Guest column: Governor vetoes tax cut, and lack of transparency dogs 2017-19 budget deal

After getting over the shock of nearly 1,000 pages of new spending, higher taxes and major education policy being released and acted on without any transparency or time for public comment, there has finally been time to review the 2017-19 state budget deal.

Combined with the shocking veto by Governor Inslee of a manufacturing tax cut, I am sure many Washington residents share the frustration of Star Wars character Lando Calrissian when he said, “This deal is getting worse all the time.”

Let’s review the moment when relations in Olympia went from Cold War to full-out nuclear. There are many working parts of the 2017-19 budget deal: increases in spending, education policy changes, tax increases and tax cuts. Included in these details are things that all lawmakers liked and hated, but they combined to make the budget deal that avoided a government shutdown. When it came time to sign these various measures into law, however, the governor decided to veto just one — he killed the bipartisan B&O tax cut for manufacturer jobs.

Stunned lawmakers said the governor broke the budget deal.

In an awkward statement, the governor says he wasn’t part of the final budget talks and thus wasn’t party to the deal reached. Which brings up the question — with three special session and a shutdown looming, why didn’t he join the budget talks?

Republicans in the Legislature, however, believe the governor did break the 2017-19 budget deal and going forward his decision “makes future negotiations virtually impossible.” There has already been comment that the Legislature may try to override the veto.

While the governor’s actions were disturbing, it isn’t the first time the parties have had trouble sticking to an agreed-to budget deal. In 2015 there was another breakdown when some in the Senate initially refused to vote to suspend I-1351 (class size reduction) as assumed in the budget deal, creating a $2 billion deficit in the newly adopted budget.

The governor said he vetoed the B&O tax cut portion of the budget deal due to the lack of transparency and time for public comment. This is a very legitimate concern, but it also applies to all the other parts of the budget deal that he did sign. If he issued a veto for this reason, he should have applied it to all parts of the deal — not just the part that would help manufacturing workers.

This is why we believed the Legislature should have adopted a temporary budget after the deal was reached to provide lawmakers, the press and the public adequate time to review the details and comment before it became law.

As for the budget deal, the good news is lawmakers rejected the capital gains income tax and 20 percent B&O tax increase proposals. Lawmakers also added historic spending in K-12 education (though important policy reforms are missing). From there, however, the rest of the budget balance sheet has serious dark clouds for taxpayers to worry about.

First, the budget spends at twice the rate of the current revenue growth. In fact, combined with the 2015-17 budget, the 2017-19 budget will have increased spending by 29 percent (nearly $10 billion) since 2013-15. Then there are more than $2 billion in tax increases, more than $300 million in fund transfers from dedicated accounts, and a very curious decision to use more than $1 billion in savings to make the state’s pension payments.

There is also the very real threat that the revenue assumed from the new online sales tax will not materialize due to lawsuits. This will put even more pressure on a fragile balance sheet.

Due to the lack of transparency, the public had little time to comment on these concerns.

As noted by Sen. Reuven Carlyle discussing the warp-speed legislative action on the just-released budget deal: “This is outside the bounds of acceptability, and I think we owe the people of this state an apology.”

Sen. Joe Fain agreed that the lack of transparency was “inexcusable,” saying: “The process of waiting to the last minute to craft a compromise and the inexcusable lack of transparency in the final days of the session is something both Republicans and Democrats should agree flatly stinks.”

To solve this problem in the future, Sen. Guy Palumbo has introduced a constitutional amendment to provide at least 72 hours for public review before a final vote by lawmakers on a bill.

Along with considering this proposal, there are several reforms that should be adopted to avoid this type of situation again. They include using something like the Utah base budget process at the beginning of session, acting on legislative transparency reforms as proposed by SB 6560 from 2014, and providing the same type of negotiating transparency to the budget that our state public labor contracts should follow (COIN or Civic Openness in Negotiations).

The one thing that everyone can agree on is the way the budget deal was finally brought to the floor after 175 days of session and voted on in a span of 24 hours was totally unacceptable and should never happen again.

This story was originally published July 15, 2017 at 11:07 AM with the headline "Guest column: Governor vetoes tax cut, and lack of transparency dogs 2017-19 budget deal."