Ideas That Would Make an Ordinary Legislature Choke – Latest List Comes From Senate Ds

Senate Majority Leader Lisa Brown, D-Spokane, unveils Senate Democratic reform list with co-authors Jim Hargrove, D-Hoquiam and Nick Harper, D-Everett.

By Erik Smith

Staff writer/ Washington State Wire

OLYMPIA, Jan. 16.—Seems like everyone at the statehouse has a list these days. The Senate Democrats last week announced a list of the big reforms they’re thinking about this session. The Senate Republican budget chief released his list last month. There’s a moderate Democratic list, from the centrist “Roadkill” faction, though no one outside the legislative backrooms has seen it. And it wouldn’t be a surprise to see a few more lists come from the House.

            Why, there’s a regular list-making craze at the Capitol this season!

            There’s a big reason lists are in, of course. The state is in deep financial trouble, with a $1.5 billion shortfall to conquer this year after three years of recession and budget woes. If lawmakers want to go to voters for a tax increase this year, they better make sure they’ve done everything they can to fix things, explains Sen. Jim Hargrove.

            “There’s a willingness to work on this pile of issues,” says the Hoquiam Democrat, co-author of the Senate D list. “There are some substantive ones in here that, you know, in the past, when budget times were better, people would say we wouldn’t look at because it’s too much trouble.”

            Percolating to the top of everyones’ lists this year are a handful of items – consolidation of K-12 health insurance programs, streamlining of environmental permitting, tort reform.

There really isn’t anything unusual about this sort of thing, of course. Legislative leaders always try to set an agenda at the start of a session, before it inevitably gets away from them. But something seems a little different this time out. Lawmakers of all stripes are talking about tackling big issues that might make fainter-hearted Legislatures choke. And what’s just as interesting is the way everyone seems to be craning his or her neck and studying the list that the other fellow is holding.

            Deep Doo-Doo

            There are two big reasons reform is this year’s watchword. One is that lawmakers have to fill an enormous hole in their budget, either with tax increases or spending cuts, and most likely a combination of both. That’s the immediate problem Hargrove was talking about – before there can be a vote on new taxes, the public to has to be convinced every last efficiency has been wrung from state government, he says. But voters aren’t the only ones. A growing number of lawmakers are raising concerns about another problem that is looming even larger for the state. Long-term spending plans remain seriously out of whack with expected tax revenue.

            If you take everything on the books and project it out into the future, the state will have a cumulative $3.3 billion deficit in 2017, says the state Office of Financial Management. That understates the problem, because the official projection doesn’t include salary increases for state employees, who have gone without raises since 2008, and it assumes that the state can keep a tight lid on health care costs. “You can see that with a few decisions breaking a different way, this could be a bigger issue altogether,” deputy director Stan Marshburn conceded last week during a hearing of the House Ways and Means Committee.

            One estimate being circulated by state Sen. Jim Kastama, D-Puyallup, offers what he says is a more realistic projection for salaries and health care costs. He predicts a deficit by 2017 of $3 billion every year.

            Which explains the rumblings you’re hearing this year from Republicans and centrist Democrats that if lawmakers want to pass a tax increase, they need to rein in state spending first. “Now you know what I think about at 3 o’clock in the morning,” says Senate Majority Leader Lisa Brown, D-Spokane. “There are people who want to see reforms before they vote for revenue, and there are people who want to see revenue before they vote for cuts. And so, you know, that is a bit of a challenge.”

            Dem Vision of Reform

            Brown’s Senate Democrats released a lengthy list of reform ideas last week, cautioning reporters, of course, that they’re only planning to work on them, and they’re not necessarily promising to pass them. It is worth noting that some items reflect partisan battles the Dems have been fighting for years.

For instance, the single biggest item on their list is a crackdown on employee “misclassification,” a high priority for the state Labor Council and building-trades unions. They want to reduce the number of construction workers who are designated as “independent contractors” rather than employees. Contractors and building-industry groups have been fighting that one for years. Advocates claim it would put an additional $1 billion in the coffers of the Department of Labor and Industries for worker-comp programs over 10 years. But it wouldn’t do anything to fix the structural problems in the budget.

