Oh, I like that. Yeah, yeah. So not aficionado,
not nerd, but budget insider. Yeah, yeah. Doesn't
that sound better? That does. It almost sounds
like it could be its own podcast. Ooh. Ooh. Wasack's
budget insider. Hosted by. Welcome back, everybody,
to the Wasack budget insider. Welcome to County
Connection, the official podcast of the Washington
State Association of Counties, where we dive
into the legislative issues shaping the future
of our communities. From budgets to public safety,
infrastructure to elections, we'll break down
what's happening in Olympia and how it impacts
counties from across the Evergreen State. Stay
informed, stay engaged, and join us as we amplify
the voice of Washington's 39 counties. Welcome
back, everybody, to the County Connection podcast,
the official podcast of the Washington State
Association of Counties. I'm Paul Jewell, your
host and government relations director for the
State Association. Today is a beautiful afternoon.
It is gorgeous outside, and I'm stuck in here
in the studio with no less than Brian Enslow.
Brian, how are things? You look casual today.
I am feeling casual, and I have dressed to meet
my mood. Not to impress. Not to impress. And
as I was informed last time, this is a podcast
and there is no YouTube stream. That's true.
So no one really cares. No filming going on in
here. You could be wearing anything. You could
wear a clown suit and nobody would know. Although
I'd probably tell them, let's be honest. Sometimes
I feel like I'm wearing a clown suit. I didn't.
That's kind of funny. That's not what I meant,
but it is kind of funny. Well, Brian, the session
ended on Sunday on time, somewhat predictably.
also maybe a little surprisingly given you know
the levels of controversy that we were dealing
with this year and i wanted you to come in today
so we could kind of chat about what actually
happened in the final budgets mostly the state
operational budget i know that you're a bit of
a budget nerd or aficionado, depending on how
you want to frame it. And I've been working in
politics in Washington State for quite a few
years. And one of your jobs previously was as
a budget writer on staff over there. And I always
appreciate the perspective that you bring to
this topic. And I think this year was a particularly
fascinating year. There were a lot of ebbs and
flows and a lot of, you know, pulls and pushes,
so to speak, and a lot of friction, frankly,
in the legislature and between the legislature
and the governor's office around the budget.
And actually, we don't even know how that's going
to end up. yet because the governor has not signed
the budget yet. He's still in the evaluation
phase, made some pretty strong statements at
the end of the session about the things he liked
in the budget, but also made it really clear
that he was going to do a line by line evaluation
and kind of make a decision at some point in
the future. Um, am I catching everything so far
or what am I missing? You've given me about 10
different bullet points to like jump off on and,
and choose one buddy. Let's go. Let's start on
the last one real quickly. Okay. Just, just for,
uh, and by the way, I prefer budget insider.
Oh, I like that. So not aficionado, not. but
budget insight. Yeah. Yeah. Oh, doesn't that
sound better? That does. It almost sounds like,
it almost sounds like it could be its own podcast.
Ooh. Ooh. Wasax budget insight. Welcome back
everybody to the Wasax budget insider. So let's
just start quickly at the line item veto. Let's
do it. Okay. So just. And we're doing this, right?
This is Professor Enslow and we're doing the...
Well, that might be a stretch, but we're going
to have a fun conversation about budgets. Just
quickly, the governor's veto authority with respect
to the budget is defined as like single subject.
Right. So in this state, the governor does not
have what is sometimes referred to as line item
veto. But in the budget, it kind of functions
that way because like each... unique appropriation
is kind of its own line right it's its own subsection
sort of right he has section veto authority on
a bill correct so you know how a bill is structured
where you see section one section two section
three he can go and say i'm gonna veto section
three of bill such and such but he can't say
i'm gonna I'm going to veto line four of section
three of Bill such and such. He has to either
eliminate the whole section or nothing. And where
the budget is concerned, because of the way it's
written, all those special appropriations are
almost subsections upon themselves, right? And
so while it's not line item authority, so to
speak. It kind of almost is, right? It kind of
is, but it can't go in and change a million dollars
and strike out a zero and make it a hundred thousand
or remove the word solely or may or shall. It's
either veto it or leave it alone. Okay. Yeah.
And so I just want to quickly just hit on that
one just because there will be a lot of intrigue
over the next roughly 20 days. And the reason
why I say 20 days is because that's the... uh
legal authority in which the governor has to
review any bill that that was delivered to his
desk um um uh with five days or fewer left in
the session which was the budget was passed on
the last day and all the revenue bills and so
governor gets 20 days to make a decision and
just another thing like the governor doesn't
have pocket veto and what does that mean i'm
so glad you brought that up because i was going
to ask you about that So in some states, if you
don't sign a bill or a piece of legislation,
it is vetoed. That's referred to as a pocket
veto. You keep the bill in your pocket. You don't
take it out. You don't sign it. Right. In Washington
state, if you don't sign a bill, it's enacted
at the end of the 20 day period. When I was in
high school or middle school, I had a teacher
and I'm trying to remember who it was. It was
either Jerry Striegel or it was. Steve, boy,
I can't remember. If he hears this, he's going
to be mad at me because I can't remember his
last name. But shout out to both of those guys.
