Category: 2008 Legislative Session

The much anticipated quarterly revenue forecast was released this afternoon in Olympia and as predicted for the past several weeks, it dropped.  Dr. Chang Mook Sohn, in his final meeting as chief revenue forecaster, estimates that the state will take in $423 million less for the remainder of the current biennium than predicted last November.  More than half of the expected decline is related to lower real estate excise tax collections resulting from the slowing housing market.  The remainder of the forecast adjustment is related to declining consumer confidence related to the worsening national outlook.

Dr. Sohn went to great lengths in his remarks this afternoon to stress that while a mild national recession is now expected for the first two quarters of 2008, the Washington state economy is significantly brighter than the U.S. picture and that a recession is not expected here.

As for the impact on the state budget picture, today’s drop in revenue reduces the expected size of the budget reserve from $1.4 billion to just under $1 billion, before any 2008 supplemental budget adjustments are made.  While legislative and executive fiscal experts expect the forecast to result in a significant curtailment of new general fund spending or new tax reductions, so far, no one has suggested making major changes to the underlying 2007-09 biennial spending plan.

The proposed 2008 supplemental operating budget is expected to be released one week from today on February 20th by committee chair Rep. Helen Sommers (D-Seattle).  A public hearing on that budget is now scheduled for 3:30 p.m. that afternoon in House Hearing Room A.  The 2008 House capital budget is also expected to be released next week and a public hearing on Rep. Bill Fromhold’s proposal is scheduled for next Thursday at 8:00 a.m.

Although a schedule has not been announced, it is widely speculated that the Senate operating and capital budgets will be released the following week.

Today is the official midpoint of the 2008 legislative session.  Considering the collective dread that everyone in town is viewing this Friday’s general fund revenue forecast update, in hindsight, this might also be the highpoint of the 2008 legislative session.  But more on that at a later time.

This afternoon, the UW’s request legislation (SB 6848) that would provide for public financing of half of the cost of renovating Husky Stadium passed the Senate Ways and Means committee.  The measure, sponsored by committee chair Sen. Margarita Prentice (D-Renton) was heard in public hearing on February 5.  It now goes to the Senate Rules committee where it would be eligible for potential action on the Senate floor.

Yesterday, Rep. Hans Dunshee’s bill (HB 2548) to establish a UW branch campus in Everett passed the House Appropriations committee and has now been sent to the House Rules committee.  The fate of the Senate companion measure (SB 6391) sponsored by Sen. Paull Shin is unclear.  Today, the Senate Ways and Means committee took public testimony on this bill and two others (SB 6352 and SB 6490) which favor locations in Marysville/Smokey Point and Lake Stevens respectively.  As of 5:00 p.m. this evening, the committee had not taken action on any of the bills.

House and Senate bills (HB 3329 and SB 6903) which would abolish the existing Council of Presidents four year capital prioritization process and replace it with a new process managed by the Office of Financial Management cleared the House Capital Budget and Senate Ways and Means committees this afternoon.  The Senate passed a substitute version of the bill that addresses the concerns raised by the Council of Presidents relating to separate submittals for research university branch campuses and participation in the capital financing study.  The House also passed a substitute version but a copy is not yet available on on-line for review.

More on these and other bills of interest and plenty of discussion about UW budget items and possible budget release dates at the next campus legislative briefing this coming Friday.

Time to check in on the joy or misery being experienced by our fellow higher education colleagues in other states around the nation.

California

A few weeks ago, I wrote a short piece about Proposition 92, a ballot measure in California which would would have established a funding guarantee for the state’s community colleges as well as capping student fees and making other governance changes.  The measure was opposed by the University of California and California State University systems because they feared that Proposition 92 could endanger their own budgets because the measure would have required an increase of $300 million in funding for the state’s two year colleges.

On Tuesday, California voters rejected Proposition 92 by a margin of 57 percent to 43 percent.  The powerful California Teachers Association also opposed the measure and helped finance the campaign against it.

