Today’s Q&A is with House Speaker Pro Tempore Jeff Morris, who I spoke with this afternoon.

With a week left in session, Morris talked to me about taxes, the budget, the possibility of not getting out on time, and how he handles long floor sessions.

(Apologies on the late hour — there was an income tax hearing to attend to.)

Q: First, I have to ask if you’ve seen the proposal to create a high-earners income tax and drop the sales tax.

Morris: No, I haven’t. We’ve just started to do some I think vote counting amongst our caucus and there’s two or three camps on taxes. And you know right now I would say as a single group the non-sales tax group is probably the largest single group but the other two are split between how they’d vote on a sales tax.

Q: So would that bill have a realistic chance in the House?

Morris: I think first we have to agree to the budget and what that new revenue may be and what it may buy back. I think something that’s not been widely talked about is not adopting a budget at all is an option. We have a supplemental budget -– if we didn’t adopt one and if we got into a cash flow issue, the governor has the authority to start doing across-the-board cuts.

Q: Really? And that’s a viable option?

Morris: Well, if we can’t get people together with either an agreed to budget number or what taxes are need to buy state services back then that would be an option. That would probably be the most draconian but one that would be the most expedient.

(more…)

Tags: Morris, Thursday Q&A

Today’s Q&A is with Sen. Adam Kline and Rep. Mike Hope. The two disagree substantially on how the state should amend the Constitution in order to change the bail system.

Bail is a Constitutional right in Washington for all but capital crimes. In the wake of the Maurice Clemmons shooting, when a three-strike criminal facing life in prison was let out on bail and went on a killing spree, the Legislature is reconsidering that policy.

If they pass a Constitutional amendment, it would be put to the people. Here, lawmakers discuss in depth what they think should happen.

First up, Sen. Adam Kline:

Q: Tell me where you’re at now on the bail issue.

Kline: The goal is a Constitutional amendment that does the least violence to the Constitutionally protected right to be released on bail when one is presumed innocent pending trial. The governor had a proposal that was worked on by law enforcement and prosecutors and it was rather broad. It would have allowed the judge to deny bail not just in capital cases, where it’s already deniable, but also in cases in any charge regardless of the charge in which the judge feels – and I want to say feels, because there isn’t a way to describe that any differently — feels that the defendant may be dangerous.

There isn’t any psychological assessment tool that allows us to predict dangerousness with any accuracy. So what we’re left with is a hunch
If we’re going to allow judges to keep people in jail with a hunch, I have a problem with that. There’s a certain tradition in America that we don’t deprive people of their freedom unless there’s a very good reason to keep them in jail. The governor’s proposal would have allowed judges to deny bail based on a feeling of dangerousness regardless of the charge. We felt that was too broad.
In the Senate and House, there are now competing versions that don’t necessarily track.

In the Senate, the bill is written by Sen. Carrell – it was somewhat narrower but, I felt, not narrow enough. And so Sen. Carrell and I worked out a compromise by which it would allow but not require judges to deny bail to a person to, in addition to capital offenses, a person charged with any offense that could result in a sentence of life without parole.
There were 30 or 40 charges in the last year in which that bill would have applied. Those are third strike cases, aggravated murder, or second strike in certain sex offense cases.

The House, at the same time, had a very different version that was also not the governor’s. We – Sen. Carrel and I – thought it was way too broad.
It would have allowed in about 1,300 to 1,400 cases a year in which charges were brought. It went far beyond just life without parole charges. They sent it over here, we sent ours over there and that’s when the fun began.
We have the House version here and we’re going to amend it. The amendment will reflect language Sen. Carrell worked out. It expands it a little bit over our original version to a list of behaviors – not referring to the crime, because the criminal definitions can change in statute — but a Constitutional amendment stays there. So we listed behaviors like intentional murder. That’s first degree, murder in the second degree and aggravated murder 1. Also, intentional assault in which great bodily harm is done – so assault 1 or assault of a child 1. And sex offense punishable by life in prison – that’s rape 1 and 2, child molestation 1, and rape of a child 1 and 2. Any Class A felony committed with sexual motivation.
And then additionally, the third strike of a three-strike case. Second strike of a two strike sex offense.
It adds up in terms of charges. This past year there were 643 charges to which this would apply.
That’s expanding it and it, I believe, reaches a compromise. I believe this is not as narrow as I would have wanted nor is it as broad as I would want. But that’s the nature of compromise. (more…)

Tags: Hope, Kline, Thursday Q&A

This week’s Q&A is with Marty Brown, Gov. Chris Gregoire’s director of Legislative Affairs. Read what he has to say on taxes, the 960 bill, the Constitutional amendment and more.

