Inslee’s 2016 Goals: How’d He Actually Do?

Environment, tax incentives, education, health care and mental health were all in play.

Governor Jay Inslee laid out an array of goals in his January State of the State speech and supplemental budget, but achieved mixed results. Image: TVW

In his January 12 State of the State Address and proposed supplemental budget Washington Governor Jay Inslee outlined his agenda for the 2016 legislative session. He called for more mental health spending, funding to pay for the 2015 wildfires, an increase in starting teacher salary, as well as eliminating four enacted tax incentives. He also expressed optimism about making progress with changes to the Clean Air Rule.

The positive rhetoric met with mixed results.

The final supplemental budget approved by the House and Senate last month included funding for the 2015 wildfires and mental health services. During the session they also created an education task force to deal with McCleary spending.

But other items on the governor’s agenda failed to gain traction. These included a proposal to add $4,300 to teacher starting salaries plus a one percent raise by eliminating enacted tax incentives. It also appears Inslee overshot the mark on the Clean Air Rule. His Department of Ecology pulled the rule back in late February after its provisions sparked an outcry from industry groups.

Proposed Spending Wasn’t Granted

His budget proposal called for $520.5 million in new spending. The enacted budget includes $191 million in new spending, almost $330 million less than he sought.

That amount of new spending was inappropriate for a supplemental budget intended to make modest adjustments to current spending levels, said Sen. Jan Angel (R-26).

“In 60 days it’s virtually impossible to create all the new spending that he wanted to do,” she said. Angel is the vice chair of the Financial Institutions and Insurance Committee.

However, circumstances beyond Inslee’s control played a role in what he could accomplish, said House Majority leader Rep. Pat Sullivan (D-47).

Inslee’s budget proposal was based on earlier financial forecasts than the House and Senate budget proposals. After his budget was released, state forecasts projected a $442 million revenue shortfall in the 2017-2019 budget. The forecast also projected a $67 million shortfall for the 2015-17 biennium.

“That probably put a damper on some of the possibilities,” Sullivan said. “Even the things we initially thought could happen got dropped off the table.”

A major problem was that Inslee’s budget wouldn’t have balanced out in four years, according to the Washington Research Council. A central plank in the Senate Majority Coalition is adhering to the four-year outlook, which the enacted supplemental budget accomplishes.

Paul Guppy is the vice president for research at the Washington Policy Center. He said much of Inslee’s agenda for the session failed to recognize “the realities of the legislature that the voters actually sent.”

It’s a sentiment shared by Senate Republicans like Angel.

“I have not seen leadership from this governor,” she said.

Inslee’s teacher proposal would have increased their base salary from $35,700 to $40,000. On top of that, teachers would have received a one percent pay increase. These changes would have added $80 million to the 2016 supplemental budget, $100 million every year following that. It was “absolutely necessary,” Inslee said in his State of the State, to put in a “framework for our future K-12 education investments.”

However, this might have caused potential problems for the newly created Education Task Force. One of their objectives is to create equal incentives for teachers to work at schools in less developed regions. This might involve different base salaries than other parts of the state.

Although the House budget included similar provisions, Rep. Pat Sullivan (D-47) said they crafted it differently because they “didn’t want to get ahead” of the task force. Sullivan is one of the task force members.

Sullivan said the state is making “some progress” in responding to the Supreme Court’s McCleary ruling to spend billions more in state funds for K-12. While there are no new teacher pay increases, the new task force starts work soon and is expected to present a plan to the legislature during the 2017 session. The bill setting up the task force proposal received bipartisan support and was sponsored by members of Inslee’s McCleary task force from last year.

In the end, $7 million was allocated for new teacher recruitment in the enacted budget.

Inslee had called for removing certain enacted tax incentives to pay for increased K-12 spending. During his State of the State speech he said the tax incentive “benefits simply do not outweigh our obligations to our students, to our teachers and to our schools.”

The four incentives he called for removing or limiting were:

  • Tax exemption for extracted fuel;
  • Sales tax refund for nonresidents;
  • Sales tax exemption for bottled water;
  • An exemption from a second, and front-end, real estate excise tax banks would pay upon assuming foreclosed properties, in addition the one they already pay upon selling them.

House Democrats proposed eliminating six tax incentives and then by amendments, two more.

At a December press conference Inslee said there was a “reasonable chance” his proposals to rescind statutorily-approved tax incentives would get through the legislature.

They did not, nor did any sought by the House.

Guppy said they were “problematic at best if not dead on arrival.”

Much of that had to do with the way they were presented, he said. While the idea of tax reform is not unpopular, Senate Republicans would most likely insist it be revenue neutral and not result in a net tax increase as Inslee proposed, said Guppy.

Clean Air Rule Aims Have Proved Tricky

Inslee’s State of the State speech and subsequent developments also showed the continuing difficulties he’s having trying to implement an ambitious environmental agenda without strong legislative or industry support.

Inslee said in his January speech, “I’m…heartened by the engagement we’re getting from the business community as our Department of Ecology drafts its Clean Air Rule. People are robustly participating in the process. They’re looking for solutions. I’m really excited about that progress…”

But by the end of the next month the response to that effort to cap carbon and carbon-equivalent emissions from major industrial sources and consumers of vehicle fuel and natural gas had helped to prompt a pull-back of the rule.

That he needed an executive order to implement the rule in the first place indicates the envisioned changes were “controversial and unpopular” even among some House Democrats, said Guppy. The order came after Inslee’s proposed carbon cap bill failed to come up for a vote in the 2015 legislature.

Sullivan said the exact provisions in the governor’s legislation last year drew concerns at the time, and as a result he felt it wasn’t ready to get passed. However, he added there’s strong support for what Inslee is trying to accomplish. The main disagreement “just how you do it.”

“You don’t want to damage your ability to attract and retain quality businesses,” he said.

Veto Imbroglio Left Bitter Taste

Inslee had other troubles getting the legislature to see things his way. The last day of the regular session on March 10 he vetoed 27 Senate bills, the most in state history. He said during a press conference it was meant to spur progress in budget negotiations.

Among them was a bill Angel had cosponsored with two House Democrats allowing health districts to carry out some banking functions.

“It was very disappointing to see this kind of behavior,” she said. “To me that’s not governing. That’s a temper tantrum.”

Despite Inslee’s vetoes, negotiations went on for another 20 days. The Senate then proceeded to override all 27 vetoes.

The governor has yet to sign the supplemental budget approved by the legislature March 29.

Some Wins For The Governor

Other proposals of his had little trouble getting through. They also benefited from bipartisan support. His budget included $180 million from the budget stabilization account, or rainy day fund, to pay for the wildfires. All three budget proposals included similar funding.

The final 2016 supplemental budget draws $190 million from the rainy day fund for the wildfires, addresses low-income health care and mental health. With policy-level increases and decreases accounted for, plus the rainy day funds to cover 2015 wildfire costs, the net gain in near-General Fund and Opportunity Pathways spending is $191 million more added to the $38.2 billion 2015-17 budget lawmakers approved last year.

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