Furthermore, under the proposal, the Education Funding Task Force is required to make recommendations on:

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1 WMBA Legislative Update: Week 1, Posted 1/19/16 The day legislative session began on 1/11. The session is expected to move very fast, and is anticipated to end on time this year as members will be gearing up for a major election cycle in November. Some of the major issues that we expect to see this session mainly focus on education, including attempting to address the Supreme Court s rulings on McCleary and charter schools, as well as discussions around energy and climate change. FFA changes discussed The stakeholder group that has been meeting through the interim met again this week to discuss potential changes to the Foreclosure Fairness Act. The group is attempting to address the needs of the program, including the reduced programmatic funding that has occurred because of the reduction in foreclosures. Under the current program, there is an exemption from the foreclosure fee of $250 for institutions that attest to completing less than 250 foreclosures the previous year. At this week s meeting, stakeholders agreed to lower the exemption to institutions completing less than 50 foreclosures in a year, in order to maintain funding for housing counselors. The group will continue to work collaboratively during the session. Glass-Steagall Act hearing The Senate Joint Memorial requesting Congress to enact legislation to reinstate the separation of commercial and investment banking functions in effect under the Glass-Steagall Act (SJM 8005) will have a public hearing on 1/20 in the Senate Financial Institutions & Insurance committee. We will sign up in opposition to the measure. Carbon tax bill introduced Senator Hobbs introduced a flat carbon tax bill (SB 6306) this week. The bill imposes a flat $8/metric ton of carbon dioxide on fossil fuel carbon pollution for fossil fuels extracted, manufactured, or introduced in the state. The bill has been scheduled for a public hearing in the Senate Committee on Energy and Environment & Telecommunications on 1/21. McCleary workgroup announces 2016 legislative plan The Governor s McCleary 5-corner workgroup released their legislative proposal on 1/8/16. The proposals-- HB 2366, sponsored by Representatives Lytton, Magendanz and Sullivan, and SB 6195, sponsored by Senators Rivers, Rolfes, Litzow, and Billig is the group s plan for the state to address its basic education obligations in order to convince the Supreme Court to lift the contempt order for the state. The proposal includes the following: 1. Establishes an Educational Funding Task Force; 2. Requires the Washington State Institute for Public Policy (WSIPP) to conduct an analysis of K-12 public school staff compensation; 3. Sets a deadline for the legislature to eliminate school district reliance on local levies for implementation of basic education; and 4. Appropriates $500,000 for WSIPP to conduct their study. Furthermore, under the proposal, the Education Funding Task Force is required to make recommendations on: 1. Sufficient compensation to hire and retain staff under the prototypical school model and salary allocation model; 2. System for future salary adjustments; 3. Local labor market adjustment formula; 4. How to achieve sufficient classroom facilities; 5. How to improve teacher recruitment and retention;

2 6. Local M&O levies and local effort assistance; 7. Local school district collective bargaining; 8. A clarification of basic education from enrichment services; 9. Required district reporting accounting and transparency of data and expenditures; 10. Provisions and a funding method for school employee health benefit; and 11. Sources of state revenue to support the state s statutory program of basic education. The Senate bill is scheduled for a hearing on 1/18 in the Senate Ways & Means Committee. The House proposal is scheduled for a public hearing on 1/20 in the Appropriations Committee. Director of DSHS resigns After three years at the helm, the director of the Department of Social and Health Services (DSHS), Kevin Quigley, announced that he is resigning his position on 1/5. The agency, which is the state s biggest agency, will be led by a new director once the Governor assigns a successor. The agency is charged with administration of the state s aging and long-term support, behavior health, children s health, developmental disabilities, economic services, rehabilitation, financial services, and services and enterprise support programs.