Q: When Gov. Gregoire introduced her tax package yesterday, she indicated it wasn’t a temporary package. Can you say more on that?
Brown: I think it’s at least through next biennium. We haven’t finished up all the bills. What we’d looked at was exactly how to make sure we raised some money for 2011-2013 biennium, too. We haven’t looked out any further than that. I think she’s considering them to be at least last three years.

Q: Why not go with a sales tax increase?
Brown: I think she thinks that it is probably our most regressive tax. It hits folks that can least afford it the hardest and I think that’s the main reason right there.
Will the Legislature still consider it? Possibly. I know they have at least one bill to do that.

Q: How much did you consult with the Legislature in putting together the tax package?
Brown: We had meetings with legislative leadership, we talked about some of the direction she was going. Obviously some of the issues have already been introduced.
We met with finance, Rep. Hunter and Sen. Murray, about things they were talking about. It wasn’t like people signed off. Much like when she put forth her budget, it’s what she proposes, understanding that the Legislature will have different ideas.

Q: Let’s talk about reform. There’s one proposal to fold the Parks and Fish and Wildlife commissions into the Department of Natural Resources. I’m wondering if that’s an idea the governor would consider?
Brown: A couple things: We considered DNR-natural resources reform and doing the same thing that some of the legislators are talking about. We are not convinced that it saves much money up front. There are lots of policy questions, but we understand the Legislature is working on that.
We have several reform things working right now. In natural resources, we’re trying to combine growth management hearings boards into trying to slim down other environmental hearings boards. We’ve got bills in on boards and commissions – to get rid of a bunch of those. The Legislature always has a hard time doing that. We’ve got a proposal to put Medicaid into the Healthcare Authority. We think that putting all of the health purchasing in one place is a cost savings we could work on. So quite a few things are moving right now. Whether or not the Legislature will be able to do it or not is an open question.

(more…)

Tags: 960, Constitutional amendment, Governor, liquor privatization, Marty Brown, taxes, Thursday Q&A

This week’s Q&A comes just past the mid-point of session: The Initiative 960 bill has just passed — clearing the way for tax votes — the revenue forecast is on Friday and, though lawmakers have passed some cuts and freezes, there remains a $2 billion-or-so problem.

Last week, I talked to House members. This week, I spoke with Senators Joe Zarelli and Rodney Tom, two experts on the budget in the Senate. Sen. Zarelli was unable to talk in person, so his interview was conducted over e-mail. I met with Sen. Tom this morning in his office.

Topics include: Sin taxes (they’re on the way), privatizing liquor stores, cutting tax exemptions, creating jobs,  what Oregon’s tax vote means for Washington (real estate sales in SW Washington), and much more. Enjoy.

Sen. Joe Zarelli:
Q: Maybe a logical place to start is: What are your thoughts on the effort to change Initiative 960. Can the budget at this point be fixed without taxes? And is this the right way to do it?

Zarelli: I personally do not see where we could effectively go, in the form of raising taxes, that would not have a negative impact on the economy, given that sales or B/O taxes would potentially take a toll on two of the three key components of our system of revenue. Additional sales tax would only hamper the desire of the consumer to spend and those businesses hardest hit by the economy would certainly feel the effects of any type of B/O tax increase or surcharge. Every day that passes the challenge becomes more difficult, this is why – to a certain extent- I get a bit frustrated. I have been asking for a joint effort at resolution starting at the end of last year seeing where things were going much the same as I did in the fall of 2008 prior to the 2009 session.

But can it still be done? Yes, but all need to be willing to reform what has been built over the last several decades and be willing to accept the fact that some will not like the decisions, and it needs to be in conjunction with an all out effort to improve our prospects for job growth through various competitiveness initiatives. If we reform government, make prudent decisions (based on a priorities approach) to what we should buy, and work diligently to encourage job growth, we can do it and most importantly would be turning the tide against what figures to be even tougher choices over the next couple of years.

