Lawmakers Still Wrangling Over Budget Details in Olympia

While state employees wonder whether or not they need to show up for work next Monday, July 1, lawmakers in Olympia continue to wrangle over the final details of the state operating budget.  Layoff notices went out to a large number of state agencies, as is required by law, with the understanding by many that this was a mere formality.  Key lawmakers have pooh-poohed the idea that the government would shut down and have continued to negotiate over the minute details of budget “provisos”, which are specific instructions given to agencies to spend state funds in a particular way or on a particular project.

One of the major sticking points to getting a state budget completed was related to a bill to end the residential telephone service sales tax exemption.  Basic landline telephone service has been exempt from state sales tax for many years.  A state Supreme court decision on wireless service sales taxes put this exemption at risk and could result in hundreds of millions of dollars of refunds of sales tax.

The telecom/cable/wireless industries, along with other beneficiaries of 911 and telecom taxes, came up with agreed to legislation that would fix this court-created problem, and provide new revenue for the state (by ending the sales tax exemption for residential phone service).

The state Senate has been very cautious about this issue, seeing it as a tax increase for mostly rural residents.  However, the risk of the state being forced to refund hundreds of millions of dollars is a very unpleasant scenario for legislators to stomach.

It appears that the telecom tax fix will now be brought up in the Senate for a vote. What the Senate is getting for that is not yet clear but could be either a worker’s compensation reform or a K-12 reform bill (or maybe something else–no one really knows yet).

State lawmakers continue to meet in Olympia daily, with the fiscal year deadline of June 30 quickly approaching.  The one encouraging aspect of this situation is that K-12 will get over $1 billion of new funding and higher education will also get additional money for the next two years.  The issue for higher education is how much the legislature will allow tuition to rise, if at all.  The House has proposed a 3-5% tuition increase while the Senate is pushing for no tuition increases for the next two years.  The money from the telecom tax could go toward higher education to reduce or eliminate possible tuition increases. 

Stay tuned for further reports from the state Capitol as the June 30 deadline nears.