The Education committee, which heard the bill first, amended it to eliminate the required state assessment of writing skills, and consequently the graduation requirement that students must have proficiency in writing. I am very uncomfortable with this decision, as were a number of other members of the committee during the hearing. We assess core graduation requirements because we believe that what is measured is taught. We should not carry this too far, and many skills are best assessed in the classroom, but we assess core requirements to ensure that students have the opportunity to learn them.

Writing is one of the key elements of the four core learnging goals established in House Bill 1209 over a generation ago (in 1993), the bill that was the foundation of our work on the Basic Education Financing Task Force, and the core of the McCleary decision last month. Almost every single occupation that will provide a living wage for today’s students requires a level of communication skills that would have been difficult for someone even 20 years ago to imagine we should require, and the original 1209 was somewhat prescient.

We do a disservice to young people by not requiring that they do the work necessary to succeed in not just today’s, but tomorrow’s economy. In 1993, HB 1209 stated:

The goal of the Basic Education Act for the schools of the state of Washington set forth in this chapter shall be to provide students with the opportunity to become responsible citizens, to contribute to their own economic well-being and to that of their families and communities, and to enjoy productive and satisfying lives. To these ends, the goals of each school district, with the involvement of parents and community members, shall be to provide opportunities for all students to develop the knowledge and skills essential to:

(1) Read with comprehension, write with skill, and communicate effectively and responsibly in a variety of ways and settings;

(2) Know and apply the core concepts and principles of mathematics; social, physical, and life sciences; civics and history; geography; arts; and health and fitness;

(3) Think analytically, logically, and creatively, and to integrate experience and knowledge to form reasoned judgments and solve problems; and

(4) Understand the importance of work and how performance, effort, and decisions directly affect future career and educational opportunities.

CR Douglas of Fox News interviewed me on the issue. I’d include a nice embedded video here if I knew how to do it. Click here for the link to the KCPQ interview.

I also wrote a piece over the weekend before session while I was still angry about the headline in the Seattle Times about the decision. The text below is a little strident, but lays out my analysis of the issue: cutting basic education, and perhaps cutting ANY education is off the table this year.

Last week the Seattle Times published a story with the headline “Court ruling won’t protect schools from more cuts.” The article stated that “everything is still on the table” with regards to budget cuts in education. They must not have read the same court decision we did.

The unanimous Supreme Court decision upholding Judge Erlick in the McCleary case on school funding is unequivocal: the Legislature cannot cut basic education funding regardless of the budget difficulties we face.

While “the legislature generally enjoys broad discretion… in discharging its duty under article IX, … the legislature may not eliminate an offering from basic education for reasons unrelated to educational policy.. such as fiscal crisis or mere expediency.”

Basic education includes: class size, special education, transportation, materials, English as a second language (ESL) instruction, and the extra money we send to schools that have large numbers of students from low-income families. This comprises over 93% of the K-12 budget. Proposals reducing the number of days in the school year have always been unwise, now it is clear that they are unconstitutional.

This is just the beginning of what the justices wrote. We’re still trying to analyze the details, but we may face significantly stronger guidance from the court. They were not impressed when the legislature added $33.6 million to K-3 class size reduction under reform legislation “but at the same time it cut $214 million for a separate ‘non-basic education’ program that went to reducing class size in K-4, resulting in a significant net loss in K-3 class reductions.” The Court noted that despite a few efforts at enhancements called for by SHB 2776, “overall K-12 funding – including funding for basic education –sustained massive cuts in the 2011-13 operating budget.” These observations may lead us to interpret the decision as prohibiting any cuts at all in K-12, a conclusion that makes the 2012 supplemental budget even more difficult to implement.

The strongest interpretation of the decision would force us to make measurable progress towards funding the implementation schedule set out in the basic education redefinition we did in 2009. This could cost as much as $500 million this year, and more than $1 billion in the next biennium. This is not an extreme interpretation – 7 members of the court voted to take the extraordinary step “to retain jurisdiction over this case to monitor implementation of .. the State’s compliance with its paramount duty”.