They were our history teachers. And the way they
described the pocket veto, at least one of them
was essentially, he said, you know, imagine yourself,
you're the president or you're the governor or
whatever. You simply read the bill. You fold
it in half. You fold it in half again. You tuck
it in your pocket and you walk away without signing
it. That's essentially. I'm not vetoing this,
but I'm not signing it either. And because I've
taken no action, it doesn't go into effect. What
you're saying is that's not the situation here
in Washington state. If the governor fails to
act, he doesn't sign it, meaning he doesn't necessarily
endorse it, but it still becomes law or still
becomes effective. And that's true with the budget
as well. Yes, it is. Okay. Good to know. Yeah.
And so, you know, so that's part of the context.
And and and I think as we made it clear, but
if we didn't, you know, the governor has partial
veto authority. Right. And it gets to that single
subject. So you can kind of pick and choose and
you don't it's not a it's not a straight binary
choice between whether I like this policy or
not or whether I like this budget or not. You
can you can kind of go through and make kind
of item by item decisions. So Steve Watson was
his name, by the way, got a got a cold. Full
circle. Mr. Watson, I apologize for forgetting
your name originally. Excuse me. Tenino, baby.
Tenino. High school faculty of 1994. 1992. They
might have still been there in 94, but I wasn't.
We have established that Paul is exactly one
year older than I am. Yeah, one year older. Exactly.
So that's just some sort of context of like the
mechanical things that are going to happen. And
so the governor's policy staff, the governor's
budget staff is starting to go through and comb
through those budgets and make decisions. I am
hearing, you know, some disparate opinions and
I, and I want to, and, and, and before I want
to get back to where you talked about just kind
of like the atmosphere and the working relationships.
And I think, you know, I think we've talked a
lot about this and I won't spend too much time,
but you know, this, this legislature and this
executive we're not walking hand in hand through
the various budget process. There was you know,
tension and disagreements about um resources
and priorities yeah and and this isn't breaking
news i mean this has been widely reported i even
read an article today in the seattle times you
know calling um governor ferguson kind of a mystery
man uh because the legislature just didn't know
exactly what he wanted and while he did help
shape the budget he did it in a way that was
in sometimes uh not exactly clearly Sometimes
by not exactly clearly communicating what he
wanted, but more what he wasn't in favor of.
I'm going to push back. And this is my, we've
talked about this, my least desirable attractive
trait is the pedantic nature of me. That's not
what I thought you were going to say when I agreed
with you for a second. Oh, he's like, yeah. Yeah,
I totally agree with that, Brian. And I'm going
to parse. I don't think the governor shaped the
budget. Oh, interesting. I think the governor
shaped the revenue package. And so on numerous
occasions, the governor... Well, he certainly
had some influence on the $100 million that I'm
sure you're going to get to for law enforcement,
right? And what else? Well... And I'm not trying
to put you on the spot. You mean as far as the
spending priorities? So he got his $100 million
and he got a revenue package that met his...
what we think was his criteria. Well, I think
the rainy day fund was something that he made
some demands about that they not, you know, dip
into. So I think, you know, that. the fact that
there was fiscal constraint around that was something
that he certainly had some influence on. Sure.
And we'll talk more about that because that is
a part of this budget story. But I think the
legislature, there's evidence to suggest that
the legislature would have made that decision
independently. But I guess what I would say,
and this is one of the observations I want to
share, is it was apparent to me that... that
the historic level of communication and involvement
of the governor's budget shop, which is called
the Office of Financial Management, or OFM for
short, they weren't involved. They weren't in
the room at the end. And this budget, the actual
conference document, was new information. to
agency directors and high -level OFM staff the
same time we got it, or pretty similar. So that's
pretty interesting because I'd not heard that.
And in fact, in the article that I read, like
I said just today, and some of the others, the
legislature, both the Senate and the House at
different times, had commended the budget staff,
specifically the leader of OFM, the director
of OFM, and others. had commended their level
of involvement, their willingness to collaborate,
et cetera. It was, I think, their confusion with
what the boss, as far as the governor, what their
boss really wanted that was creating some of
the communication gaps. Sure. At least that's
what was reported. You're saying that at the
end, OFM staff wasn't even part of the final
conference? I wasn't in the room. Okay. But what
I would say is, In communications I had with
policy staff and other communications I heard
from within the lobbying community was there
was a lot of agency directors and other high
position people basically asking lobbyists what
was going to be in the budget. Wow. And just
to be very clear, the director of OFM. That's
unusual. Katie Chapman See. It's an incredible
individual. And before accepting. The post at
OFM with this new administration was kind of
the head budget person for the House Democratic
Caucus. And so has great relationships with the
legislature. So it does not surprise me at all
that the OFM director was. involved and engaged
and had input into the process and decision.
That doesn't surprise me. And that makes sense
to me given their relationships. But I do think
that the executive broadly, and like I said,
we've talked about this. What was the theme music
we have or the catchphrase? Idle speculation.
Yeah. Yeah. So I am engaging in some speculation
here. Sure, of course. It appears to me that
the governor was not as involved in the final
negotiations and final shaping of the actual
expenditure side than maybe historically. Interesting.