Kentucky

All is not well in the “Bluegrass State.”  Faced with an almost $600 million budget shortfall, Governor Steve Beshear has proposed a 12 percent cut for state universities and community colleges.  Michael McCall, president of the Kentucky Community and Technical College system was recently quoted as saying “I think the bomb’s been dropped on higher education.”

The proposed 12 percent cut would come on top of a 3 percent reduction the Governor has ordered already for the current academic year.  Higher education officials have said that the cuts would jeopardize the state’s ability to achieve its ambitious “2020 reform goals” which were established in 1997.  Among other things, those goals call for the University of Kentucky (UK) to become a top 20 research university.  Kentucky president Lee T. Todd Jr. has already suspended 90 individual faculty searches pending the outcome of the budget reduction discussions.

Some Kentucky state legislators are urging university and college presidents to support an increase in cigarette taxes and legalization of casino gambling if they want the Governor’s proposed cuts to be restored.  “It’s a three-letter word and it starts with a T,” said Rep. Mary Lou Marzian (D-Louisville) according to a story in today’s Louisville Courier-Journal.

Michigan

Governor Jennifer Granholm has taken an interesting approach to how she proposes funding Michigan colleges and universities in her budget which was unveiled this week in Lansing.  While higher education in general receives an average annual budget increase of 3 percent, the amounts provided to individual institutions varies based on how well they are performing on a number of performance metrics.

For example, Lake Superior State University gets an increase of 6.2 percent, in part, because it has a fairly large proportion of low income students and graduates a substantial number of students in high demand fields such as technology.  Wayne State University and the University of Michigan (UM) would each get funding increases of 3.2 percent, but Michigan State University would only get an increase of 2.7 percent because it has commercialized a smaller proportion of its research than Wayne State or UM.

Overall, higher education funding would rise by $51 million above last year’s budget, a big improvement from prior years.  The Governor’s funding proposals, however, are meant to reward those schools which are making progress on achieving her priorities of graduating more students in high demand fields and commercializing university research.

Arizona

Like Kentucky, Arizona is facing a significant budget shortfall but unlike Governor David Beshear, Arizona Governor Janet Napolitano has pledged to spare K-12 and higher education from budget reductions in both the current and future fiscal years.  The shortfall for fiscal year 2008 is almost $1 billion and the projected gap for fiscal year 2009 could be as much as $1.7 billion.  Napolitano’s budget would make cuts to other state agencies, use monies from the state’s Rainy Day Fund and use lease purchase mechanisms for K-12 school facilities.

The Arizona Legislature, however, might have different ideas.  The chairman of the House and Senate appropriations committees have developed proposals that would reduce higher education funding.  For the University of Arizona, for example, the cut to state support would be 10 percent or $44 million.  Budget deliberations will continue for the next several weeks.

Policy committee cut-off is today so I thought I’d take a moment to provide an update on a number of bills we are keeping a particularly close eye on this session.

HB 2825/SB 6637 — Allowing certain permit holders to obtain alcohol in nonbeverage form directly from suppliers

This is the UW’s bill that would permit us to buy industrial alcohol directly from suppliers instead of going through the state liquor board.  The House version passed the full chamber yesterday by a vote of 95-0 and will be sent to the Senate.  The Senate version is in their Rules committee awaiting a pull to the floor.

SB 6848 — Financing for Husky Stadium

This bill had a public hearing in the Senate Ways and Means Committee last Tuesday February 5.  We are awaiting executive session in the committee.

SB 6328/HB 2648 — Enhancing campus safety

The Senate version of the Governor’s campus safety bill is in Senate Rules awaiting a pull to the floor. The House version is in House Appropriations Committee.  We are supporting both measures since the substitute versions have corrected most of our concerns.

HB 2646/SB 6639 — Requiring bereavement leave for employees of higher education institutions

The UW along with all other four-year schools had opposed this legislation because it is something which should be discussed as part of collective bargaining and because it creates an unfunded mandate.  The bills were heard in both the House and Senate policy committees but did not pass.