Other evergreens on the list might be called “reform,” but they don’t really save any money for state government. For instance, the list includes amendments to I-937, the measure that requires utilities to purchase a growing amount of costly alternative energy, even if they don’t need it. There are a raft of smaller-scale reforms to economic-development programs. And the Senate Dems’ list includes Kastama’s proposal for an “ARROW Commission,” an independent panel of elder statesmen that would review state programs and recommend them for termination. It might save money in the long run, but at this point merely establishes a process.

There are a number of modest changes in procurement policies and other measures that do save money – but the bottom line isn’t all that staggering. The total this biennium would be $85 million; over three years, the savings would be $300 million. Hargrove says he would count it as a victory if lawmakers could pass $60 million worth this year.

No way will reforms cancel the need for a tax increase, Brown says. “It looks to me that after we get through this process, we are still going to have a gap between revenue and expenditures,” she says. Adds Hargrove, “There is no magic bullet.”

            Barely Scratched the Surface

Republicans certainly don’t agree. “In my mind, the Legislature has barely scratched the surface when it comes to reforms,” said Senate Republican budget chief Joe Zarelli last week in his response to the governor’s State of the State address. A full-scale reform effort might eliminate the need for a tax increase, he says.

Zarelli has released his list on the Senate Republican Caucus website. Of particular interest is Zarelli’s call to “dial back” some of the preferential tax rates for specific industries in order to give a B&O tax break to startup businesses. There’s also a state property-tax proposal aimed at reducing the burden of special levies on school districts – House Ways and Means Chairman Ross Hunter has offered a similar idea in the House.

Senate Minority Leader Mike Hewitt, R-Walla Walla, said he was glad to see the other team unveil a reform agenda – but $85 million? They are going to have to do better than that. “Some of the reforms we want to do probably will not equate to dollars either,” he says. “So maybe I shouldn’t be critical, but $85 million isn’t even a start.” 

Meanwhile, there’s another list floating about that no reporter has seen – a list of proposals from the so-called “Roadkill Caucus” of moderate Democrats, which has been submitted to leaders of both parties. Leaders say they have been meeting and trying to decide if there are any issues on which everyone can agree.

There do seem to be a few.

            On Everybody’s Lists

One is streamlining environmental permitting processes – though there is plenty of divergence on detail, and it is certain to engender opposition from environmental groups. Another big item on the D and R lists is tort reform of the type advocated by the state attorney general’s office, to limit or eliminate “joint and several liability” – which means the state gets stuck with 100 percent of the bill even when it bears only a small fraction of responsibility for a claim. There the trial lawyers might have an opposing argument.

And then there’s consolidation of K-12 health-insurance programs, as hot a topic as the Legislature is likely to consider this year. Right now health insurance is bargained at the school-district level, and generally in the case of schoolteachers it means that teachers are steered toward programs offered through the Washington Education Association. Centralized purchasing might save $90 million a year, said an auditor’s report last year, and a new proposal from the state Health Care Authority would implement it. But the union vows to fight: “We in organized labor will resist forever,” declared WEA’s Randy Parr at a hearing last week. “They are proposing to take away our collective bargaining rights over health insurance.”

There’s another big idea that didn’t make the Senate D list, but it certainly is being talked up by the Republicans and the Roadkillers. That’s to repeal costly programs that are on the books but which no one expects ever to have the money to fund.

They include initiatives 728 and 732, the teacher-salary and class-size measures passed by voters a decade ago, paid family leave and the working families tax credit.

If you start comparing lists you can see the beginnings of a consensus, says state Sen. Steve Hobbs, D-Lake Stevens, a prominent member of the Roadkill group. The Roadkillers may hold the deciding votes this session, as they did last year. By working with Republicans, they have enough votes to force a compromise.