Dear Friends and Neighbors,
We are four weeks into the 2011 legislative session and it is different from any other I have experienced. We have already voted on a budget measure to correct the overspending in the current 2009-11; budget, we are racing to get meaningful unemployment insurance tax reform passed by February 8; and we have already been denied the opportunity to make our budget process more transparent.
Budget Remains Unsustainable
The recent budget proposal passed by the majority party is unsustainable, not honest with taxpayers, and fails to prioritize or reform government. Substitute House Bill 1086 reduces expenditures for the remainder of fiscal year 2011 by around $222 million. However, I voted against the measure because it relies too heavily on retroactive cuts to education and did not make the necessary reforms to state spending and large government entitlement programs. Even the Everett Herald editorialized that the “GOP had a smarter fix” for our state's budget shortfall.
Our proposal did not touch the K-4 teacher enhancement dollars that are retroactively taken away by the majority party proposal. We don't believe you take back funds that have already been budgeted and used to hire new teachers. Where are school districts supposed to get this money? And how can they budget in the future if they have to continue looking over their shoulders at the Legislature to see if promised funds are scheduled to be “recalled?”
The bottom line is their plan is not sustainable and leaves a current budget deficit of more than $200 million. And, it continues to rely on one-time money to fund on-going programs, and takes the same old “kick the can down the road” approach.
I met with Governor Gregoire early in the session regarding unemployment insurance (UI) tax reform. We agree it is important to address UI this year.The catch is we need to pass UI reform measure by Feb. 8 for the tax deferral to take effect this year for the employers. Although House Republicans and the governor are on the same page and support her bill, organized labor and leadership in the Democrat party are blocking the measure. The Seattle Times printed an editorial I wrote, “Governor's unemployment reforms pose road to recovery” on the UI situation.
This tax adjustment would come at a time when tax rates are set to increase by an average of 36 percent. In the latter part of 2008 and 2009, the state paid out significantly more in benefits than it collected in taxes. This caused a dramatic increase in the tax rates in 2010, and if changes are not made this year to how the social tax is calculated, there will be a dramatic increase in 2011 and 2012 as well. The House Democrat proposal, that neither the governor nor I support is House Bill 1091. In its current form, this bill would increase extended benefits, add dependent benefits and drive costs to the system higher.
As of Friday, Feb. 4 we have reached an agreement on HB 1091. The plan is to vote on the agreed upon bill Monday. Things can change quickly down here, but we are hopeful the agreement will be honored and we will have a win-win proposal for both employers and labor passed and signed by the governor by the end of Tuesday. We will share the details with you in our next update. There are a few details still being worked out and we want to make sure we get the bill through the legislative process.
Last week, Republicans in the House of Representatives introduced two amendments that would have required state budgets be available for either 72 or 48 hours prior to a final vote of the House. Unfortunately, we only managed to maintain the current 24 hour amendatory process. It's important to remember that in the final hours before a budget vote, a striker amendment can replace the initial budget that has moved through the public process. The striker may have substantive changes that neither we, or the public have seen. Twenty-four hours is simply not enough time.
The Legislature should not be an institution of secrets, but an institution of solutions. The public has felt shut out of the process in the past and want a say in the important decisions that affect all of us. Ample time is needed to review and provide input on a budget before the House takes a final vote on a bill that spends taxpayer dollars. Last year, we had only a few hours to review the final 500+ page document before we were to vote on it. This is no way to conduct the people's business and appropriate YOUR money! These amendments would have ensured some accountability and transparency in the budget process.
Health Savings Accounts?
The Public Employee Benefit Board (PEBB) is moving forward with a Health Savings Account(HSA)/high deductible health plan option for state employees in 2012. It is unfortunate they didn't move forward with this earlier as required by the 2006 law I was able to pass through the legislative process. The state AND employees could already be dramatically lowering their health care costs.
While I am excited that this FINALLY seems as if it is going to be an option, I am extremely disappointed the compliance of this law seems to come only under the duress of the state's current fiscal and budget crisis, and the governor's directive to hold the state funding rate constant for the next two years. I believe the unions have also decided to soften their opposition on this issue, since they are finally being asked to bear more of their health care costs.
As always, please let me know if you need additional information on any or all of the topics above. If there are other bills you are watching, do not hesitate to contact my office. The budget is getting most of the attention, and rightfully so, but there are many other issues being worked on by the legislators this session.
Thank you for allowing me to serve you.