House Democrats unveil two-year spending plan

After more than 80 days of work, the House Democrats have revealed their proposed budget for the 2011-2013 biennial and held a public hearing on the nearly 1,000-page budget.

Their budget proposes includes:

  • $4.4 billion in reductions
  • $214 million in fund transfers
  • $300 million in funds from privatizing the liquor distribution operations
  • $124 million in consolidation of some revenues into the general fund

Unlike the governor’s proposed budget, which was released in December, the House budget preserves many of the programs that the governor proposed to eliminate, with attempts to maintain them at minimal levels. Savings were generated by continuing the practice of suspending $1.2 billion for funding of I-728 and I-732, the class size and teacher pay raise initiatives passed many years ago by Washington voters. Additionally, the plan contemplates significant reductions in higher education funding requests, which are partially offset with increased tuition setting authority.

The proposed budget includes three particular items of interest to WRA members:

  1. The budget does not rely on new tax or fee revenue; however, the WRA is expecting that bills will be introduced that add new fees or increase existing fees. For example, HB 2014 would increase liquor license fees by 10% on top of the 10.5%  increase enacted in 2009.
  2. Budget writers again propose to transfer $85 million from the liquor revolving fund to the state general fund to assist in balancing the budget. The liquor revolving fund, which is largely funded from proceeds from the sale of spirits at state liquor stores, was transferred in 2009, leading to a 8%-11% increase in product prices for consumers and businesses. The WRA is working to see if relief from those price increases is possible with this fund transfer. We are concerned that lawmakers may be enticed to raise prices further to help the budget situation.
  3. The House budget also anticipates $300 million from privatizing the state’s liquor distribution system. The proposal would allow a private entity to enter into a 20-year contract to supply state liquor stores with product in return for a share of the mark-up on the state’s sale of liquor. When grilled by reporters about this proposal, House Ways and Means Chair Ross Hunter acknowledged that there are few details on the proposal available, and that lawmakers have to examine the idea carefully before proceeding ahead. The WRA is concerned that the change, which is similar to the system that exists in Maine, would not lead to increased competition for the consumers and businesses that rely on the state for their supply of spirits, would not add competition to the distribution system and does nothing to allow businesses to inventory product for their own use.

The House proposed budget is just the first or many steps yet to follow. We expect the proposal to be amended considerably in committee and perhaps again on the floor later this week. Meanwhile, the Senate is developing its own version of a two-year budget – and once it emerges from the Senate, negotiations between the governor, the House and Senate will begin in earnest.

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