3 WMBA Legislative Update: Week 2, Posted 1/25/16 The Legislature is wrapping up the second week of the 60-day session, and is drawing near its first cutoff of the session. All policy bills must be heard and passed out of their policy committees by 2/5 in order to remain alive for the session. WMBA legislative day & reception The WMBA is holding its annual legislative day this week, 1/27, to hear from speakers such as DFI Director Scott Jarvis. Additionally, there will be a legislative reception, where WMBA members will have a chance to meet and talk with Legislators from key committees and legislative leadership. The reception is free but you need to register. To register go here. FFA changes continue to be discussed The stakeholder group continues to meet to discuss potential changes to the Foreclosure Fairness Act. The group is attempting to address the needs of the program, including the reduced programmatic funding that has occurred because of the state s reduction in foreclosures. The group will continue to work collaboratively during the session to consider options for the program. Glass-Steagall Act hearing The hearing to consider a Senate Joint Memorial requesting Congress to enact legislation to reinstate the separation of commercial and investment banking functions in effect under the Glass-Steagall Act (SJM 8005) was canceled in the Senate Financial Institutions & Insurance committee this week after industry representatives raised concerns. I-1366 As many were anticipating, a King County Superior Court judge ruled on 1/21 that Initiative 1366 is unconstitutional. According to the judge s opinion, the initiative usurped the Legislature s role, and also violated the single subject rule. As a reminder, the measure called for the state share of the sales tax to be reduced from 6.5% to 5.5% percent beginning April 15, unless the legislature referred a constitutional amendment requiring a two-thirds vote on all future tax increases to the voters. This reduction in the sales tax was projected to cost the state general fund approximately $1.5 billion in the current biennium. It is expected that this issue will be appealed the Supreme Court. Charter schools The Senate s bill to reauthorize charter schools and address the Supreme Court s ruling regarding non-common schools and their funding sources (SB 6194) was passed out of the Senate on 1/20. The bill was voted out of the body with a vote of 27 to 20, with three Democrats voting in support of the bill and one Republican voting no. The bill has now been referred to the House Education Committee, and has not been scheduled for a public hearing to date. Education Funding The legislation that stemmed from the Governor s education task force to address the state s basic education obligations (SB 6195 and HB 2366) had public hearings this week in both the House and Senate. The agreement for this session is to come up with a plan to address these remaining obligations in The House bill was voted out of the Appropriations Committee on 1/21.

4 WMBA Legislative Update: Week 3 The Legislature has wrapped up its third week of the 60-day session, and is drawing near the first cutoff of the session. Policy bills must be heard and passed out of their policy committees by 2/5 in order to remain alive for the session. Fiscal bills must pass out of the fiscal committees by 2/9 in order to remain alive. Foreclosure Fairness Act changes A bill (HB 2876) which is the outcome of the discussions by the stakeholder group dealing with potential changes to the Foreclosure Fairness Act was heard on 1/31 in the House Judiciary Committee. The bill is an effort to address the needs of the program, including the reduced programmatic funding that has occurred because of the state s reduction in foreclosures. The bill alters the funding distribution to the state agencies in charge of the housing counseling, and shifts the fee from being applied at the notice of default stage to the notice of trustee sale. The bill also reduces the exemption from the fee to those entities that attest to less than 50 notice of trustee sales per year. Bill Setting Timeline for McCleary Solution The legislation that stemmed from the Governor s education task force to address the state s basic education obligations (SB 6195 and HB 2366) continues to move through the process. The House bill passed out of the House on 1/25 with a vote of 64 to 34. The proposed legislation (1) establishes an Education Funding Task Force to continue the work of the governor's work group; (2) requires school districts to provide data on how local levy money is used and allocates funding for assessment of that data; and (3) requires the Legislature to take action by 2017 to eliminate the state's overreliance on local school levies to pay for basic education. Senator Litzow raised concerns regarding the 2017 timeline this past week. Therefore, the Senate bill was voted out of the Senate Education Committee on 1/28 and was amended by the committee to adjust the number of committee members and to require legislative action by 2018 to reform school district levies (instead of 2017). Senators McAuliffe, Billig, Rolfes, and Mullet voted no on the bill. The bill has now been referred to the Senate Ways & Means Committee. Several constitutional amendments proposed to require two-thirds votes for taxes Given the discussion around Initiative 1366, which would have set forth a constitutional amendment requiring a twothirds vote on all future tax increases, there have been quite a few bills introduced which would implement the twothirds vote requirement for tax increases. I-1366 was recently ruled as unconstitutional by a superior court judge, but the measure had called for the state share of the sales tax to be reduced from 6.5% to 5.5% percent beginning April 15, unless the legislature referred a constitutional amendment requiring a two-thirds vote on all future tax increases to the voters. If this had occurred, the state s sales tax was projected to be reduced by approximately $1.5 billion in the current biennium. Here is a summary of the bills to date: HJR 4213 constitutional amendment on taxes. HJR /3 vote for tax increases. HJR 4215 amending the Constitution to require a two-thirds majority vote of the legislature to raise taxes. SJR /3 vote for tax increases--had a public hearing in the Senate Government Operations & Security Committee on 1/21. SJR 8212 requiring a two-thirds majority vote of the legislature to raise taxes, a simple majority to impose or raise fees, and no advisory vote schedules for a public hearing in the Senate Government Operations & Security Committee on 2/4. SB 6604 providing limitations in respect to tax raises and fee increases by the legislature.