HB 2548/SB 6391 — Establishing a UW branch campus in Everett

The House version of the UW North Sound bill was heard this morning in the House Appropriations committee.  The Senate version is expected to be heard next Tuesday in the Senate Ways and Means Committee.

HB 2641 — Creating a pilot program to test performance agreements at institutions of higher education

This bill has been sponsored for several years by Rep. Fred Jarrett (D-Mercer Island) and Rep. Skip Priest (R-Federal Way) and the UW has been supportive of the idea of establishing such contracts for many years as well.  This bill would establish a performance agreement pilot program with the UW and Western Washington University and creates a process for developing and negotiating the contracts during the upcoming 2008 interim.  The UW is supporting the bill and other four year schools are seeking to be added to the pilot program.

HB 3329/SB 6903 — Prioritization of public four year institution capital project requests

This is a relatively new bill which was just introduced last week.  It would abolish the existing Council of Presidents joint capital budget prioritization process established in 2003 with a new prioritization process managed by the Office of Financial Management.  The measure also calls for a capital facility financing study that would assess capital financing systems in other states and examine potential new revenue sources for higher education capital projects.  The UW has been working with the Council of Presidents to analyze the legislation as introduced and is requesting two major changes.  The first would be to eliminate a requirement that the research universities submit separate capital project requests for branch campuses and all other campus projects and the second is to add four year institutional participating in the upcoming financing study.  A substitute to the Senate version of the measure was released today with addresses these two concerns and will be heard next Monday.  The original House version was heard earlier this week and executive session is scheduled for next Tuesday.

More than halfway through cut-off week and I’m really pooped today.  I actually nodded off in the back of the Ways and Means hearing room waiting for a hearing on a bill that the committee never got to.  I really need to get to bed a lot sooner I think.

I hope many of you got a chance to catch some of the media coverage of the Husky Stadium bill hearing yesterday in the Senate Ways and Means committee.  I thought Governor Evans, Coach Willingham and Scott Woodward did a very good job explaning the serious safety problems with the stadium and clarifying a number of questions about the proposed legislation.  No doubt this is a controversial issue but I believe that even the most skeptical legislators got a chance to see the significant deterioration of the stadium and better understood the need to move quickly on renovation given the Sound Transit project coming soon.

As for the UW North Sound issue, the House version of the bill that establishes the UW branch campus in Everett cleared the House Higher Education committee on an 8-2 vote on Monday.  The bill now goes to the House Appropriations committee.  Meanwhile, the Senate Ways and Means committee canceled today’s scheduled public hearing on the Senate version of the same measure.  It is possible that a hearing on the measure might be scheduled next week.

Work continues in earnest on our supplemental budget request items.  There has been considerable discussion by legislators on the campus safety items and so far, there appears to be very little enthusiasm among a number of House members to spend very much money in this area.  With the help of a lot of folks on campus, we have been successful in amending several bills of concern, particularly in the human resources area, and we will continue to work on possible changes to others as action moves to the full House and Senate later next week.

More hearings tomorrow and a marathon House Appropriations committee hearing on Friday since many legislators will be heading back to their districts this weekend for presidential caucuses.

The campus legislative briefing I was hoping to have on February 12 has now been rescheduled for Friday February 15 from 10:30 a.m. to 11:30 a.m. in the Regents Room, third floor of Gerberding Hall.  Hope to see many of you there.

It’s week number four in Olympia and this Friday is cut-off day for all standing policy committees in the House and Senate.  As a reminder, that generally means if it hasn’t moved onto a fiscal committee or the rules committee by Friday, it’s dead for the session.  So, you can bet this will be a week packed with round the clock committee hearings, impatient and tired legislators and anxious lobbyists.

Both House and Senate Higher Education committees continue hearing policy bills on Monday at 1:30 p.m.  Executive session on HB 2548, which would establish a new UW branch campus in Everett is expected in the House Higher Education committee at the same time.  Here’s today’s story in the Everett Herald about the current status of this issue in the state legislature.