Those conference committees and those negotiations
are held pretty... tightly to the vest it's pretty
hard for us to know exactly what happened even
trying to do a after action debrief is a real
challenge nobody people are pretty tight -lipped
so um obviously a lot of what we're talking about
is speculation but that's an interesting perspective
and uh it'll be interesting to see how things
change through this administration as time goes
by, you know, there were definitely hiccups,
you know, in the transition from the Gregoire
administration to the Inslee administration.
And some of those things got smoothed out. Some
of those things didn't change. Right. It'll be
interesting to see. how things operate here,
if this was, you know, first year, just kind
of not knowing how to navigate the landscape
or if it was a planned kind of management style.
And we'll see more of that or if it'll be a little
easier in future years. I don't know. I don't
know. It is interesting. There's in many ways,
this governor. is more like Governor Gregoire
in the sense that has strong opinions about just
kind of the operations of the state as an executive.
Yeah, and Governor Inslee was definitely less
inclined to get involved in those discussions.
I think, right, very driven on specific policy
issues and kind of some kind of big picture like
ideological. Right. But maybe not necessarily
as deeply invested in kind of the just mechanics
and X's and O's of running a state. I was going
to say the operational machinations of how one
thing, you know, how things get from conception
to, you know, implementation. And that might
just be, you know, in many ways, Governor Ferguson's
background is more similar. To Governor Gregoire's
background, they both were attorney general and
they both ran independently elected state offices
and agencies and had other kind of governmental
jobs versus being a congressman. Right. Yeah.
Very different. Very different backgrounds for
sure. Yeah. Okay. Well, that was one or two of
the big points that I threw out at the beginning.
Where would you like to go now? You want to talk
about revenue? And how that whole package shaped
up? Well, yeah. I mean, we talked a little bit
about this, right? But I think I'm going to put
you on spot. It doesn't really work in a podcast,
you know, because we can just edit it. No. So
this conference budget has challenges. And there
are, you know, some... And we'll get into the
details. And I just want to acknowledge that
there are reductions in service levels. There's
some issues from our courts. There's a lot of
things that are problematic and have impacts
on real people and real services. For sure. But
it's also not that bad. Right. I agree. You had
to expect cuts. Yes. Right. In a year like this
where they walk in saying from the very beginning,
you know, anywhere from eight to twelve billion
dollars as far as the four year budget outlook
for a deficit in these just a state operating
budget. And then you get another revenue forecast.
And now the governor is saying 16 billion. Right.
And other people are saying anywhere from 10
to 16 billion. And who knows what the exact answer
was going to be. But he was saying as much as
16 billion, you know, to come out. of a budget
year like that, not expecting some cuts, I think
is completely naive, right? Totally unrealistic,
totally unacknowledging of the situation that
you're in, like, you know, literally ostrich
with your head buried in the sand sort of, you
know, perspective or business model. You had
to expect cuts. They were talking about revenue.
And they were talking about big revenue for a
while in the range of $20 -some billion. That
got knocked down to about $12 billion. It ended
up being about $4 billion, right? So that's a
big difference and a big drop. And $4 billion
in new revenue is fine. Would they have $4 or
$6 billion in additional cuts? You have to expect
that kind of thing in a budget year like this.
I agree with you. I don't think it was that bad.
Certainly not for counties. Yeah. And you just
threw out a whole bunch of numbers and I'm going
to not clean them up, but I'm going to establish
some baselines because I'm going to refer back
to these. So the initial Senate budget had a
revenue package just under 17 billion and the
house was right around 15. Okay. And that's over
four years. And I think, and that's where I think.
Sure. What I want. And then the conference budget,
the budget that was passed by the legislature,
is $8 billion over four years. Right. Over four
years. Okay. And here's the other thing I want.
So, and again, I would see - In fact, it's a
little over eight. It's almost nine over four
years. I'm rolling the dice here, Paul. Is the
budget - I love it when you're rolling the dice.
In your opinion, the conference budget - Give
me two sixes. Better. I'll take two fives. Is
it better - than the budgets that they built
on like $16 billion. I mean, it depends. Yeah,
I mean, it depends. It definitely depends. It
depends kind of where your priorities are, what
your perspective is. One of the things I always
talk to about county commissioners, especially
new county commissioners, is if they really want
to make a difference in the early parts of their
terms, their early years serving, the thing they
need to pay the most attention to is their budget.
It's the most important policy document that
they have. And the same thing is true for the
state. I don't see it any other way. Where you
spend your money as a legislator is what is important
to you. And this budget, any budget, really lays
out the policy for the next two years for the
state because that's where they're going to spend
their money. So I think it really depends on
what you wanted and what you were thinking about.
There were some things that were better for us.