In the court’s view, a basic education gives students the “basic knowledge and skills needed to compete in today’s economy and meaningfully participate in this state’s democracy.” The court agrees we should implement this over time, but did not seem tolerant of excuses about fiscal problems.

“This court cannot idly stand by as the legislature makes unfulfilled promises for reform”.

This is not a subtle decision. This is a landmark ruling from a unanimous court, with 2 members dissenting on the supervision part only. The McCleary case re-defines how the legislature must approach funding education. Our forebears wrote very strong language into the constitution about the primacy of education in the missions assigned to the state. The legislature has failed to live up to the lofty language of Article IX of the constitution, and now it should be very clear to everyone that the state must “make ample provision for the education of all children residing within its borders, without distinction or preference on account of race, color, caste, or sex.”

The Legislature should take heed of the decision and move forward, or the court may do it for us.

The 48th District lawmakers will solicit constituents’ concerns and priorities and answer questions from 6 p.m. to 8 p.m. in the council chamber room of Bellevue City Hall at 450 110th Ave. NW, Bellevue, WA 98009.

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For more information, Michael Althauser, 360-786-7326

Last year I supported a budget solution that would have required larger healthcare contributions from employees than we achieved in the final negotiations, but the general premise of this comclusion isn’t right. Let’s start with the numbers.

I’ve uploaded a spreadsheet with numbers from the Legislative Evaluation and Accountability Program (LEAP) committee. You can recreate them from their website if you wish, but it’s a lot of work. We excluded higher education and K-12 from this evaluation. That’s another post, and not what people think about when they think about general government workers. In general, you’d think that the number of employees we need would increase as the population increases – there’s more work to do. The chart above compares these employees with the growth in population in Washington.

The end result is a 13.5% drop in general government state employees per thousand residents. Total employees, not adjusting for population is a 7.3% decline – not as dramatic as the number adjusted for population growth, but still not what most people have been expecting.

Comparing compensation is a little more complex. If you compare state workers to the average of all private sector employees you get one set of results, and if you compare them to Microsoft engineers you get something different. Weighting deferred compensation (like pensions) against higher current salaries is also difficult. The devil is in the details of the comparison, and you can wind up doing “advocacy economics” if you aren’t careful.

The Seattle Times published an article about this early in 2011 that I found to be a good basic primer on to do valid compensation comparisons. The Times looked at the makeup of the labor force by occupation, and compared wages in each category to their private sector counterpart. They found that “Overall, lower-wage state workers tended to earn more than their nonstate counterparts, while higher-paid professionals made more in the nonstate sector.”

It’s easy to draw conclusions based on individual data points, or to do simplistic analyses of broad numbers. In general, this turns out to not work so well for making thoughtful comparisons. Of course, how you present the data (and how loudly) can serve to reinforce a point you are trying to make.

We’ll be pretty careful in what we do, and the state employee base will most certainly be affected by the budget decisions we make, but we want to be sure to not create a situation where our salaries are non-competitive. Just like any private business, we rely on a quality workforce to be able to actually get things done, and having the compensation package too low means that all the people with other options in the world go somewhere else, leaving us with those that do not. Not a pretty outcome.

Washington’s state and local taxes (as a percent of personal income) dropped to their lowest level in 50 years in Fiscal Year 2009, according to new figures released by the U.S. Census Bureau.

Washington taxes dropped to $93.24 per $1,000 personal income from $105.49 in Fiscal Year 2008.  While many states experienced declines in taxes relative to personal income during that period, Washington’s decline was steep enough to change its national ranking to 35th highest among the states in 2009 from 30th highest in 2008. The national average for Fiscal Year 2009 was $102.10, down from $111.99 the prior year. The $93.24 figure, comprising $56.70 in state taxes and $36.54 in local taxes, is the lowest since the Department of Revenue began tracking this statistic in 1960, when the rate was the second lowest at $98.43. Taxes per capita also declined to $4,049 in 2009 from $4,354 in 2008, dropping Washington’s per capita ranking nationally to 21st lowest from 16th.  The national average in 2009 was $4,141.  More information on changes in rankings over the years and the factors involved is available in Comparative State and Local Taxes 2009, published online at http://dor.wa.gov/Content/AboutUs/StatisticsAndReports/2009/Compare09/default.aspx.