Later that evening, the House Commerce and Labor committee will hold a public hearing on HB 3332 which applies only to institutions of higher education and would, among other things, permit the Governor to submit a funding request for a collective bargaining agreement that was not finalized by the current deadline of October 1.

On Tuesday at 1:30 p.m., the House Capital Budget committee will hold a public hearing on a brand new bill (HB 3329) sponsored by Rep. Bill Fromhold (D-Vancouver) and introduced at the end of last week.  The bill would make significant changes to the capital budget prioritization process for four-year institutions.  The measure abolishes the existing Council of Presidents managed process which was established in 2003 and instead places the prioritization responsibility with the Office of Financial Management.  The new process would be based on the existing process used by the State Board for Community and Technical Colleges and would place four year capital projects into different categories (access, economic development, renovation, etc.).  Of concern to the University is another requirement in the measure which would require development of two priority lists of capital projects — one for our two branch campuses and one for all other projects.

The public hearing on SB 6848, sponsored by Sen. Margarita Prentice (D-Renton) which would provide public financing for a renovation of Husky Stadium will be held Tuesday at 3:30 p.m. in the Senate Ways and Means Committee.  Former Governor and UW Regent Dan Evans, Interim Athletic Director Scott Woodward, and head football coach Tyrone Willingham will testify in support of the measure on behalf of the University.

On Wednesday, the Senate Ways and Means committee will hear Sen. Paull Shin’s SSB 6391 which is the Senate version of the UW Everett branch campus legislation.  Sen. Derek Kilmer’s legislation (SSB 5978) which would study the baccalaureate needs of the Olympic and Kitsap peninsulas is scheduled for a public hearing at the same time.

I’m sure I’ve just scratched the surface of what is likely to be a fast and furious week.  Just for your information, I am tentatively scheduling an in-person campus legislative briefing for February 12, so stay tuned for more details.

…… that I started working for the state of Washington.  On Monday February 1, 1988, I walked into the offices of the Senate Ways and Means Committee in what is now the A,B,C conference rooms in the John A. Cherberg Building to begin working as a fiscal analyst for the Washington State Legislature.  The Friday before, I was literally working in the same capacity for the California State Legislature.  Yep, I moved jobs and states in one weekend and started work three weeks into a legislative session.  No, I would not recommend that to you or anyone else.

Anyway, two decades later, I’m still working for Washington State, albeit in a different state agency and a different city.  Sixteen years on staff with the Senate Ways and Means Committee and now four years representing the UW and I am still really having a blast.  As I get ready to speak to an Evans School class next week, it’s also encouraging to see so many students continuing to have an interest in public service (note the UW was once again #1 in Peace Corps participation for the second year in a row).

No time for punch and cake.  There are bills to follow and budgets to lobby.

And I’m not just talking about the weather (which has been miserable as you know).

Tomorrow we hit the one-third mark of this legislative session and while policy committees are in a full blown state of frenzy as they approach their cut-off dates next week, the hallways and corridors are filled with some apprehension and anxiety about the state of the Washington economy and what might happen to the next general fund revenue forecast.

Tomorrow, the Economic and Revenue Forecast Council will hold its quarterly economic review meeting and on February 15, will release it’s updated projections of general fund revenue collections for the remainder of the biennium.  The preliminary news from legislators and staffers who follow these issues closely has been a bit gloomier than anyone would like.  While the state’s economy is still considered stronger than many others around the nation, most all of the hot housing market which fueled the last two years of unprecedented revenue growth is gone.  Couple that with a strong chance of a national recession and it’s hard to be very optimistic about the future.

While the current consensus is for a short and shallow economic dip, even modest changes to the state’s revenue forecast can cause havoc for budget writers because even small percentage drops could mean the loss of one or two hundred million in the forecast.  With all eyes on the size of the ending fund balance (which the Governor made her top supplemental budget priority), a drop in the revenue forecast in two weeks could mean all those wonderful ideas we have for additional spending might have to be reduced or possibly postponed.

Well, at least the mood seems to match the weather.