In those budgets, those earlier budgets that
had larger revenue packages, for sure, there
was additional funding for different services
and a few other things. I think there were definitely
some issues with some of those budgets, some
of the durability and sustainability of those
revenue sources and what they were predicting
and whether they were actually going to come
to fruition. whether the rug would have been
jerked out from under them via lawsuit or referendum
or citizen's initiative. All those sorts of risks
were there. So I think it really depends on how
you look at it overall. I would say we're not
dissatisfied with what came out at the end and,
in fact, quite pleased. You and I were here during
the Great Recession. Yes. And counties and others
were targets. I mean, just flat. There's no other
way to say it. They literally looked us in the
face on more than one occasion during those years
and said, you are going to be very upset after
this session because I am going to take your
revenue because we have shortfalls and we don't
care about you as much as we care about us. That's
I mean, those were not exactly those words. Right.
But I mean, those were the messages that were
being conveyed was like you local governments.
You're going to have to figure it out your own
way because we're taking the money that we normally
give you. These budgets are different. And I
would say that the potential deficits that they're
facing are much larger than they were back then.
Now, granted, they're spending a lot more than
they did back then. The programs, the diversity
of spending programs that they have are much
greater than they had back then. And it wasn't
even that long ago, although it was, Jesus, it
was like almost 20 years ago. It was longer than
you'd like to think. Yeah, longer than we'd like
to think. But the difference is, the way I see
it, There's a lot more respect shown in these
budgets for the work that their partners, that
the legislature's partners do, both on a government
and non -governmental level, and a recognition
of how important that funding is for the implementation
of the programs that the legislature on a statewide
level wants to see. And they didn't make those
same level of cuts in those programs, which was...
refreshing to us. And something that we're, we're
very thankful for and, and, you know, recognize
very clearly because in the past, you know, we
would have expected much more severe cuts that
hurt programs that we do much more severely.
Well, you know, I think it's now Friday, Paul.
It's not, it's still Thursday. Are you saying
that was boring? So you didn't take my bait exactly,
but I think at the very least... I took your
bait and gave it back to you. At the very least,
when we saw what was going to happen, where we
saw that the governor was not going to be comfortable
with the revenue of $16 billion... I'm just distracted
by the fact you called me boring. I did not say
you were boring. I just simply suggested that
maybe it was a... A long answer. Too long winded.
All right. Just ask me yes or no questions. I
think he's worried that I was perhaps too provocative
in suggesting what I suggested about the end
of the negotiations. And so he was afraid to
say anything. No, no, no. Okay. But will you
at least agree that you thought the budgets were
going to be worse when they only had $8 billion
to play with? I thought they were going to be
tougher on local governments. Yeah. Yeah. And
from my perspective, that would be worse. Yeah.
Right. And I'm setting aside revenue, and I don't
know if we want to, you know, there'd have to
be some conversation about it. And the truth
is, Brian, we didn't know how much revenue they
were playing with at the end. We knew that they'd
made a decision, but until the budget came out,
we didn't know it was $8 billion over four years
or $4 billion over two. It could have been $2
billion. It could have been $12. We didn't know.
And so I think, so it's still a mystery to me,
a mystery. I love a good mystery. How they did
it, like how they did it. And, and Paul, do you
have a famous, a favorite like mathematician?
Are you, are you like a favorite? Yeah. Like,
are you like a, are you like a Newtonian guy?
Do you have like a soccer style scarf of Euclid?
Like Euclidean geometry? No, no. It's all a means
to an end for me. Archimedes, maybe? My favorite
mathematician is this calculator on my phone,
yeah. So given the baseline... Well, you can't
ask that question without answering it yourself.
Do you have a favorite mathematician? Oh, yeah,
Euclid. Oh, of course, yeah. What was I thinking?
I'm so stupid, yeah. Troglodyte here. Yeah. You
got his picture on your wall? So - Giant poster,
huh? So - You're so old, you probably have an
autograph copy. So Paul, so I'll - A budget,
right, has a couple very basic components. Like
how much money comes in. Yep. How much money
you spend. We call those revenues and expenses.
And then the difference. Yeah. Okay. So in this
case, we have revenue, expenditures, and then
ending fund balance. Right. Okay. Profit or loss.
What? I have in front of me for all those people
watching live on the YouTube stream. So that'd
be zero. Is what is the four year outlook. Okay.
And a very rudimentary level. This tells you
those three things. Right. And here's why it's
a mystery to me is because the proposed expenditures
are about the same. So this is the enacted one.
This is the Senate proposal. This is a budget.
The Senate proposal was based on $16 billion
in new revenue. this was on eight okay and the
the expenditures for the respective bienniums
are about the same there's the there's a billion
dollar difference in um in the 27 29 so there's
a difference of a billion okay the ending fund
balances right so it should add up right you
should you know the ending fund balances are
four billion off okay so so that's five i have
A $5 billion difference between what was enacted
versus what was initially proposed. I should
have an $8 billion difference. And I can't figure
out why, Paul. And I can't figure out how. And
so that's why this budget is a mystery to me.
I can't figure out how it's arguably as good
or not worse. We'll use maybe your words. Not
necessarily worse than the initial budgets they
proposed. And I can't figure out. Like, I can't
figure out how. And, you know, as a self -proclaimed
budget insider, this beguiles me to no end. So
what you're saying is the proposal from the Senate
that was based on $16 billion in new revenue,
from a spending perspective, is about the same.