As always, it’s an honor and a privilege to serve you in the Legislature. This will be my tenth year, which I find astounding. I never intended to do this – I thought I’d swoop in and fix school funding, then go back to the private sector. It turns out that some problems are harder to fix than you would think. The “great recession” is also making it a little more difficult…

Gov. Gregoire called the Legislature into special session Nov. 28 to deal with a significant decline in our expected revenue over the remainder of the two-year budget period, which ends June 30, 2013. She released her proposed revised budget Nov. 21.

We finished the special session on December 14^th with the passage of a “down payment” bill on the budget, along with a handful of bills that were related to the budget or to creating jobs in Washington. The down payment bill saved a little less than 25% of the overall problem: $480 million. We still have about $1.5 billion to go.

One of the purposes of a newsletter like this is to answer common questions from constituents, and from folks all across the state who write to me about their concerns. In the past two weeks, I’ve been inundated with emails about items in the budget. I answer many of them below. I apologize for not writing a personal response to every inquiry, but it is almost impossible to do so and still do my job.

We face a daunting set of decisions this year. Last spring, we adopted a bipartisan two-year budget that spent less than we expected to receive in revenue and that provided for $700 million in reserves. It was, according to most neutral observers, remarkably free of gimmicks. Since then, the revenue forecast for the state has declined by more than $1.6 billion, including a $122 million drop in November’s forecast. These declines are a result of economic forces from outside the state, but we have to deal with them – and with necessary reserves, that means closing a $2 billion gap.

To fix that hole in the budget, we will have to adopt spending cuts, revenue increases, or a combination of both that equal $2 billion. Due to Initiative 1053, approved by voters in 2010, any revenue increase (even closing a tax loophole) must win two-thirds approval in the Legislature or be ratified by voters statewide. Practically speaking, that means any revenue proposals will have to go to the ballot – and that means the Legislature will have to first close the gap entirely with cuts, then decide which cuts to ask the voters to restore with new revenues. We’re in the middle of this process.

While we have not made any decisions yet, we are spending a significant amount of time thinking about what is the appropriate mix of cuts and revenue. I support some revenue as part of the solution, as I am unexcited about large reductions in education and our social safety net.

We are looking at a number of options, including sales tax increases and closing loopholes in the tax code. I am not excited about sending proposals to the voters that are likely to fail, so we will be cautious about what we do.

As House budget chairman, I’ve been spending most of my time in Olympia for the past few months, working on a draft of a budget. The governor has to get only one vote to adopt her budget: her own. In the Legislature, we have to get 50 votes in the House and 25 in the Senate, and this is remarkably more difficult. Most of the first few weeks of the special session will be spent educating members about their choices and what the budget committee’s recommendations are. We’ll then make adjustments and negotiate with the Senate on their preferences.

I expect this to take a while. After all, we have the “worst form of government ever invented, except for all the others that have been tried from time to time.” (Winston Churchill) I’m a little comforted by another Churchill quote, this one on the American character: “Americans can always be counted on to do the right thing…after they have exhausted all other possibilities.” I expect this will be what happens on the budget.

In a discussion with House Democrats about proposed cuts, I presented a document that I thought might be interesting to others as well. There are six pages here and it’s a little wonky, but you begin to get a sense of the actual meaning behind some of the rather bland descriptions of the impacts of proposed cuts. The spreadsheet at the end is explained in one of my earlier blog posts about the budget, at www.rosshunter.info.

In the sections below, I’ve written about the various budget items that concern people enough for them to bury me in email suggesting that we fund them completely. We will make a very difficult set of decisions this year that will require a re-setting of budget expectations. I try to describe the particular issues involving several possible reductions, but cannot make any promises that any specific item will be funded.

