Legislative update: Despite passing budget, legislature still in session

From Diana Carlen
WAWG Lobbyist

The Washington State Legislature is still in its 3rd special session despite having averted a partial government shutdown last week by passing a two-year operating budget that was signed by the governor just before midnight last Friday. The reason the Legislature is still in overtime is that an agreement on a capital budget has not been reached.

The capital budget includes appropriations made to state and local agencies for building and construction projects, such as public schools, universities, parks and prisons. The Democratic-controlled House approved a $4.2 billion capital budget by a vote of 92-1 early last Saturday that included funding for both Washington State University buildings that are priorities for the Washington Association of Wheat Growers. However, the Republican-controlled Senate did not vote on the House proposed capital budget. Senate Republicans have remained committed to hold firm in not passing a full capital budget without first passing legislation aimed at overturning a recent court case known as the Hirst decision. That decision effectively limited the use of new domestic wells in rural areas.

The Legislature did pass a stop-gap capital budget last Friday totaling around $330 million to keep existing projects going and avoid layoffs of employees paid by that category of spending.

The third special session is scheduled to end on July 20. It is anticipated that the Legislature will only focus on legislation related to the capital budget and the Hirst decision during the remainder of the session. If the Legislature cannot come up with an agreement on the capital budget and Hirst by July 20, it is unlikely that the governor would call another special session this year.

Operating budget summary

In the final hours of the fiscal year, the Legislature passed an operating budget that totaled $43.7 billion. The budget invests an additional $7.3 billion more in K-12 education funding over the next four years to comply with the McCleary decision. The operating budget includes the following tax changes:

  • Establishes a new state property tax for common schools, beginning in calendar year 2018, for a total rate of $2.70 per $1,000 of assessed value when combined with the existing state property tax (this is an increase from current rate of $1.88 per $1,000 of assessed value). It also establishes a new school district levy lid capped at the lesser of $2,500 per student or $1.50 per $1,000 of assessed property value, effective calendar year 2019;
  • Expands the internet sales tax to out of state retailers;
  • Repeals the sales tax exemption for purchasing bottled water; and
  • Narrows a tax exemption for extracted fuel.

Notable highlights from the budget include the following:

  • Clean air rule. $4.6 million is provided to the Washington State Department of Ecology for implementation of the Clean Air Rule which establishes caps on greenhouse gas emissions of certain businesses.
  • B&O tax exemption for sale of commercial fertilizer. Creates a new exemption to the B&O tax for the sale of commercial fertilizer, agricultural crop protection products and seed from an eligible distributor to an eligible retailer.
  • B&O tax reduction for manufacturers. Reduces the B&O tax rate for manufacturers to .2904 which is the same rate for Boeing. However, the governor vetoed this today.
  • Voluntary Stewardship Program. $7,602,000 is provided to the Washington State Conservation Commission to implement the voluntary stewardship program.
  • Food Policy Forum. $50,000 is provided for the Conservation Commission to convene and facilitate a food policy forum.

The final budget can be found here. Agency detail reports can be found here.