Q: On the subject of cuts: The Legislature has passed several savings bills – like freezing state worker pay, hiring, out-of-state travel and bonuses. But there’s quite a ways to go in the next 29 days to get to a balanced budget. What substantial cuts would you like to make?

(more…)

Tags: Thursday Q&A

This week’s Q&A is all about jobs: The Governor, Senate and House Republicans, House Democrats and Senate Democrats have each introduced their own “jobs packages.” I wanted to find out: What are the philosophies behind (a couple of) them, who would benefit, and where is there common ground. I spoke with Sen. Jim Kastama, a Democrat, and Sen. Janea Holmquist, a Republican.

I always learn something in these interviews, and this week is no exception. Keep reading and you’ll find details on plans that are still in the works, including a BRAC-style government reform commission, a bill to protect Initiative 960 and more.

First, Sen. Kastama. This interview was conducted Wednesday evening in his office.

Q: There are four jobs packages. What are the crucial elements of yours?

Kastama: I think the Senate we have made it pretty clear we are continuing on the economic agenda we set last year.
We have to focus on the here and now. Sixty-five percent of the employment growth that we’re going to get coming out of this is in small business. That’s what our proposal is focused on.
First, work force. We’re going to make sure that there’s money in the budget to educate approximately 6,000 people who are unemployed and could be working in these jobs that are highly in demand. We’re going to make sure that happens.
I just had a proposal in higher education to create a dedicated funding source by converting the lottery’s purpose to higher education specifically. In other states where they have done it, it’s allowed them to market the lottery for the purpose it goes to and they sell far more tickets. In Georgia, it increased sales to $800 million and they’ve sent a million students to college with their Hope Scholarship
Our lottery, unfortunately, has flattened out. We bring in $130 million. We really can’t market it for what it goes toward, which is K-12 education because if we say it’s going to education, local school districts worry their bonds and levies won’t pass. So what they tell people is, buy a lottery ticket and you’ll get a swimming pool or a nice house. They’ll buy a lot more if they think it’s going to an altruistic purpose.
So, we’re looking at the workforce and infrastructure. We had a tax increment financing bill – a minor adjustment to the tax increment financing bill that we passed last year. For very little money — $2.6 million — you can bring thousands of jobs to Washington state.
And we want to coordinate the whole green industry in order to do weatherization better, to emphasize job growth.
Transportation: We will keep the $4 billion that we have in transportation going through the biennium. That’s a good budget item that actually does provide good paying jobs.

We also want to invest in entrepreneurship. We want to make sure that Washington state is a good place for companies to thrive and to start, so we’re putting in place many things that will help. One is that small business assistance will be able to expand services.

(more…)

Tags: Holmquist, Jobs, Kastama, Thursday Q&A

This week’s Q&A is with Arun Raha, the state’s chief economic forecaster. Every quarter, his office puts out a comprehensive forecast of how much money the state will collect and what the economy will do. Lawmakers use the report to write budgets. Since his first forecast in November 2008, Raha has had to deliver negative forecasts. But … maybe things will change in 2010?

Q: You mentioned earlier this week in a committee hearing that revenue collections for the two months since the last forecast are up about $50 million.

Raha: Yes, revenue is $51.8 million higher than we had forecasted in November for the two months of collections that we have data for.

Q: What would it take to have a positive revenue forecast in February?

Raha: Well, there are two aspects to the forecast. One, of course, is the collection, which is a small part. The other, of course, is the condition of the economy. Our forecast of revenue for Washington state depends on our forecast for Washington’s economy, which depends on our forecast for the national economy.

So, if economic conditions are better in February than November, that would have a bigger impact on positive revenue than the collection.

The collection, all it points to is the fact that all this while our model was overforecasting revenue. We’ve finally gotten to where the model is underforecasting. So it’s like revenue’s reached a turning point. That’s all I can conclude from it. It’s positive news, but that in itself is not enough to guarantee a positive revision to the revenue forecast.

Q: The next forecast is less than a month away. Walk me through what you’re doing between now and then to produce a forecast.

Raha: Right now, we are working on our national and state economic forecast — the economic forecast, not the revenue forecast. We are collecting revenue collection data, which is what’s coming in the door. And we are also looking at national and state economic indicators. We don’t have all the indicators we need yet to do our national and state economic forecast. We’re waiting on a few important indicators.