Working out how we balance this budget will be difficult and is likely to try my patience. I look forward to your input as we work through it, and I hope you have new ideas that can help us find better solutions than what the governor has proposed.

The governor proposes a reduction to K-12 education that I think is not only unwise, but unconstitutional: cutting the length of the school year by four days. A court case in the early ’80s made it pretty clear that once the Legislature defines what “basic education” is, we cannot reduce support for it for purely budgetary reasons.

Some of the governor’s other cuts are painful (and probably also unwise), but are potentially outside the constitutional definition of basic education. A fundamental issue of fairness is involved in the cut to levy equalization funds, which are payments to reduce the property tax burden in school districts with low property-tax bases that otherwise would have to set their school levy rates very high to raise enough  money. But it will be hard to avoid that cut, given that it targets the only K-12 spending item of any size that is outside “basic education.”

I propose a substantive reform to the entire levy equalization system to deal with the fairness problem; you can read about it on my Web site. This proposal would eliminate the need for much of the levy equalization spending now in the budget.

The decisions we make in education (from pre-school to higher ed) will be strong indicators of how serious we are about moving forward as a state and investing in our long-term economic future. It is mathematically difficult to avoid reductions altogether in K-12, but we should at least fix the system so that it will work better as we grow our way out of this mess.

In higher education, the governor proposes reductions of $160 million — a 15% cut in state spending for higher ed, on top of reductions of 49% over the past few years. This moves us in the direction of a set of nominally public but de facto private universities and a weakly supported community college system. I don’t think this is a good direction, but I struggle with the budget realities that make similar levels of reduction almost inevitable.

If we imposed a $2 billion budget cut across the board — making reductions of the same percentage in all areas that aren’t protected either by the state constitution or federal law — then higher ed would be in line for a 30% cut, so the governor is at least moving in the right direction. But I am very concerned about what the governor’s proposed reduction would say to companies such as Boeing, which are considering substantial investments in the state and need a highly educated workforce.

What would likely happen if the governor’s proposal were adopted: UW and Western Washington University would increase tuition to cover the reduction and WSU would do that to some degree, but the other four-year schools would not realistically be able to do so. The community colleges would struggle because large fractions of what they do don’t involve tuition charges, so they can’t make up the reductions through increases. This doesn’t work for our economic future.

But protecting higher ed entirely means deeper cuts in other areas such as social services and health care, and proponents of those services are likely to push back against that.

Basic Health/Disability Lifeline

The state created the Basic Health program to allow working citizens affordable access to quality health care. The state subsidizes health care insurance premiums for low-income working families on a sliding scale, providing for tens of thousands of people who would otherwise be uncovered. The federal government (thanks to Senator Cantwell) recognized the value of what we do and has incorporated it into the new Affordable Care Act, passed last year in the other Washington but not yet fully in effect.

Disability Lifeline provides a way for adult citizens who typically are not eligible for Medicaid but who are temporarily disabled to get health care. It assists a variety of people, from young adults who break a leg and can’t work for a few months to others who have mental illnesses that block them from working. These are very poor people, and the program has time limits.

Gov. Gregoire has proposed that we eliminate both programs. This isn’t something anyone wants to do, but it is under consideration as we grapple with our huge budget deficit. We are trying to plan the transition to the world after the federal Affordable Care Act takes effect: The expenses for the Basic Health and Disability Lifeline populations will be covered 100% by the federal government as of Jan. 1, 2014. We’d like to keep the programs around to avoid major disruptions of service, but the cost factor is very challenging this year.

Critical Access Hospitals – HB 2031

The governor proposed a cut to “critical access hospitals,” which are certain small hospitals in rural areas. We heard her bill in committee and the reaction from those hospitals was that this would devastate them. There is another program that, when cut, affects largely Harborview and the UW hospital. Other hospital cuts in her budget are large as well. The system is bizarrely complex and we will sort through the different effects and try to come up with a rational solution.

Given the amount of money we spend on Medicaid, it will be hard to avoid reducing payments to hospitals. “Hard to avoid” means that we can’t spare them without making other, equally untenable cuts elsewhere in the budget. This is true for every single reduction I address in this newsletter.

