The 30 day Special Session is over. So the 2010 Legislative Session went a full month longer than the constitutionally mandated 60 days to complete its work; so this session lasted a total of 92 days.In the final days of the Special Session the legislature was in Pro Forma Session; which means that no actual votes are held and no legislative business is conducted. Due to the nature of the Pro Forma Session many legislators from districts a great distance from Olympia had returned home.
Members of the legislature were called back for floor action and caucus on April 10 and set the goal of concluding all business by Tuesday. They made their goal and here are some of the outcomes:
Taxes - 20% B&O Increase on Architects
In the last year and a half Washington has lost 7,000 architecture and engineering jobs. AIA|WA has been providing regular updates on the job situation to the legislature. And, hundreds of AIA|WA members shared their own stories of hardship to lawmakers through meetings, phone calls and e-mails.
Despite knowing that architects are struggling, the legislature passed a 20% increase in the B&O taxes for architects and other service businesses. This new tax will cost architects and engineers about $70 million over the next 3 years.
The legislature also changed the law to add make firm owners, principles and certain employees personally liable for unpaid taxes. Even if a business fails and closes its doors, the state can now go after you and your employees' personal assets for the taxes. Protection of the corporation is gone in Washington State.
The new tax rates and liability provisions will go into effect on May 1, 2010. While the higher B&O tax rates is only supposed to run through June 2013, given predicted budget problems, it is possible the higher rates could be extended or increased.
General Operating Budget
Once the tax package was finalized, legislators pushed the Operating Budget and it quickly passed with a partisan vote. The Operating Budget had cuts in some areas, but increases in others. It also relies upon new taxes and new federal stimulus money (that has yet to be appropriated by Congress). Total operating budget expenditures actually increased for the state by $1.9 Billion.
More concerning is that this budget does not fix long term fiscal problems. If the economy does not recover, then additional cuts or taxes may be needed later. Legislators have said they have cut as deeply as they dare. Thus, the question is will they turn to even higher and new taxes to close next year's $5 billion budget gap?
Capital Budget
Building on last years transfers, the Capital Budget shifts about $1 billion to the General Operating Budget, which results in a continued decline in overall design contracts. AIA|WA had lobbied to have some design projects restored so that projects will be ready for construction when the economy rebounds.
There were cuts in K-12 school and higher education projects. Other areas, however, saw increases. Overall, the Capital Budget increased by $360,000.
Procurement Reform
In the closing hours of the legislative session HB 1690 was revived, altered and passed.As originally introduced, HB 1690 specifically applied to the University of Washington. The UW had caused great concerns when it went outside of established procurement laws for the Husky Stadium renovation. It was drafted to require UW to follow the state's alternative public works procurement law.
UW had argued that based on a 100 year old law, it did not have to follow state procurement laws. The bill had passed the House unanimously during the regular legislative session, but stalled in the Senate.
In the last day of the special session, the bill was revived and revised. The House made the bill apply more broadly to all public bodies. It states, "It is the intent of the legislature to establish that, unless otherwise specifically provided for in law, public bodies may use only those alternative public works contracting procedures specifically authorized in this chapter..." The Senate amended the bill further and added the details of another bill affecting public housing authorities. The new provision states, "All housing authorities shall be subject to the provisions of chapter 39.10 RCW except where alternative requirements or procedures of federal law or federal regulation are authorized."
Dunshee's Bond Bill
For two legislative sessions, Representative Hans Dunshee has been pushing for a bond bill to pay for school energy efficiency upgrades. It passed the House twice, only to stall in the Senate.
In the closing hours of the 2010 special session, the bill was scaled down and sent to the Governor. It would authorize $505 million of state bonds to pay for capital improvements for energy costs savings to K-12 schools, colleges and universities. The bonds would be paid for out of state general fund dollars.
Because these bonds are above the state bond limit, it will require approval by the voters in the November elections.
New Initiatives to Block Tax Hikes
The Seattle PI reported Wednesday that, "Just hours after lawmakers adjourned their special session, Eyman filed eight initiatives Tuesday morning to repeal new taxes imposed by lawmakers..."
One of the eight initiatives would repeal the B&O Tax hike. Because they have only just been filed, the initiatives are not yet numbered. Look for more information in coming weeks.
Unlike a referendum, the initiative would not block collection of the new taxes unless it passes in November. The legislature put an emergency clause on its tax bills, which precludes the ability to run a referendum. An initiative requires more signatures to qualify for the ballot than a referendum.
The report continued, "Eyman already is gathering signatures for Initiative 1053, which would reinstate the requirement that two-thirds of the Legislature vote for any tax increases (unless the taxes are sent to a public vote.)"
If you have questions regarding any of these bills, about the 2010 Legislative Session, or would like to find out more, contact us at bowman@aiawa.org.
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