But the revenues are lower by about half as far
as new revenue. And then the ending fund balances
are off a little bit, which explains some of
it, but not all of it. Yes. Okay. Could it be
that there are just internal savings and reappropriations
to new line items? And how much of that is there?
There's all sorts of things we as the public
can't see. So there's got to be an explanation.
Yeah. And whether it's buried in a spreadsheet
or it's a transfer or whether it's some sort
of difference in assumption about what needs
to be funded moving forward. But somehow they
constructed a budget that spent about the same
amount of money in both biennium and wasn't necessarily
worse than the previous budget. with half the
amount of new resources. And like I said, you
do see a difference in ending fund balance. Right,
which you would expect to. But it doesn't account
for the whole difference. And there's no money
out of the rainy day fund. Which would be on
the revenue side, if it were. So you would see
it. Yeah. That is a bit of a mystery. It's a
mystery. It's a mystery to me. Why'd you have
to bring this up right now on a podcast? Because.
How am I supposed to figure this out? You can't
figure this out. I mean, if you don't have a
favorite mathematician, Paul, I don't like your
chances of figuring this out. You don't have
to have a favorite mathematician just to understand
basic principles of accounting. Okay. That's
probably true. That is very true. That's probably
true. So that's something I want to share because
when we start going into the details, as we mentioned,
there are some gaps in services and in funding
that are very important. the, you know, the,
you know, they cut the funding for like drug
task forces and things like that. And like I
said, we can go item by item and there's definitely
some cases where we're going to experience, you
know, a loss in service, loss of revenue at the
local level. But, but it wasn't as bad. as we
thought, and it didn't get worse from when we
thought we had $16 billion to play with to when
we only had eight. Well, there were a few things
that got worse. You know, for instance, the final
budget cut. foundational public health services
by about 40 million dollars and that was worse
yeah uh than we had originally thought right
so there were some things that got worse um you
know there's other things that are popping into
my brain that have to do with the capital budget
but of course that's completely different and
completely dependent yeah um on what happens
public works assistance account yeah but it moved
to the house version yeah um which was an extra
hundred million dollars right so i think it was
originally you know close to 200 million in the
Senate, $288 million in the House, and the House
version is what prevailed. So they moved $288
million. But that doesn't explain an $8 billion
difference, right? No. And I don't know if this
is the podcast for it, but I think the House
methodology of transferring revenue for the biennium
versus permanently taking the revenue streams
from the Public Works Assistance Account and
dedicating it to... Anyhow, that might be a topic
for another day. Obviously, a highly controversial
proposal that did not move forward. It was fairly
short -lived, I would say, but did cause a lot
of angst among stakeholders up at the Hill and
really everywhere. But that ended up not being
in the final budget. Let's talk about some of
the details. I mean, obviously, the mystery is
there, which is intriguing. I apologize. I've
definitely rattled you a little bit. Well, a
little, especially since now, I don't think we're
going to solve it on this podcast. No. So, yeah,
I'm going to have to go digging and see if I
can figure it out. See, what I've done is I've
blended this podcast, a political podcast, with
now a true crime podcast. Well, maybe a math
podcast. I don't know if it's true crime. There's
no Agatha Christie happening. But there is a
mystery. There's a little bit of a mystery. But
the nice thing about math is math is only a mystery
until you figure it out. And then it's no longer
a mystery because math is math. Yeah. Right.
It's the only pure language of truth. I think
anywhere, maybe anywhere, at least on this planet.
Counter Mark Twain, three kinds of lies, lies,
darn lies and statistics. Yeah. Statistics aren't
the same as pure math. They're just a manipulation
of math to try to make a point. You know what?
Let's let's let's continue. Let's get into some
of the details. You know, some of the highlights
of the budget. All of the state -shared revenues
that counties depend on on a regular basis, whether
it was liquor profits or liquor taxes, whether
it was the county assistance and the county justice
fund, cannabis or streamlined sales tax, all
of those funds were maintained at current levels.
Not a single drop of that money was touched.
Some of the other pass -through funds that have
been targets in the past, like local solid waste
financial assistance, You know, that one was
cut 60 % during the Great Recession. It took
more than 10 years to get that money back. That
was maintained in the budget. FPHS, which we've
seen huge gains on over the last several years,
was cut by about $40 million, but that is a fairly
small percentage of the increases that we've
seen since that whole effort around foundational
public health services started. Predictably,
the Public Works Assistance Account, money was
swept and transferred um unfortunately that is
kind of a normal thing for the legislature to
do during you know different fiscal it's definitely
looked at as a i don't want i don't want to use
It's definitely a source of revenue that the
legislature feels is fairly fungible. Yeah. And
so we expected some level of transfer from that
account, $288 million. is a lot but then they
turned around and backfilled like another 350
million or something like that in the um capital
budget uh for new appropriations for public works
assistance uh projects so you know that that
almost kind of equaled itself out uh not to the
same level that we were hoping for uh but at
a reasonable i mean it was a reasonable compromise
i thought it is it's And I think why it's important
that the methodology was ultimately the house
that prevailed is it's a one time because backfilling
general obligation bonds to then - It's a little
bit of an eyebrow raiser. The math of taking
money that you get to 4 % to 5 % and then sending
it out in loans that are at 1%. Right. It points
to something we talked about this year. that
they were debt capacity rich and cash poor. Yeah,
and just for folks who maybe aren't that familiar
with the Public Works Assistance account, it
has dedicated funding that comes into it every
year. Some of that is from utility taxes, a major
fund. a funder of the public works assistance
account is the solid waste tax right so there's
these different revenue streams that come in
and then essentially the public works board takes
applications there are certain qualifications
and local jurisdictions can get loans at one
percent and even some mixture of loans and grants,
so money they don't have to pay back, to do infrastructure
projects. It's a super low -cost, really valuable
program for public works projects in Washington
state. It's been ongoing for a long time. Unfortunately,
it oftentimes sees its money swept. But the idea
is long -term, these... dedicated revenue sources
pay into the fund, the money gets loaned out,
the recipients of that funding, which I think
there's been no defaults on or very few throughout
the history of the program, pay it back, including
that low interest rate. And with the new revenue
and the payments coming back into the fund, there's
always money available for new projects. It's
kind of this self -funding, self -perpetuating
model that really is in the taxpayer's interest.