Breast and Cervical Cancer Screening

As a cancer survivor myself I understand the importance of this item in the budget. We provide screenings for low-income individuals that in many cases significantly increase the patient’s ability to detect a cancer early, when it’s simpler (and cheaper) to treat. Had we not caught mine as early as we did I would not be writing this impossibly long email.

Family Planning

There are a number of ways the state provides funds for family planning in Washington. First, we provide family planning (contraception) to all women who are eligible to have the cost of their pregnancy and delivery paid for by Medicaid. About half the births in the state are currently covered by Medicaid. It turns out that this family planning program is much cheaper than paying for the deliveries would be, particularly if there were to be any complications at all.

Second, we make some grants to family planning clinics to provide services more broadly. Again, these interventions are relatively effective at reducing costs in the rest of the health care system.

The governor proposed a 10% reduction to the clinic grants this year, about $1.8 million. I do not know if we will be able to prevent this cut, but I will make every effort to do so.

Chemical Dependency Treatment

I’ve received many touching emails from recovering addicts who talked about how, without treatment, they would likely still be involved in destructive behaviors. The emails have talked about how people were able to re-unite with their children, get jobs and otherwise succeed in life in ways that were not possible before treatment — including staying out of jail,

Washington is blessed to have the nationally renowned Washington State Institute for Public Policy, which is highly regarded for its research into the corrections system and what can reduce recidivism. As we look at the system, we have to decide what values we hold: Do we want to punish people, or do we want to create a situation where they don’t offend in the future? For most of the public, the criminal justice system is a mixture of both.

We hope to draft a proposal to reduce spending in corrections by shifting that balance a little bit. Based on the evidence, we’ll propose a model that saves money with shorter sentences, but ensures that we have adequate chemical dependency treatment in the community so that ex-convicts aren’t almost guaranteed to fail and return to prison, at a cost of $35,000 per year per prisoner. Treatment is cheaper.

Treatment also is a more cost-effective solution to many problems addressed by programs in the child welfare system, such as Child Protective Services, foster care and adoption support. In many cases, children caught up in that system struggle in school. Treatment is cheaper, and yields better results.

I can’t promise that we’ll hold onto all our treatment options, but we will certainly try to hold onto as much as we can.

I love to hear from you about your issues, suggestions, or concerns. We can solve a lot of problems for people, direct you to resources, etc.

Olympia Office
John L. O’Brien building
Capitol Campus
Olympia, WA 98504
Phone: (360) 786-7936

Bellevue Office
16011 – 116^th Ave NE Suite 206
Bellevue, WA 98009
Phone: (425) 453-3064

Email: hunter.ross@leg.wa.gov

Website: www.rosshunter.info

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There are several bills in Congress right now do do this – a Democratic bill, a Republican bill, and a bi-partisan effort that seems to have legs. Yesterday the legislature in our Washington passed a “joint memorial” (SSJM 8009) to Congress urging them to take action on one of the bills. I personally prefer the bipartisan act.

This act by Congress could collect up to $170 million in sales tax that is legally owed but not being collected today, putting a substantial dent in our budget problem. This would not raise taxes, just do a better job of collecting them.

Our membership in the streamlined sales tax group and this bill is supported by the business community in Washington State, including the Association of Washington Business, Amazon.com, the Retail Federation, etc.

Article from SSUTA:

Early retail sales estimates released today by the U.S. Department of Commerce for November show total retail sales increased 6.7% in November, but that sales at non-store retailers increased at more than twice that rate, 13.9%. E-commerce and mail-order sales make up more than 75% of the non-store retailer subsector, the Commerce Department says.

On a month-to-month basis, total retail sales increased 0.2% from October to November, whereas non-store retail sales grew 1.5%, the Commerce Department says. The November estimates show that stores continue to lose ground to e-retailers during the critical holiday period. Non-store retailer sales accounted for 8.7% of total adjusted retail sales in November, versus 8.2% in November 2010 and 7.8% in November 2009.

