At long last, Washington has balanced budget again

By Rachel La Corte

Associated Press

Published: Wednesday, April 11 2012 4:05 p.m. MDT

Senate Majority Leader Lisa Brown, D-Spokane, gets in the Senate elevator to go home from the Senate floor, Wednesday, April 11, 2012, at the state Capitol in Olympia, Wash., after the Washington state Legislature adjourned after finalizing a budget deal that had lawmakers working throughout the night and into the morning.

Ted S. Warren, Associated Press

OLYMPIA, Wash. — It took more than 200 days and a series of overnight votes that ended an hour after sunrise, but Washington state's budget has been balanced once again.

Lawmakers adjourned their double overtime session Wednesday morning, ending an exhausting day of negotiations that had left some lawmakers and staff members napping in between votes. In the end, the bill to close a roughly half-billion dollar shortfall became somewhat of an afterthought to some larger ideas pitched by Democrats and Republicans alike.

A GOP-led coalition secured some major changes to how the state handles pensions, health care and future budgeting. Democrats, meanwhile, managed to protect the state's social safety net and secured a new stimulus package designed to get people back to work.

All of it came together as a compromise pact, with each piece in flux until the final hours. Lawmakers eventually adjourned at 7:30 a.m.

"This has been one of the more bizarre sessions I've been through," said Democratic Sen. Ed Murray, a leading budget negotiator. "I've never seen such a struggle on the part of all the parties to compromise."

Sen. Joe Zarelli, who led budget talks on the Republican side, said that the ultimate budget was "accomplished in a bipartisan way, sometimes tugging and pulling, but nonetheless, in a bipartisan way."

"It's been a pretty significant experience, and we're better for it," he said.

Lawmakers first got word of their unbalanced budget last September and have been formulating solutions ever since.

Democrats initially considered putting a tax package on the ballot to avoid education cuts, but the improving economy changed the budget outlook and allowed lawmakers to avoid those more draconian spending reductions.

The Legislature first held a special session in December and their regular session in the opening weeks of this year. That wasn't enough, so Gov. Chris Gregoire called them back for a 30-day special session that ended Tuesday.

By midnight, lawmakers still weren't done, so the governor had to call one more special session to finish things off.

The budget deal cuts another $300 million in spending, largely in the social services sector. It doesn't make any cuts to education and protects programs that provide medical care and assistance to people who are disabled — something Republicans had initially proposed to eliminate.

Negotiators balanced the budget by relying heavily on an accounting maneuver, valued at $238 million, in which the state would temporarily claim control of local sales taxes before they are redistributed back to jurisdictions at their usual time — roughly a month after they are collected. The budget includes some targeted tax increases, raising $14.5 million by eliminating a tax deduction for some large banks and $12 million by changing rules on roll-your-own cigarettes.

Lawmakers planned to leave some $320 million in reserves.

The major policy proposals that were linked to the final agreement include some substantial changes:

— One will reduce benefits for future state workers who take early retirement, saving the state some $1.3 billion over 25 years. State workers who retire before age 62 are already penalized with lower pension benefits. Under the new bill, those penalties will increase to as much as a 50 percent reduction for workers retiring at the age of 55.

— Conservative lawmakers also successfully pushed a measure requiring the state to approve a budget projected to remain balanced over a four-year period, instead of just the current two years. Supporters say it will force lawmakers to consider the long-term implications of their decisions so that it's easier to keep spending under control.

— Another measure approved early Tuesday increases transparency in the health insurance system for K-12 school employees. It will make the cost of coverage for a family more equitable with the cost of coverage for an individual.

— Lawmakers also approved a $1 billion stimulus plan, largely backed by bonds, that supporters believe will help create thousands of jobs. The spending will include construction projections, environmental cleanup and energy efficiency grants.

Gregoire said the compromises made on both sides of the aisle show what is possible when political leaders work together. She said the final package preserves critical programs while setting the state on a more sustainable path.

"Our job isn't done," Gregoire said. "Implementing this supplemental budget won't be easy, but I'm confident we've developed a solution that protects our state's financial future while preserving critical programs that Washingtonians rely on."

Follow Rachel La Corte at http://www.twitter.com/RachelAPOly

Follow Mike Baker at http://www.twitter.com/MikeBakerAP

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