And what has happened this year, they scooped
up a bunch of those revenue sources, put them
into the general fund, and then they backfilled
by bonding, right? Using the state's bonding
authority to provide money for public works assistance
account projects that will be paid back, but
at a much lower interest rate. So it is a bit
of an eyebrow raiser. And that's what I meant
when I said that. You just go, hmm, that sounds
like a really strange thing to do. I don't, yeah,
I don't think this is accurate, but this, I think
of it as reverse arbitrage. A little bit, yeah.
But, you know, what's interesting to me is we're
at a time where. The value of the program has
never been greater because, you know, like, you
know, you and I have talked about this before.
We've both been watching or engaged in politics
for about 25 years. And for the vast majority
of that, interest rates have been fairly low,
right? Yeah, really low. And for the past 25
years, I would say. And so. large counties or
large municipalities haven't always looked to
the public works assistance account because their
access to capital their debt capacity didn't
necessarily predicate a need to where they would
like go through the steps or the requirements
that the program required. They would just use
their own access to capital. Sure. But now the
delta between what like just King County could
get with their own, you know, AAA bond rating
versus what the public works assistance account
has grown significantly. And I'm not. I shouldn't
even have said a specific county, but there are
choices in that access to low interest capital.
What you really mean is any county that has access
to capital through their own bonding capacity
based on their revenue streams that has a good
credit rating, even they. could benefit now because
of the way the markets are by going to the public
works assistance account rather than just going
out to the bond market itself. And that's just
a function of the interest. Yeah. And I guess
the easier way to just say it is that all counties
are going to benefit because the delta between
what they could or could not get with their own
bond rating. to what is being offered now has
grown. Yeah. It's wide enough now that it makes
sense. For everyone. For everyone, for sure.
It's always made sense for the smaller ones,
right? Because they just don't have that same
access to capital. They don't have the same asset
base. They don't have the same revenue base.
They don't, you know, they may not have the same
debt experience. Exactly. Right? All of those.
That a longstanding county or a longstanding
city would have, or they've got this, you know,
huge history of bonding over time. And, you know,
good repayment schedules and investors feel good
about that. Right. And especially when you, when
you, when you throw in the grant component and
scale a project. So the grant award might be
a much higher percentage of the project at a
smaller County than it would be Brightwater.
Well, and it's not always a County, right. It
can also be a city. It could be a special service
district, some of those other ones, ports, water
and sewer, you know, all those sorts of things.
Yeah. Any, any local government. Yeah, no. Not
to belabor the point on this one, but it is when
you look at it that way and we know how valuable
the program is, we're grateful that they backfilled
with bonding capacity. But that's obviously not
a sustainable model, not something the state's
going to continue to do into the future. All
right. Well, that section was brought to you
by Commissioner Hutzel. So what else do you want
to talk about in the budget? Well, let's talk
about some of the cuts. Where were you pinpointing
some of the cuts that you thought would be more
impactful? Well, I mean, you labeled, I think.
You identified just kind of a number one on foundational
public health. Yeah. And I think it, I don't
think we need to, I don't need to spend any more
time on that, but I think. Well, we had a good
conversation with Jamie about that as well. So
great. She's the right person to talk to. I think,
you know, one of the things was I was looking
at is the relationship between the state and
locals with respect to Blake and last biennium.
We're going to have to tell people what Blake
is. Oh. Because I don't think we've actually
talked about that on this podcast. So the Blake
decision was what? Two years? Three years ago?
Four years? Was it longer than that? It was longer
than that. So the long and short of it is there
was a court decision that rendered our felony,
our ability to prove that someone knowingly was
in possession of narcotics, made it very difficult.
Right. And that was the Blake decision. And at
the same time in Oregon. Essentially, someone
claimed that the narcotics were found. Oh, we
did a whole story? Oh, yeah. Yeah, this individual
complaint. It's like they said they bought their
clothes at Goodwill or Buffalo Exchange. No,
no, no, no, no. That's not what I heard. It was
in the pocket of the jeans they were wearing.
