2015-17 budget links

1. From The News Tribune, “I-1351: A major threat to safety net, higher ed.”

Innocuous as it sounds, it is a grave threat to Washington’s safety net – to funding for foster children, early learning, homeless families, foster children and the mentally ill. If approved, it could also push the Legislature to further cannibalize the state’s higher education system.

(The editorial hits many of the points we made in our policy brief on the initiative.)

2. Yesterday PubliCola noted that I-1351 is having trouble winning endorsements:

Hometown state Sen. Jamie Pedersen (D-43, Capitol Hill), speaking against the measure, warned the crowd that I-1351 could add perhaps another $1 billion in costs to the looming McCleary session where the legislature is already on the hook to come up with an extra $5 billion beteween [sic] now and the start of the 2018 school year.

The 43rd ended up making no recommendation on the measure.

Actually, according to the OFM fiscal impact statement, I-1351 would add $4.7 billion in costs over the next four years — over and above what is already required under McCleary.

3. The Washington Federation of State Employees has negotiated a contract (which must still be ratified) for general government employees that includes a 3 percent salary increase in 2015 and a 1.8 percent raise in 2016. Austin Jenkins reports that the state estimates this will cost about $250 million.

4. Kriss noted the new revenue forecast yesterday. In a blog post, Rep. Reuven Carlyle writes about the forecast’s inclusion of revenue from marijuana taxes.

The revenues are not, however, free for the taking despite multiple claims on the cash. The Initiative, I-502, has a few things to say about the use of proceeds that played a role in the campaign, something that budget writers and advocates alike need to keep in mind. . . .

Simply, it would be irresponsible to begin siphoning off revenues to programs and services unrelated to the initiative and the public’s expectations. Moreover, local governments are clamoring for a share of state government’s portion, a debate that will surface again in Olympia in 2015, and that could reduce further the resources if done for expediency and political considerations rather than evidence-based policy reasons.

5. On that note, the Municipal Research and Services Center has a post about the problems local governments have in estimating state-shared revenue:

Local government has felt the impact of decisions made by the State Legislature in the past.  During the 2012 session, ESHB 2823 diverted all liquor excise tax revenues that would normally have been distributed to cities and counties to the state general fund for one year.  In addition, it provided for a permanent diversion of $2.5 million a quarter from the liquor excise tax fund to the state general fund beginning with the October 2013 distribution.  The 2013-2015 budget (3ESSB 5034), passed by the 2013 legislature contained a provision that increased the state share of liquor taxes from 65 percent to 82.5 percent, then the 2014 legislative session passed ESSB 6002 which returned a small portion of the distribution and changed the state share of liquor taxes to 77.5 percent.

As you can see from this synopsis, the changes in state shared revenue for the liquor excise tax have made the forecasting of this revenue stream a bit difficult to predict.  With possible legislative changes each year, how should we forecast state-shared revenues for 2015 and beyond?  Will the legislature return the shared revenue percentage on liquor excise tax for cities and counties back to the original 35 percent distribution or will the amended percent of 17.5 percent become the new norm?

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