(April 9, 2015) April 1 was the deadline in Olympia for bills to pass out of policy committees in the opposite chamber. The most notable legislation to fail at the cut-off was a package of far-reaching labor bills, including HB 1355 which would have raised the state’s minimum wage to $12 over four years. Despite a well-choreographed campaign, the bill died in the Senate Commerce and Labor Committee when Senator Michael Baumgartner (R-6th District) refused to let it pass out of the committee. In response, supporters promise a 2016 ballot initiative with the slogan “$16 in ’16.”Wealthy businessman Nick Hanauer, a strong proponent of higher minimum wages, told The Seattle Times “If the Legislature doesn’t act to raise the minimum wage, we’re going to the ballot with a statewide $16-an-hour minimum-wage initiative in 2016.”

He also reported that he and his supporters have already done polling and policy analysis, and they plan to start collecting signatures next year for a ballot measure that would increase the minimum wage to $16 and introduce sick leave requirements.

The other labor bills to fail in Olympia at the cut-off were HB 1356, which would have required employers with more than four full-time equivalent employees to provide paid leave to workers, and HB 1646 which would have modified the State’s Equal Pay Act. This second bill would have prohibited less favorable employment opportunities based on gender and prohibited retaliation for certain workplace wage discussions.

Budget Negotiations Begin

With less than a month left in the regular Legislative Session, activity is moving away from committees on to the floor and behind closed doors as caucuses and budget negotiators work to resolve the major policy and budget issues that divide them. Although some still say they can complete their work within the allotted timeframe, most expect one or more special sessions will be needed. Staff have been told not to schedule vacations before July.

Both House and Senate have passed their respective budget proposals, and the differences between the two are stark. Both budgets invest substantially in education and mental health funding to meet court mandates, but they are far apart on key issues:

The Senate’s $38 billion budget proposal is characterized as a “No New Taxes budget.” The Republican budget taps $325 million from marijuana taxes. Another $381 million is found in fund transfers. Fifteen small tax exemptions are allowed to expire to raise another $40 million.

By contrast, the $38.8 billion House budget relies on almost $1.5 billion in new tax revenues found in HB 2224, an omnibus revenue bill. The two biggest elements of that bill include:

1. $570 million from a 5% Capital Gains tax applying to single persons earning over $25,000 in investment profits (or married couples earning over $50,000). Retirement earnings and sales of primary residences are exempt, as are any other items that would not be reportable on line 13 of the federal income tax return.

2. $532 million comes from raising the 1.5% B&O service rate to 1.8%. The remainder is made up by closing “tax loopholes,” including limiting sales tax exemption for non-residents, imposing sales tax on out-of-state internet retailers, and repealing the sales tax exemption for bottled water.

Carbon pricing, primarily through a cap and trade program, had been proposed by the Governor as a major funding source but was not moved forward in the House. Finance Committee Chair Reuven Carlyle (D-36th District) said that there was interest in continuing to work that bill so there is some possibility that carbon pricing will re-emerge as a potential revenue source during budget negotiations.

Entering the final weeks of the Legislative session, policymakers now have a good understanding of the major policy differences they must resolve, and the somewhat tenuous control that leadership may have over the majority caucuses in the House and Senate. It will be difficult to make deals, but deals will be made. It remains to be seen if the majorities will hold or if new coalitions will emerge as those deals get cut.