5 The Legislature finished its fourth week of the 60-day session, and has passed the first cutoff of the session, where policy bills must be passed out of their policy committees in order to remain alive for the session. The next cutoff is quickly approaching, where fiscal bills must pass now out of the fiscal committees by 2/9 in order to remain alive. The last day for each body to pass bills in their house of origin is 2/17, at which point bills will be considered by the opposite body. Mortgage lending fraud prosecution bills The Department of Financial Institutions proposals to extend the mortgage lending fraud prosecution account (HB 2315/SB 6282) continue to move through the process. The House bill unanimously passed out of the House on 2/3. The Senate bill is currently in the Rules Committee. The WMBA supports both of these measures. Labor issues moving through the House There are several controversial labor issues being considered this session: Equal pay: the House passed a bill banning retaliation against employees for discussing wages and salaries, and preventing the use of policies that require pay secrecy (HB 1646) on 2/3. While the sponsor, Rep. Senn, has been negotiating the bill with interested stakeholders since last year, the proposal that passed is the same version of the bill that was passed last year. The bill passed with a vote of 56 to 41. Pregnancy accommodations: A bill setting forth statutory accommodations required to be provided by employers for pregnant employees, childbirth, or pregnancy-related health conditions (HB 2307) passed the House with a vote of 52 to 45 on 2/4. The bill has now been referred to the Senate Commerce & Labor Committee. Minimum wages: The Senate heard a bill (SB 6087) on 2/1 to put an alternative minimum wage and sick leave initiative on the November ballot. Sponsored by Sen. Hobbs (D) the bill is similar to the ballot measure recently passed in Tacoma, which would phase in a $12 an hour minimum wage. The bill has not moved out of the committee. Non-compete agreements: Two bills to ban employers from using certain non-compete provisions from employment agreements passed out of the House Labor & Workplace Committee on 2/3. HB 2406 would make non-compete agreements unenforceable for certain industries, such as barbers, manicurists, and fast food workers. HB 2931 would prevent companies from keeping departing employees from taking similar jobs at competing companies for specified periods of time after they leave. Rep. Graham Hunt resigns after controversy After questions had been raised over the accuracy of his military record, Rep. Hunt (R, 2 nd LD) resigned from the House on 2/2. Allegations had been mounting over the last couple of weeks, when news broke that there were inconsistencies in the stories that Hunt had publicly made about his military career and his actual military record. It is unclear when his replacement will be appointed.