Yeah. And they said they were someone else's
jeans. Yeah. And had no knowledge that the narcotics,
which they were in possession of. Were theirs.
Were theirs. The classic. I haven't used this
excuse, but those drugs aren't mine. Right. I
have no idea whose drugs those are, officer.
They were in your pocket. Well, these aren't
my jeans. I mean, that's essentially my understanding.
I'm going to get the legal terms wrong, and Russ
is going to just, if Russ is listening, I apologize.
I'm sure he's not. Don't worry about it. But
basically, saying they weren't yours was. It
was not an affirmative defense, right? And if
you had them, if you were in possession of narcotics,
then that was fine. So it basically added an
element that our prosecutors would have to prove
that you knew that they were on your possession,
which was a standard that I think the court system
was like, you know, would be very difficult.
And now within the atmosphere was there was an
organ initiative that legalized. or removed felony
penalties, well, legalized, you know, possession
of narcotics. And it was the, I think it's fair
to say that the legislature was kind of trending
that way or hoping. to the progressive, certain
progressive elements of the legislature were
for various reasons. We're looking at ways to
decriminalize drug offenses. Well, there was
certainly a lot of discussion in the legislature
about that. Yeah. Around this decision and how
to move forward, et cetera. And in fact, we ended,
I think we had to come back and have a special
session two sessions ago just to. Because they
temporarily put something in place, right, for
a longer -term solution, and then they left session
without that longer -term solution. If you look
back, I think, at our 2023 or 2022 legislative
wrap -up report, there's something in there about
that. But, yeah. And so this has been ongoing
for years. And essentially what happened was
it, well, it overturned or substantially altered.
the sentences or the convictions of a lot of
different criminals. I shouldn't say criminals
of a lot of individuals who were convicted of
those crimes that overturned those sentences
or it was a mitigating factor in part of another
sentence. And so. People had to get resentenced
or their sentences had to be vacated. And in
many cases, the fines and fees and forfeitures
that they had paid had to be repaid. Yeah. And
so there's been some funding that continues to
be provided because most of this happened in
counties because counties are where the state's
justice system is essentially. Yes. You know,
remind me. In Superior Court, what does every
docket start with? In Superior Criminal Court.
The state versus. Yep, state versus. We are the
ones who operate the state justice system. We
are the ones who implement and enforce the laws
through our system of courts at the county level.
And so we were the ones actually imposing the
fines. We were the ones imposing the sentences
and in some cases actually incarcerating the
individuals because if it was less than 365 days,
they would stay in county jail versus going to
the state correction system. And so we are also
the ones in most cases faced with vacating, resentencing,
refunding, et cetera, et cetera. And so there's
been ongoing support financially from the legislature
to counties to deal with this issue. Yeah. And
the amount of state support on that is dramatically
diminished in this biennium. compared to last
month yeah and i'm not sure exactly what impact
that's going to have on counties i don't know
if that is um if that is a function of just some
of the workflow being yeah the fact that we've
gone through a lot of it already and that is
starting to dwindle um or if you know there's
going to be larger impacts i don't know yeah
to be determined i think the other um i think
the water rights adjudication Um, I think, um,
the Becca responsibilities, Becca was a big one.
Um, there was a, there's a dramatic drop off
there from, I think 14 million down to four.
So that was a major cut. Now the Becca, the Becca
funding, um, was, uh, directly related to some
new requirements from the Becca bill. Uh, and
that was, you want to remind everybody what that
was originally juvenile truancy, right? From
geez, 2000 and what? Oh, I don't, I can't. That's.
Yeah. Like 2004, 2005. Senator Hargrove was here.
Yeah. Way back when. Yeah. Yeah. Shout out to
Senator Hargrove. But that funding and that program
has been in place for a long, long time. Yes.
And this is a major hit to that program. Senator
Regala, Debbie Regala, Pierce County. Yeah. It's
big. Yeah. So there are some impactful things
here. That's for sure. But even when you bring
those up. And you pinpoint and you say, okay,
and some of these are going to be really important
to some people, right? And I get that. But from
a county perspective, even when you bring those
up and you point at those, still a better budget
than we had anticipated. Yeah. And honestly.
I know I've said this before, but we are grateful.
I mean, we are eternally grateful. We're very
pleased with the support that the legislature
has shown counties and other local governments
in this budget and the fact that we didn't experience
what we experienced during the Great Recession,
which was just, I mean, I hate to say it this
way, but almost a bloodletting of... state shared
revenues for local governments to the point where
we were shutting down programs and laying off
staff at record levels. I think the way I would,
the way I think of it is, is at that time there
was a fundamental renegotiation between the state
and local government about the responsibilities
and resources available to do those responsibilities
that we weren't necessarily party to that negotiation.
I was going to say, I don't remember that. being
a negotiation i remember it being whereas here's
what you've got whereas this is a um a peanut
buttering of pain points yeah it's a little bit
more sharing the pain i agree throughout all
sectors of the budget um uh i think um I think
higher ed might say that they got disproportionate
cuts. I know our community college system has
some concerns. Yeah, but do you remember what
they did to higher ed during the Great Recession?