Most importantly, we’re waiting on what’s known as “rebenchmarked” employment numbers. When employment numbers first come out, they’re based on a sample and then they are rebenchmarked based on the entire unemployed population, so there are revisions. So we’ll get rebenchmarked data for the third quarter in Washington – we’re waiting for that. So our model can pick up whatever is there. So once we get that, we’ll have both Washington and national figures.

Typically, there’s a process of oversight. We have these workgroups of legislative and executive staffers who come and look through our forecast and give us feedback on what appears to be right and wrong, what needs to be considered and so forth. The second part of the process is, on the fifth we take it before Governor’s Council of economic advisers and get their input. We survey them before so we know where they stand.

You can’t do it in one week; we already have most of the numbers. We finalize it after we’ve got the feedback from the governor’s and the work council and our own council. We have a public meeting on the 5th (of February) in the afternoon.

So, then we finalize the revenue side for the revenue forecast. The other thing we do is meet with other agencies — the smaller revenue agencies like lottery, Department of Licensing – and we let them do their forecasts based on models we have given them in the past. Those numbers are very small, so it doesn’t make much of a difference.

We get their updates and factor that in, we talk to the Department of Revenue about whether there are any special assessments or refunds or special factors. We add that into the forecast.

So: We do the revenue forecast, there’s an economic part, then a fine tuning part based on exceptions, then we release it on the 12^th and everybody cheers. (more…)

Tags: Arun Raha, economic forecast, Thursday Q&A

I just talked to the state’s chief economic forecaster, Arun Raha. I’ll post the entire interview tomorrow — it’s this week’s Thursday Q&A — but I wanted to give you a slight preview to the 1,500-word interview.

On the next economic and revenue forecast: “We release it on the 12th and everybody cheers.”

Really?: “I have no idea. I have no idea. So far, nobody’s ever cheered after a revenue forecast.”

On the recession: “Here’s why people are feeling they’re still in a recession: They’re still anxious … the reason I’m optimistic is that we’re not falling any deeper.”

On job growth: “We are seeing increases in temporary help … But we’re still losing construction jobs. And until that stabilizes, you know, it’ll be a drag on the jobs recovery.”

On when forecast joke writing: “It’s usually the night before. So it’s usually very tired, sorry, lame jokes.”

Raha had much, much more to say. I’m cleaning up the typos now and will post tomorrow.

Tags: economic forecast, Raha, Thursday Q&A

For this week’s Q&A, I took advantage of Committee Days (which you can watch live on TVW today) and interviewed two leaders in the House. First up, Rep. Richard DeBolt, leader of the Republican caucus. Then: Rep. Lynn Kessler, Majority leader in the House. The interviews are below in the order in which they were conducted, as usual.

Rep. Richard DeBolt:
Q: There’s an estimated $2.6 billion less in the state biennial budget. What are your specific ideas for dealing with this?
DeBolt: We had a lot of specific ideas on how not to get here. We’ve been talking to people for a couple years about reducing the budget. It’s important to understand that this is a choice made that (majority Democrats) knew this was going to happen and they knew they were going to create this bow wave. We talked to them about creating a sustainable budget and at that point we brought solutions to the table and they weren’t taken.
We’re going to go back in, we’re looking at the budget right now, and some hard decisions have to be made. We’ll be a part of the process if the Democrats like.
(more…)

Tags: Budget, DeBolt, Kessler, taxes, Thursday Q&A

This week’s Q&A is with State Treasurer Jim McIntire, who sat down for an interview in late summer (elections-related Q&As took precedent for a bit, but now we’re back to state leaders). McIntire talked about a nail-biting bank fail on his third day in office, legislation that will help keep public deposits safe, and how he helps manage about $60 billion of taxpaer money.

What follows is the complete interview. Enjoy!

Q: I don’t think a lot of people know what the state Treasurer does. How do you describe your job?

McIntire: Actually we just redid our web site and we have a great description on there and there’s a lot of information. One of the things we’ve done is highlight some performance measures that focus on some of the key activities of the Treasurer’s office.