6 WMBA Legislative Update: Week 4 Senate refuses to Confirm DOT Secretary Lynn Peterson In a surprising and controversial act, yesterday afternoon the Senate Republicans refused to confirm Transportation Secretary Lynn Peterson s appointment, citing numerous issues and lack of confidence and trust in the management of the agency. The Governor s office and Senate Democrats were surprised to see this come to the floor. The debate lasted for approximately 90 minutes and was heated and emotional. The Senate did confirm Revenue Director Vikki Smith immediately before and had good things to say about her and her agency. Economic Forecast On February 3, the Economic and Revenue Forecast Council was presented with the February Economic Forecast which is used to develop the February revenue forecast which will be released on February 17. The February revenue forecast will set the revenue level that the legislature will use to develop the 2016 Supplemental Budget. Overall the Economic Forecast is lower than the November Economic forecast. The most significant changes are lower inflation, a result of much lower oil prices, and weaker Washington nonresidential construction employment. Washington employment is expected to grow 1.8% this year, the same rate as in the November forecast. The preliminary February forecast for average annual employment growth from 2017 through 2019 is 1.2% per year, down from 1.4% in the November forecast. The Economic forecast for nominal personal income growth this year is 4.4%, down from 4.8% in the November forecast. The new forecast for nominal personal income growth from 2017 through 2019 averages 4.9% per year, also down from 5.3% in the November forecast. The Legislature finished its fourth week of the 60-day session, and has passed the first cutoff of the session, where policy bills must be passed out of their policy committees in order to remain alive for the session. The next cutoff is quickly approaching, where fiscal bills must pass now out of the fiscal committees by 2/9 in order to remain alive. The last day for each body to pass bills in their house of origin is 2/17, at which point bills will be considered by the opposite body. Mortgage lending fraud prosecution bills The Department of Financial Institutions proposals to extend the mortgage lending fraud prosecution account (HB 2315/SB 6282) continue to move through the process. The House bill unanimously passed out of the House on 2/3. The Senate bill is currently in the Rules Committee. The WMBA supports both of these measures. Labor issues moving through the House There are several controversial labor issues being considered this session: Equal pay: the House passed a bill banning retaliation against employees for discussing wages and salaries, and preventing the use of policies that require pay secrecy (HB 1646) on 2/3. While the sponsor, Rep. Senn, has been negotiating the bill with interested stakeholders since last year, the proposal that passed is the same version of the bill that was passed last year. The bill passed with a vote of 56 to 41. Pregnancy accommodations: A bill setting forth statutory accommodations required to be provided by employers for pregnant employees, childbirth, or pregnancy-related health conditions (HB 2307) passed the House with a vote of 52 to 45 on 2/4. The bill has now been referred to the Senate Commerce & Labor Committee.

7 Minimum wages: The Senate heard a bill (SB 6087) on 2/1 to put an alternative minimum wage and sick leave initiative on the November ballot. Sponsored by Sen. Hobbs (D) the bill is similar to the ballot measure recently passed in Tacoma, which would phase in a $12 an hour minimum wage. The bill has not moved out of the committee. Non-compete agreements: Two bills to ban employers from using certain non-compete provisions from employment agreements passed out of the House Labor & Workplace Committee on 2/3. HB 2406 would make non-compete agreements unenforceable for certain industries, such as barbers, manicurists, and fast food workers. HB 2931 would prevent companies from keeping departing employees from taking similar jobs at competing companies for specified periods of time after they leave. Rep. Graham Hunt resigns after controversy After questions had been raised over the accuracy of his military record, Rep. Hunt (R, 2 nd LD) resigned from the House on 2/2. Allegations had been mounting over the last couple of weeks, when news broke that there were inconsistencies in the stories that Hunt had publicly made about his military career and his actual military record. It is unclear when his replacement will be appointed.

8 WMBA Legislative Update: Week 5 The Legislature finished its fifth week of the 60-day session, and has passed the first cutoff of the session, where policy bills must be passed out of their policy committees in order to remain alive for the session. The next cutoff is quickly approaching, where fiscal bills must pass now out of the fiscal committees by 2/9 in order to remain alive. The last day for each body to pass bills in their house of origin is 2/17, at which point bills will be considered by the opposite body. Mortgage lending fraud prosecution bills The Department of Financial Institutions proposals to extend the mortgage lending fraud prosecution account (HB 2315/SB 6282) continue to move through the process. The House bill unanimously passed out of the House on 2/3 and has been referred to the Senate Financial Institutions & Insurance Committee. The Senate bill passed out of the Senate unanimously on 2/11, and has been scheduled for a public hearing on 2/16 in the House Business & Financial Services Committee. Budgets expected soon after the next revenue forecast Also on 2/17, the Economic Revenue & Forecast Council will release its updated revenue forecast. This will frame the available resources for the supplemental operating budgets, as well as the budget. It is anticipated that the House will release its budget proposal on 2/22, with the Senate following up shortly after. Indications are that the forecast may be down a bit, although not by much. Constitutional amendment on tax increases fails in the Senate On Friday, the Senate brought a constitutional amendment (SJR 8211) to the floor which would have required taxes to be raised by a two-thirds majority, which is much higher than the current simple majority requirement. Constitutional amendments are very difficult to pass because they require passage of both the House and Senate with a two-thirds vote, at which point they are then sent to the ballot for a public vote of the people. SJR 8211, sponsored by Sen. Roach, failed to meet the two-thirds requirement with a party line vote of 26 to 23. Education Funding The House s proposal stemming from the Governor s education task force to address the state s basic education obligations (HB 2366) has been scheduled for a public hearing in the Senate Early Learning & K-12 Education Committee on 2/18. The Senate version (SB 6195) was amended by the Ways & Means Committee requiring an education funding task force to set forth working group recommendations on funding by Sept. 1, The bill also now requires the state auditor to review school district practices to ensure local levy funds are not used for basic education, and requires legislative action to be taken by Dec. 31, 2017 (not 2018) to reform school district levies. The Senate proposal is currently on the second reading calendar, and may be considered by the whole body next week.

