automatic cost-of-living pension increases.