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Economic forecast could break Olympia logjam

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By Jerry Cornfield
Herald Writer
OLYMPIA -- With a government shutdown looming, state lawmakers are receiving some economic news today which could provide a catalyst for reaching agreement on a new state budget.
Reports due out today will show tax collections rising and demand for costly public services falling, trends which two key senators said Monday should speed up deal making to end the stalemate which has dragged lawmakers into a second special session.
Washington chief economist Steve Lerch will issue his new forecast this morning of how much tax revenue he expects the state will take in during the two-year budget period starting July 1. Lerch tracks collections monthly and his latest report shows they are running $94 million ahead of his last forecast in March.
This afternoon, lawmakers will learn the state should save roughly $90 million from an anticipated drop in caseloads for public services. The caseloads report looks at how many children will be enrolled in public schools, how many people will be imprisoned and how many people will be on Medicaid or seek welfare aid. The government saves money when caseloads fall and must spend more when they rise.
"We're going to find out what the forecasts are and that might help break the gridlock and maybe we have an agreement Wednesday or Thursday," said Sen. Tracey Eide, D-Federal Way, a senior member of minority Democratic caucus.
Senate Majority Leader Rodney Tom, D-Medina, a member of the Republican-dominated coalition that runs the chamber, said he's expecting enough new revenue to erase the gap between the spending plans of the Senate and House.
That would then enable negotiators to focus on where the dollars are spent, a process which could be wrapped up fairly quickly.
"The revenue forecast should be enough money to get us out of town," he said.
But House Speaker Frank Chopp, D-Seattle, on Monday sought to tamp down expectations of a quick end to the impasse.
"I don't want to speculate. Obviously every little bit helps to move the negotiations along because we can accommodate more concerns that people have," he said. "Hopefully with some additional revenue on the table after the forecast tomorrow that they'll be able to come to a fairly effective negotiations in the next few days so we can get done here."
Rep. Hans Dunshee, D-Snohomish, chairman of the House Capital Budget Committee, also urged against expectations of a quick deal
"I don't think it's the key to start the car," he said. "It might ease things up a little but not enough to get us home."
They're cautious because the Senate majority also is pushing an omnibus reform bill for public schools and a major expansion of eligibility for structured settlements under the worker's compensation program. The Senate passed the education reform bill last week but hasn't acted on the other legislation yet.
"If we're going to save the Boeings of the world from leaving this state, we need education reform and worker's compensation reform," Tom said.
House Democrats won't approve the education bill in its current form because of how it deals with teacher evaluations, Chopp said.
And Democrats oppose altering the worker's compensation program contending the use of structured settlements is still in its infancy and are concerned the Republican-inspired changes could hurt workers in the long run.
Another sticking point is taxes. Senate Republicans opposed House Democrats attempts to raise money by revising tax laws governing the telecommunications industry and making out-of-state residents pay sales tax even if they live in a state without a sales tax, like Oregon.
Last week, the Senate did approve an estate tax bill considered a legislative fix in response to a Supreme Court ruling. The decision saved $160 million for the budget plan lawmakers are currently trying to reach agreement on. Tom said that could be the only tax bill if there is enough new revenue in today's forecast.
Meanwhile Monday, Inslee's offices continued preparing to power down government.
His office is in the process of identifying which services and programs may be halted and which may be considered vital and necessary and thus keep operating. Agency leaders had until 5 p.m. Monday to make the case for which of their programs should be exempt from closure.
Layoff notices could go out as early as Friday to some of the roughly 59,000 state workers, according to a spokesman in the governor's budget office.
Jerry Cornfield: 360-352-8623;
Story tags » Legislature

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