9 WMBA Legislative Update: Week 6 The Legislature is now less than three weeks (March 10) from adjournment in the 60-day session. Bills that are still alive have now moved into the opposite house where the process begins with the other body. The next cutoff is quickly approaching, where policy bills must pass out of the policy committees by 2/26 in order to remain alive. The fiscal cutoff follows immediately after, where bills need to be passed out of the fiscal committees by 2/29. Revenue forecast down by more than $500 million The Economic & Revenue Forecast Council released its February revenue forecast on 2/17 as lawmakers are working to release their supplemental budget proposals next week. The revenue forecast reduced by $67 million in the Biennium, and was reduced by $442 million in the Biennium. Some of the reasons for the reduced revenue resources include a reduction in the personal income forecast, the slowing of global and U.S. economies, a stronger dollar which has impacted exports, and a weakening of manufacturing activities. Some of the positive economic indicators including an increase to hourly wages, additional growth in housing permits, and lower gasoline prices are positive for consumers. On the positive side, the caseload forecast was updated 2/12, this combined with other maintenance level updates like a decline in inflation have reduced the cost of the supplemental budget by about $250 million. Budget update Now that the revenue forecast has been updated, the supplemental budgets in both the House and Senate are being finalized, and are expected to be released next week. The House will release their supplemental operating budget proposal on 2/22, and its capital budget on 2/24. The Senate is expected to release its proposals a few days later. The House Finance Chair is expected to introduce a new revenue package on Monday to fund the House budget (different from the above proposals), focusing on the following six specific tax preferences: REET on Foreclosures $34.4 m Sales Tax on non residents -$21.9 M Sales Tax on bottled Water - $23.2 M Resellers of Prescription Drugs - $17.6 M International Investment Management Services - $ 31.4 M Travel Agents and Tour Operators - $ 6.1 M However, the Senate has been clear it is not interested in raising taxes this year, so it will be difficult for the package to pass. Mortgage lending fraud prosecution bills The Department of Financial Institutions proposals to extend the mortgage lending fraud prosecution account (HB 2315/SB 6282) continue to move through the process. The House bill unanimously passed out of the House on 2/3 and has been scheduled for a public hearing in the Senate Financial Institutions & Insurance Committee on 2/24. The Senate bill passed out of the Senate unanimously on 2/11, and had a public hearing on 2/16 in the House Business & Financial Services Committee. The bill has been scheduled for executive action on 2/23. House Democrats release several tax packages On 2/18, a small group of legislators released a package of increased taxes on businesses. The package consists of five separate bills with separate sponsors:

10 Aerospace accountability (Rep. Robinson): adds an additional requirement that Boeing would be required to pay a $2500 fee to the state education legacy fund for each job lost below a specified baseline. Extracted fuel use tax exemption (Rep. Peterson & Gregerson): repeals the use tax exemption for extracted fuel used in manufacturing for oil refineries, but maintained for hog fuel. Narrowing first mortgage interest deduction (Rep. Farrell): narrow the organizations eligible for the first mortgage interest deduction by redefining community banks to entities with $10 billion or less in assets. International banking facilities (Rep. Riccelli): repeals the B&O tax exemption for international banking facilities in WA. Large corporate airplanes (Rep. Frame): repeal a sales tax exemption for the purchase, repair, and retrofitting of large private airplanes by corporations. McCleary plan passes both bodies Both the House and Senate have now adopted a plan for meeting the school funding obligations specified in the state Supreme Court's McCleary ruling. What has been dubbed a "plan for a plan, this was likely best outcome lawmakers were going to achieve this year. The governor has said he's eager to sign the bill. The biggest lifting will come next year in the budget process, when lawmakers will be required to fully meet the obligations of McCleary.