One of the things that we do is that we are responsible for investing all of the short term cash reserves for the state. We have roughly $3 billion in cash. The state’s monthly expenses are about $3 billion. What we’re trying to do is to maximize that money, but first we have to make sure it’s safe and secure. It also has to be perfectly liquid so we have complete access, and then we want a good return. We go after return only after the first two.
If you look at the returns we’ve been getting, we tend to do better than what you would find in a private sector market. We actually do pretty well.
So, we manage that short term balance and we do the same thing with local governments that choose to put their money in the Local Government Investment Pool – the LGIP is about $8 billion. In total, we’re managing about $11 billion for state and local government. That’s all very liquid, it’s all essentially in government securities in various forms. There’s no commercial paper. We do probably about $24 million a year in earnings. We’re very careful about how we invest that and we’re fairly large and we can anticipate the timing on a lot of it. So we have the ability to say here’s the core to that portfolio. We can invest some of it for longer periods of time knowing that this is what we’re not likely to have to dip into.
The other thing that we do is that the Treasurer is the only statewide elected official that sits on the statewide Investment Board. So I spend a fair amount of my activities on the state Investment Board on the unemployment insurance trust fund and other trust funds for universities, etc. In our combined trust fund, we have probably $48 billion. Overall it’s probably close to $60 billion in total investments. The combined fund is the one that has all of the pension fund dollars in it. That is something that I spend quite a bit of time worrying about. There are nine other voting members – (the pension account) is one that we continue to focus on. If you look at the performance measure, we’ve exceeded what we’ve considered our benchmark, which is the return for all other major public sector investment funds; we’ve exceeded their returns or had less than their losses for all of the 10 years.
So we’re doing quite well. The long-term assumption that we build the pension funding around is that we will have an 8 percent return on these funds. This fund has had, even with all the problems in the last year, an average of 7.9 percent. So we actually believe that the values in this fund will come up and respond pretty well as we come out of this recession.

The other two major areas as you probably know is that we issue all the debt for the state — or most of it — meaning we issue bonds here. We expect that this fiscal year we’ll issue about $2.25 billion in new debt for the state to finance – that’s for transportation, schools, universities and other capital projects. We’ve managed to avoid the spikes in the market and continue to issue debt. We’ve maintained a strong credit rating — we’re a Double A-rated state. We issued $3 billion in debt – the biggest piece was a transportation bond for $300 million – and those got the lowest interest rates that we’ve got in 30 years. We feel like we’re doing things pretty well.
The fact is that the state treasurer handles all of the cash transactions means we pay all the bills, handle all the receipts. We process $400 billion of transactions a year. When you think about that, it’s important to pay attention to how well we do that part of it as well. Our cost per transaction is substantially lower than the cost per transaction that other banks experience.

So if you look at the private sector benchmark that other banks experience, they average about 14 cents per transaction. We’re at 2 cents. Relative to the private sector, that saves us $1 million a year (in transaction fees).
My intent in redesigning the web page is to bring some light on what is it that we do. It’s not voodoo, it’s not black magic. We want to make it very transparent, to give the public and others the measures that we work with.

Q: What are the biggest challenges of your job?

McIntire: The biggest challenge when I faced when we came into office was with the public deposit issue. We had, on my third day in office, a bank fail. It was a small bank in Clark County. But part of the job in the Treasurer’s office is to look out for the public deposits for state and local governments in Washington. The Public Deposit Protection Commission meets and basically we approve where state and local governments can deposit their money. We set the regulations around that.

When I came in, the bank in Clark Co. failed on my third day in office and they had $24 million of public deposits. We discovered that we had one of the lowest collateralization policies in the country.

Q: What does that mean?

McIntire: Typically when an outside depositor makes a large deposit, the bank will, often in a Certificate of Deposit, buy a security to give them a little bit higher return than what the local government is going to get paid. But that difference is the bank’s profit.
Our requirement was 10 percent – meaning the bank had to keep 10 percent of that money on hand. So when that bank (in Clark County) went into receivership with the FDIC and the bank was sold, it turns out that there was $15 million in public deposits missing. On my fourth day in office, I got to tell the other banks that they had to make up the difference. (more…)

Tags: McIntire, state treasurer, Thursday Q&A

This week, I interviewed Larry Stickney, campaign manager of Protect Marriage Washington, which opposes Referendum 71. Below, you’ll find the complete text of our interview. When you’re done reading, check out Anne Levinson, on why she thinks voters should approve Referendum 71.