Early data for December show the trend continuing. Store sales grew 2.9% year over year for the week ended Dec. 10, according to the International Council of Shopping Centers and Goldman Sachs Weekly Chain Store Sales Index. For the week ending Dec. 9, meanwhile, onlinesales increased 15.7% compared to the same period last year, per comScore Inc., which tracks web sales. Sales data released today by ChannelAdvisor Corp. show that the company’s e-retailer clients yesterday—a day marketers have dubbed Green Monday—experienced an overall sales increase of 19% compared with the same day in 2010. Yesterday was the second Monday in December, which is typically one of the top sales days for e-commerce.

Consumer electronics is a prime example of a category of product that consumers increasingly are buying online. ComScore estimates that approximately 30% of all consumer electronics sales in the United States are now bought online, and online sales of consumer electronics grew more than 15% during the third quarter versus the same time a year ago.

Best Buy Inc. today reported that its same-store sales of consumer electronics declined 4.8% during the third quarter ended Nov. 26, compared with the same quarter last year. The electronics retailer also reported that same-store sales (including BestBuy.com sales) increased almost 1% during the quarter. On its own, BestBuy.com revenue increased 20% year over year during the quarter, Best Buy says. Best Buy is No. 11 in Internet Retailer’s Top 500 Guide.

Store retailers this week also announced that they’ll be extending their hours to capture sales ahead of Christmas. Sears Holding Corp. (No. 7 in the Guide) says most Sears stores will stay open until midnight starting Wednesday and lasting through Friday, Dec. 23. Department store chain Macy’s Inc.. (No. 17) says it’ll have 14 stores open 24 hours a day in the last days before Christmas and another 27 stores will be open until 2 a.m. Meanwhile, web-only retailer Amazon.com Inc.. (No. 1) announced today that it is extending its deadline to qualify for free super saver and standard shipping until Dec. 19.

(source: Internet Retailer December 13, 2011)

The bill, sponsored by Chair Ross Hunter, D-Medina, makes $479.7 million in cuts to the 2011-13 budget, which was initially adopted last spring. Since then, continuing economic stagnation at the national level has resulted in a forecast that revenue will fall nearly $2 billion short of what’s needed to fulfill the budget and provide necessary reserves.

“This bill is a down payment on the overall solution we’ve been working on since September, when it became clear we would have to make major modifications to the budget,” Hunter said.

“It includes administrative cuts across broad areas of the budget, but other areas are left intact for now while we continue to work on solutions to more complex areas.”

Gov. Gregoire called the Legislature into a special session Nov. 28 to address the budget situation. She has released her proposals for $2 billion in reductions, including deep cuts in health, social services, higher education and public schools. The Legislature has been holding hearings on her proposals, taking testimony from people from across the state.

Reaching agreement among Democrats and Republicans in the House and the Senate on all $2 billion in cuts – including possible restructuring of programs and policies – will require action in the regular legislative session, which starts Jan 9. Hunter’s plan represents a major step toward that goal.

7 cities and 2 counties got together and agreed to build an arena in Wenatchee. They used a stream of money from the state plus the expected “operating profits” from the arena to get a construction loan in 2008, and expected to refinance before December 1, 2011 when the balloon payment on the loan came due. Unsurprisingly, the arena isn’t generating enough cash flow to pay the operating costs, let alone any potential debt service.

The relationships between the 7 cities and the counties are complex beyond belief, but the long and short of it is that they failed to refinance and defaulted on the loan last week. I am concerned that this default will result in increased borrowing costs for other local governments and worked with the treasurer’s office to propose legislation that would have paid off the loan and forced the local governments to pay for it.

There’s been lots of news coverage of the issue, most concurring with my concerns about the impacts on other local governments. The proposal would not have impacted the state budget issue, would not have “bailed anyone out”, and would have made money for the treasurer.

The House passed the legislation but it got stuck in the Senate. This felt to me like the triumph of the edges of the political world over the center. We failed to make a practical decision that had bad politics. I hope this does not continue to be the case as we work through the budget situation.