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Budget from House Dems relies on delayed payments

Budget from House Dems relies on delayed payments

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OLYMPIA — House Democrats unveiled their plan to fix the state's budget shortfall Tuesday, relying on $400 million in delayed payments and reduced support for local governments while largely protecting basic education from further cuts.

In total, the plan saves some $890 million without asking voters for a temporary sales tax increase, as suggested by Gov. Chris Gregoire. However, the proposal does open the door to higher local taxes.

"We've been working on this since October — to try and come to a place where we have a budget that really doesn't damage the state over the long-run," Rep. Ross Hunter, D-Medina, said. "It's been a challenging project."

The Democrats propose to leave $504 million in reserves.

The biggest savings come from delaying $405 million in some payments to schools until the next budget cycle that begins in July 2013. The proposal also calls for $65 million in cuts to higher education and $224 million in cuts to health care and human service programs.

Democrats suggest reducing distributions to local governments by $82 million, including support for criminal justice programs and the elimination of a sales tax credit for rural counties. To offset that, the state would give local governments authority to make some increases in local taxes — essentially tax increases without a public vote.

Hunter said local governments over time have punted some of their duties to the state.

"We can't afford to do that anymore," Hunter said.

Rep. Gary Alexander of Olympia, the Republican lead on the budget in the House, said he doesn't see any support for this budget in the GOP caucus. He said the Democrats "kick the can" in their budget proposal.

"They don't only kick it once, they kick it twice," he said, mentioning both the shifting of the education apportionment into the next budget cycle, and with putting local funding back to the local governments. He also criticized Democrats for not leaving more money in reserves.

The House Democrats' plan also counts on $18.1 million from the elimination of a tax break that out-of-state banks are able to claim on interest earned on first mortgages. The plan also accounts for nearly $54 million in fund transfers, including more than $37 million in unspent agency money being returned to the state's general fund.

The Democrats also are looking to save $130 million in other areas, including reductions to the Department of Corrections' chemical dependency treatment and community supervision programs.

Lawmakers initially had been looking at a $2 billion budget problem but addressed some of it during a special legislative session in December. They were helped, in part, by a forecast last week that showed a slight uptick in revenue.

That came in addition to about $340 million in savings because of a drop in demand for state services, or caseloads, reducing a roughly $900 million shortfall to about $500 million.

Budget writers said that good economic news helped them avoid deep cuts in education, just a year after they cut salaries for teachers and other education workers. Lawmakers are still working to interpret the implications of a recent state Supreme Court ruling that determined the state isn't meeting its constitutional duty to fund basic education.

Gregoire called the budget proposal "a good start."

"I'm pleased this budget leaves a sizable ending fund balance as we must continue to plan for unforeseen circumstances," the Democratic governor said in a statement Tuesday.

Senate Democrats are expected to unveil their budget proposal next week. The 60-day legislative session ends March 8.


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