Q. Why should voters reject Referendum 71 (which would extend all state-granted rights and responsibilities of marriage to registered domestic partners)?
Stickney: On Nov. 3, we’re facing one of the most hotly contested bills ever. Why is it so controversial? In effect, Senate Bill 5688 will legalize homosexual marriage. Legalizing homosexual marriage would be the most profound policy change in our history.
The “Accept” folks and the homosexual activists are claiming that SB 5688 is not about marriage but their own leadership has said otherwise. As Sen. Ed Murray told the Seattle times on Jan. 10, 2007, when he announced the Domestic Partnership bill, “the goal is marriage equality. It’s an important statement that our eyes are on the prize and the prize is marriage.” Rep. Jamie Pedersen told the Times, “SB 5688 will give homosexuals a bridge until they can legally marry.” Murray again told the Times that the expansion 5688 is “an incremental approach, a strategic plan. And we believe 5688 is the last incremental step to same-sex marriage in Washington State.”
We believe that this whole homosexual marriage agenda is being promoted over the objections of a majority of Washingtonians. As presently, marriage is a common social good. If homosexual marriage becomes legal, the next step for homosexual activists is to teach children that homosexual unions are normal, to require churches to perform homosexual marriages.

Q: Last week I spoke to supporters of Referendum 71 who said those statements about school curriculum and churches are false. I want to give you a chance to explain how this will require schools to teach about homosexuality and churches to perform domestic partnerships. Will it?

Stickney: That’s a possibility. What we’re running into is a clash between what they claim to be a civil right and freedom of religion.
That’s happened in Canada. You’ve got examples from around the world here. You’ve had issues like a Knights of Columbus hall wouldn’t rent their hall for a homosexual marriage ceremony and eventually they were sued and fined $1,000 because they wouldn’t acquiesce. This is in British Colombia. This would be a violation of the very tannins of the Catholic Church.
In New Jersey, there’s a Methodist organization and in 2007 they refused to rent a facility to lesbians for a civil union ceremony. A complaint was filed with the state division of civil rights. It ruled against the Methodist group, the state revoked their tax exemption for the property because they refused to back down.

Q. Domestic partnerships do exist in Washington State currently – this would extend the benefits. Can you explain how expanding them would lead to that?

Stickney: Yes, I can. We have a national laboratory — it’s called Massachusetts — on the same-sex marriage issue. There in a recent case, parents of a young elementary school student objected to the curriculum and classroom discussion that was meant to inculcate the idea that there was no difference between marriages between a man and wife and same-sex relationships. The court upheld that public schools have an interest in teaching tolerance, including on the issue of gay marriage.
They’re saying that because there’s no specific language (in the bill to require schools to teach it), but they don’t need specific languages. All they need is the statute and they will develop the curriculum from there. I’ve got examples on our Web site of what has happened even here in Washington now. The site has many references to the activism we’re seeing here in Washington.
Much of the state curriculum is developed by some folks that are very much interested in promoting the homosexual agenda here. The first domestic partnership couple, one of the parties is a very active and a director of the Safe Schools Coalition in Seattle.

Q. Do you have examples of education curriculum being changed in Washington?

Stickney: Yes, there is. We have several examples. Go to www.protectmarriagewa.com and go to talking points and scroll down, you’ll see many reference about same sex examples in curriculum. And it goes into the early learning benchmarks of our state school system. You can reference documents – the F.L.A.S.H. curriculum is the top recommended curriculum for public schools to use. They recommend showing the video “We Are Family,” which teaches that same-sex relationships are the same as marriage.
There are also some oddities — they don’t currently add requirements for educating children, but it does force a new definition of the word “family.” It’s not about allowing choice for adult relationships. This law will result in children being taught that there is a different definition of “family,” so that same-sex partners will be a recognized norm.
Study after study after study has shown that that’s not best for children. That’s simply what we’re trying to uphold here is the standard of marriage as the very best for society. We understand there are occasions when you can’t achieve that, but we believe that it is the institution that should receive entitlements and benefits of marriage. We simply cannot go and raid the public treasury for every group that’s lobbied its way into getting civil rights. (more…)

Tags: Domestic partnerships, R71, Thursday Q&A