2017 operating budget: Crisis created, then averted

With state shutdown looming, budget deal reached in triple OT


The following story appears in the Washington State Labor Council’s 2017 Legislative Report published in August.


OLYMPIA — Prior to every legislative session, we tell our members to gird themselves because every win will be hard fought, every good policy will advance by inches, and victories are as often notched by what failed to happen as by what did. But even by those standards, the 2017 session was truly one for the ages.

The labor community came to Olympia in January with a few simple goals: advance policies to lift up working families, support our sisters and brothers in K-12 as the Legislature sought to fulfill its McCleary obligation to amply and stably fund our schools, and ensure that the ratified state employee collective bargaining agreements were funded. All the while, we needed to band together with our community partners to ensure that the new revenue necessary was not raised on the backs of working people.

At the 11th hour—literally—before a state government shutdown, Gov. Jay Inslee signed a budget that funded contracts, made modest investments in anti-poverty programs, injected significant funds into our behavioral health system, and added billions of dollars to our public schools. Further, the Legislature passed a historic paid family and medical leave insurance law that will guarantee paid time off for family care and bonding, and for personal disability.

Democrats secured billions of dollars for these priorities, but did so with Republican taxes. Higher state property taxes from communities in the central Puget Sound area will fund not just schools, but also a major business tax cut for manufacturers. (At press time, Governor Inslee thankfully vetoed that new tax break.) The budget once again sweeps $200 million-plus from the Public Works Assistance Account and relies on a big transfer from the Budget Stabilization Account to bridge the gap.

Crisis budgeting, driven by brinkmanship up until the last possible hour, does not lend itself to sound finances and policy making. Sure enough, the longer we review this budget, the more warts become apparent. But given the deep partisanship that pervades our politics and our divided state government—with Democrats controlling the House and Republicans the Senate—the risks posed to workers and unions were clear. Right-to-work legislation, minimum wage rollbacks, workers’ compensation erosions, and efforts to undermine prevailing wage were rampant.

And yet, none of them came to pass.

The relative gains secured during this session—paid family leave, education funding, contracts, and responsible bidder legislation—are testaments to the hard work and constant organizing of Washington’s workers, their unions, and their community partners. But the threats remain. Washington is potentially one House seat and one governor away from Right to Work, low wages, and health-care repeals. Our work is not done and the path to securing dignity for working people runs through the Senate.


Missed opportunity for tax reform


While the 2017 session(s) delivered historic gains in paid family and medical leave, collective bargaining agreements for state employees, and new money for schools, legislators also missed opportunities to cement Washington as a truly trendsetting state. Over $7 billion in new revenue was required to meet the state’s obligations to students, workers and families in need, but the Legislature failed to do the bold thing by raising revenue while making our upside-down and backward tax code more fair.

It was not for lack of trying. House Finance Committee Chair Kris Lytton (D-Anacortes) introduced HB 2186, a tax reform bill to repeal unproductive tax loopholes, and create new sources of revenue to fund services without further burdening working families and people living in poverty. HB 2186 would:

  • Make the purchase of a home easier by lowering the Real Estate Excise Tax for affordable homes, while increasing it on houses worth $1 million or more.
  • Effectively eliminate the B&O tax for small businesses while raising it for the state’s most profitable companies.
  • Create a modest 7% tax on the sales of stocks and bonds through a capital gains tax, with common-sense exemptions for retirement income, the sale of a home, and the first $50,000 in capital gains per family per year.

Despite the need for major reform of our regressive tax code, and despite the broad benefit these reforms would deliver for rural and urban Washingtonians alike, Republican budget negotiators refused to adopt them. Instead, the GOP Senate passed billions of dollars in property tax increases, and refused to budge even when facing a government shutdown. In addition, they demanded a major business tax cut for manufacturers, effectively moving the goal posts at the last minute with everything at stake.

Ultimately, the Legislature did the right thing by funding services, state employee contracts and public schools to avoid, if barely, a shutdown. But it missed an opportunity to deliver a win for working families, small businesses, rural communities, and future generations of taxpayers when it failed to adopt real revenue reform.

Public employees and their supporters held dozens of rallies and events to urge legislators to pass a fair 2017-18 operating budget.


Bipartisan silver linings


A lot has been written about the partisan rancor in Olympia this year—and you will see more of it in these pages—but myopic politics was not the only story to be told this session. Several times, workers saw legislators cross the aisle to do right by working people.

In 2016, state employee unions made significant progress in helping public employees get back on their feet after years of financial harm lingering from the Great Recession. Year after year of missed cost-of-living adjustments, layoffs, and increased health-care costs, state agencies have struggled to recruit and retain the talent necessary to deliver critical public services. Our unions negotiated with the governor’s office for collective bargaining agreements that include 6 percent in raises over the next two years, but the Legislature needed to fund them. Initially, Senate Republicans refused to fund the CBAs in their budget (see Vote #8) and undermined the financial stability of state worker health care.

As budget talks reached their end game after multiple overtime sessions with a July 1 state shutdown looming, some unexpected allies bucked their party leaders and stood with state workers. Sen. Phil Fortunato (R-Auburn) sent a letter to Republican Ways & Means Chair John Braun stating that he would not support a budget that did not fund state employees’ negotiated contracts. Also weighing in for state workers were Republican Sens. Kirk Pearson (Monroe), Maureen Walsh (Walla Walla) and Mark Miloscia (Federal Way).

These senators also refused to sign on to an omnibus workers’ compensation attack bill (see story on Page 7) despite its sponsorship or co-sponsorship by every other member of their caucus. And while budget negotiators worked through two-and-a-half special sessions, Republican Sen. Joe Fain (R-Auburn) partnered with Sen. Karen Keiser (D-Kent), Rep. June Robinson (D-Everett), and House Republican Reps. Matt Manweller (Ellensburg) and Gina McCabe (Goldendale) to pass a paid family and medical leave insurance bill.

This bipartisan support is not a matter of luck. Union members have spent years building power, and relationships, with elected officials in their own backyards, and with those community groups who share our values. These legislators have opened their doors to workers in their districts and formed important relationships so that when workers step up to speak, they listen.

Click here to see more reports from the Washington State Labor Council’s 2017 Legislative Report. Or download the entire 8-page PDF.

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