11 WMBA Legislative Update: Week 7 The Legislature is beginning to near the end in the 60-day session, with less than two weeks from adjournment scheduled on March 10. Policy bills were required to pass out of policy committees by 2/26 in order to remain alive. The fiscal cutoff follows immediately after, where bills must now pass out of the fiscal committees by 2/29 unless bills are deemed necessary to implement the budget. Tax proposal heard in the House The House held a hearing on HB 2996 at which Russell testified in opposition, which is a proposal to change tax rates for six specific tax rates: 1.) Applies the real estate excise tax on transfers in foreclosure proceedings; 2.) Eliminates the preferential B&O rate for international investment management services; 3.) Eliminates the preferential B&O rate for travel agents and tour operators; 4.) Eliminates the preferential B&O rate for resellers of prescription drugs; 5.) Eliminates the sales and use tax exemption for bottled water; 6.) Converts the nonresident sales tax exemption to a remittance program. The proposal is scheduled for executive action on 2/29. We expect it to be very difficult to pass the proposal out of the House, and do not expect a positive reception from the Senate. Mortgage lending fraud prosecution bills The Department of Financial Institutions proposals to extend the mortgage lending fraud prosecution account (HB 2315/SB 6282) continue to move through the process. The House bill had a public hearing and passed out of the Senate Financial Institutions & Insurance Committee on 2/24. The Senate bill had a public hearing on 2/16 in the House Business & Financial Services Committee, and was passed out of the committee on 2/23. Both bills are now in the Rules committee. Budget update Both the House and Senate released their Operating, Capital, and Transportation budget proposals this week. The House released their supplemental operating budget proposal (HB 2376) on 2/22, and held a public hearing the same day. The House capital budget (HB 2380) was released on 2/24. Both budgets were passed out of the House on 2/25 on party lines. The Senate released its proposals on 2/24, hearing the bills the same day. The Senate Ways and Means Committee passed its operating budget (SB 6246) on 2/26, also on party lines. The Senate passed the capital budget (SB 6201) off the floor on 2/26. In summary: House supplemental budget Adds approximately $467 million in policy additions; Assumes passage of $119 million in new taxes; Spends moneys from the state s emergency funds (the budget stabilization account) to fund homeless programs, local effort assistance and teacher salaries; Funds efforts to repair wildfire damage; Includes $49 million for mental health programs $15 million savings from changing school assessments Assumes passage of a bill making changes to the four-year balanced budget requirement. Senate supplemental budget

12 Adds approximately $49 million in policy additions; Funds efforts to repair wildfire damage (Transfers $172.7 M from General Fund to Disaster Recovery Account for fire Suppression; funds $10.3 m for wildfire management) Does not increase teacher salaries; Directs more than $54 million to address safety issues at Western State Hospital and other mental health services; Funds $6.6 million from the state s Opportunity Pathways Account to keep charter schools open; Merges two pension plans (one with a deficit, one with a fund balance) $75.4 m NGF-State

13 WMBA Legislative Update: Week 8 The Legislature is drawing towards the near the end of the 60-day 2016 session, with less than one week from adjournment scheduled of the regular session on March 10. Policy bills were required to pass out of opposite house by 3/4 in order to remain alive. The only bills that remain alive are those being considered for concurrence by the opposite body or that are deemed necessary to implement the budget. The focus has begun to narrow significantly as the legislature begins to look almost exclusively at the supplemental budgets. House tax proposal The House s proposal to change tax rates for six specific tax classifications passed out of the House Finance Committee on 2/29 on a party line vote. The bill has not been voted on by the entire body, and indications from members are that the bill is likely dead for the session. The Senate has showed no sign of being interested in tax increases this session. That being said, we will work closely with allies and legislators in these last few days to ensure that our tax rate is not considered to balance the final budget proposal. As a reminder, the proposal included the following tax increases: 1.) Applies the real estate excise tax on transfers in foreclosure proceedings. 2.) Eliminates the preferential B&O rate for international investment management services; 3.) Eliminates the preferential B&O rate for travel agents and tour operators; 4.) Eliminates the preferential B&O rate for resellers of prescription drugs; 5.) Eliminates the sales and use tax exemption for bottled water; 6.) Converts the nonresident sales tax exemption to a remittance program; Budget update Both the House and Senate have now passed their operating, capital and transportation budgets, and the negotiations have begun to take place between the two bodies in order to reconcile the differences. The negotiations have narrowed to just a handful of legislators, as lawmakers work behind the scenes to reach compromises. Indications are that the capital and transportation budgets are nearing final agreement, but the operating budget continues to be the biggest difference to negotiate. However, at the end of the week, specific proposals were being offered between the House and Senate, which is a good sign of progress. But with only a handful of days remaining, significant progress will need to be made this weekend in order to finish on time. Special Session? There were some rumors around Olympia last week that one option was to adjourn Sine Die without passing a supplemental operating budget. The Governor quickly came out with a response that, should the legislature not finish and pass an operating budget by 3/10, he will call the legislature back immediately to address the budget. The Governor made it clear that he does not agree to the idea of not passing a budget this session. As a reminder, the recent revenue forecast reduced the four year outlook by more than $500 million. Because of this, should the Legislature not pass a budget, the Office of Financial Management would be required to address this shortfall by making across-the-board cuts to all discretionary programs. Because of this risk, it is very likely that the legislature will pass a budget this session; however it is not clear whether this will be accomplished by the end of the regular session, or shortly after in a special session. Mortgage lending fraud prosecution moving to the Governor s desk The Department of Financial Institutions proposals to extend the mortgage lending fraud prosecution account (SB 6282) passed out of the House on 3/1 with a unanimous vote. The bill was not amended in the House, and its next stop will be to the Governor s desk to be signed into law. Rep. Dunshee appointed to Snohomish County Council

14 On 2/29, the Snohomish County Council voted to appoint Rep. Hans Dunshee (D) to the council to replace Dave Somers, who had been elected as county executive last election. Dunshee currently holds the position of the chair of the Appropriations Committee as the chief budget writer of the House, and has been in the legislature for 14 years.

15 WMBA Legislative Update - Week 9 The final day of the 60-day legislative session came and went on 3/10 but without a final budget deal. The Governor immediately called the Legislature back for a special session, which means the Legislature has a full 30-days to wrap up business. It is uncertain if that full length of time will be necessary to finish the work for this year, and there will be a significant amount of pressure to finish with the big election cycle looming and the majorities of both bodies up for grabs. Special session immediately called & many bills vetoed Governor Inslee announced on Sine Die night that an immediate special session would be called as the legislature adjourned the 2016 Regular Session. Also, in an unprecedented move, Governor Inslee followed through on his threat and vetoed 27 of 37 bills that were on his desk for signature, saying they are not as important as the supplemental budget. In Washington, if bills are sent to the Governor more than 5 days before the Legislature adjourns, the Governor has 5 days to act on the bills. Bills delivered fewer than five days before the Legislature adjourns have 20 days to be acted on by the Governor (April 2). It is unclear how the legislature will react to this move: whether the legislature will override the vetoes (takes 2/3 vote of both chambers), re-pass some or all of those bills, or let the vetoes stand. Governor Inslee states he will continue to "hold a high bar" to the bills that come before him in measuring whether to sign or veto. Bills he signed 3/10: SB 6282 Mortgage Lending Fraud/acct Benton this was a WMBA support item. We were pleased to see it signed into law. SB 5342 Human Trafficking Hasegawa SB 5846 Annexed areas sales and use tax- Nelson SB 6202 National Guard Employee rights Hobbs SSB 6219 Vehicular Homicide Brown SSB 6286 Offender Assault Victims Pearson SSB 6295 Coroners Inquests Hasagawa SB 6376 Human Trafficking Awareness Fraser SSB 6421 Proscribing Epinephrine Auto Injectors- Ranker SSB 6463 Luring Pearson Bills vetoed 3/10: SB 5145 Health Tech Clinical Comm- Dammeier SB 5265 Public Funds/Recip deposits Benton SB 5458 Health District Banking Angel SB 5549 Pharmacy Assistants Jayapal SB 5767 Local Govt Treasuries Cleveland SB 6148 Storage/Personal Property Warnick SB 6162 Invasive Species Council Honeyford SB 6170 Retirement info Disclosure Roach SB 6177 Marijuana Research Licenses Rivers SB 6196 Energy Site Eval Council McCoy SB 6206 Industrial Hemp Growing Hasegawa SB 6220 Federal Economic Dev Funds Brown SB 6281 Uniform Athletic Agents Act Fain SB 6284 Fire Sprinkler Systems Takko SB 6290 Apple Commission Honeyford SB 6226 Automobile Facility Records King SB 6341 Cannabis Producer Serv Rivers SB 6342 Private Activity Bond Alloc Miloscia

16 SB 6356 Reverse Transfer Agree- Liias SB 6398 Cultural Foods Hasagawa SB 6401 Secondary Fish receivers Rolfes SB 6466 Higher Ed Disabled Students Habib SB 6491 Apostille Services Pedersen SB 6498 Recovery Sponsor Privilege Fain SB 6569 Patient Out-of-Pocket Costs Cleveland SB 6606 Wholesale Vehicle Dealers King SB 6633 Marine Resources Adv Council Ranker Charter Bill sent to Governor One of the significant political issues this session was addressing the charter school court decision from last September that held charter schools were unconstitutional. On March 9 th the House passed SB 6194 with a vote of 58 yes, 39 No, 1 excused. The Senate concurred with the House amendments on March 10 th with a vote of 26 yes, 23 No. The bill has now been sent to the Governor for signature. The Governor has 20 days to sign the Charter bill. Budget updates Transportation: The legislature passed a supplemental transportation budget before the 60-day clock ran out. You can see the final budget here: Capital: The supplemental capital continues to be in play, and will likely be part of the final package in conjunction with the operating budget. While the capital is technically not necessary (in fact the legislature did not pass a supplemental capital budget in 2013), it is not a common occurrence. Operating Budget There continue to be negotiations to reach a final agreement on the final supplemental operating budget. Some members in the House have contended a supplemental operating budget is not required, and argue that the underlying existing budget would be preferential to the reductions seen in the Senate s proposed budget. At the beginning of session, the Governor had said there was no need for any supplemental budget - operating, capital or transportation. However, since that time the revenue forecast went down by approximately $500 million. Because of this, failing to pass a supplemental budget would mean the Governor would be required to drastically reduce or eliminate many discretionary programs. Senate Releases New Operating Budget Today the Senate released and held a public hearing on new operating budget. This is part of the Senate negotiating strategy with the House. Some of the most significant highlights are: $38.2 Billion spending level (Near General Fund +OPP) $178 M increase in spending (Near General Fund +OPP) 4 Year Balanced Budget No pension merger Uses budget stabilization account to fund wildfires - $190 M Assumes revenue from Broadcaster legislation (SB 6665) - $57 M ; $25M Turnover expected in the Legislature There have been a number of new announcements of those not seeking re-election.

17 In the Senate: Lt. Governor Brad Owen; Long-time Senator Jim Hargrove (D, 24 th LD) is not seeking re-election; Sen. Hewitt (R, 16 th LD) is not seeking re-election; Sen. Benton (R, 17 th LD) is not seeking re-election. Senator Dammeier (R, 25 th LD) is leaving the Senate to run for Pierce County Executive; Sen. Fraser (D, 22nd LD) is giving up her seat to run for Lt. Governor. Additionally, there are members seeking new offices that do not have to give up their Senate seats to run because their terms are not up until 2018: Sen. Habib (D, 48 th LD) running for Lt. Governor Sen. Hobbs (D, 44 th LD) running for Lt. Governor; Sen. Miloscia (R, 30 th LD) is seeking the Auditor's office; Sen. Jayapal (D, 37 th LD) is running for Congress. In the House: Rep. Moeller (D, 49 th LD) is not seeking re-election in order to run for Lt. Governor; Rep. Walkinshaw (D, 43 rd LD) is not seeking re-election in order to run for Congress. Rep. Dunshee (D, 44 th LD) is being appointed to the Snohomish County Council so will resign his legislative seat after session. Unemployment rate flat in January The Employment Security Department released its jobs report on 3/9 for January, reporting that the unemployment rate has remained at 5.8%, the same rate as December. The largest growth came from the retail sector, adding approximately 3,500 new jobs, while education and health services added 3,300 jobs.