They gave them basically unlimited tuition authority
in exchange for just cutting general fund. cut
and i mean they i think they took it harder than
we did i agree tuition's more than what what
do they double triple quadruple during that period
of time just to make up the difference i mean
higher ed was was decimated yes for a period
of time i mean they really took it to community
behavioral health the red pen was all over higher
ed and and public health uh and and behavioral
health you know the red pen you know was striking
out all of those things and Again, just not the
same thing here, right? I mean, much more support
for all of those things than we saw, you know,
almost 20 years ago now. That gets back to my
mystery. Like, I don't know how they did it.
And I'm okay with that. I was never the smartest
person in the room. But it is, you know, they
have somehow figured out how to thread the needle.
of kind of spreading the spreading the pain if
you will to kind of all areas of the budget um
whether as we whether it's higher ed whether
it's whether it's um whether it's human services
whether it's local governments etc um without
necessarily you know overly targeting one sector
Interestingly enough, too, in this budget, they
are transferring, what, one half of 1 % or one
tenth of 1 % permanently now to transportation
from sales tax, which is something that they
had to take out of their revenue streams in this
budget in order to make that happen. One -tenth
of 1%. One -tenth of 1%. Okay. And so that's
a new thing that wasn't here before. So that's
revenue that they had to figure out a way to
either go without or replace. And there are new
investments in other programs here. For instance,
the grant program that was created by House Bill
2015 that creates also some additional authority
for local governments with a new one -tenth of
1 % sales tax for... Law and justice purposes,
there's $100 million in a grant program to hire
more law enforcement officers, which was a priority
and a campaign promise of the new governor, Governor
Ferguson. He made it very clear at the very beginning
of session that he wanted to see that in the
budget, despite the fiscal challenges that the
state was going to have. And it's in there. It
is. And this is, that is contrary to my. And
you mentioned it. The House budget proposal only
had $25 million in it. Right. We end up with
$100 million. Right. Grant program over four
years. There's some criteria involved in order
to be eligible to the grant program. Must be
new hires. Cannot be laterals. Have to have certain
policies and trainings in place, et cetera. And
I don't know. Can we say this? It's a podcast.
We can say anything we want. Because we can always
cut it out afterwards. It's not. one new one
-tenth it's two depending on whether you live
in a city or a county so 2015 oh because counties
can double up so 2015 that's right gives a um
And I hate saying this, but there's not a better
word to say because we haven't figured out a
replacement, but a councilmanic authority. So
the legislative authority of a county. It's actually
one of my favorite words. Well, so many people
say matic, which is wrong. It's wrong. It's manic.
Which is gendered. Which is weird. Because there
used to only be councilmen, and that's why I
hate saying it. But also it feels like. We're
trying to be. it feels like manic. Oh, like manic
depressive. Yeah. Or like a little nutty, you
know what I mean? Like a little council manic.
Um, I was actually leaning less towards the gender
part of it and more towards the, it's a funny
name because it's makes you sound like the council's
a little nuts. Well, At WSAC here, we strive
to reach a certain balance. But it is a word
sandwich to say at the discretion of the legislative
authority, this is just councilmanic. In other
words, the council can just take a majority vote.
And if the majority vote says yes, they can impose
the new tax. So the county can do that. Right,
for a period of time. I think the city can do
it as well. Yes. Again, for a period of time.
And then after, I think it's after 2028, it has
to go to the voters. So it can stack. Yes, which
is the two -tenths portion that you're talking
about. So if you're in a city, you could end
up with the two -tenths because the city could
impose it as well as the county, right? So if
I lived in the county of Paul and I was the city
of Brian. It would be a very nice county. And
if Paul were to take that tax. I could as well.
And residents of the city of Bryan would experience
a sales tax increase of two -tenths. Right. Some
people refer to that as fifth, but it's two -tenths
in legislative tax terminology. Sure. And then
people in the unincorporated county of Paul would
have a one -tenth sales tax experience. Right.
Unless, of course, when they go into the city
to buy goods and services, then they're going
to pay two -tenths. And Paul would... This guy
sounds, this County sounds really familiar. The
legislative authority, the budget authority of
the County of Paul would receive the one 10th
that was assessed on the city of Brian. That's
right. So that's right. Hopefully I didn't. Is
that confusing enough? I don't know, but I didn't
want to talk about any of our members taking
votes. So I didn't want to use County example.
So it is what it got into trouble earlier. I
mean, the bill is what it is. It does stack.
And so if you're a County, you would collect
that one 10th. percentage sales tax increase
on all taxable sales countywide whether it's
in the city or not so you're not just subject
to your 15 of city wide sales taxes on this particular
one tenth that you would otherwise get as a city
you would impose that one tenth but it only gets
applied in the city and so if the county and
the city both did it it could result in a two
-tenths increase. I think we've said that about
four times now. So hopefully that's got two -tenths,
one -fifth, four -twentieths, however you want
to do it. 2100s, whatever. So it does impose
a little bit extra. on city residents really
not city residents but sales taxable sales within
the city boundaries the question i have maybe
you don't know the answer to this question because
it's come to my mind and i don't know the answer
to it either a county typically gets 15 of the
city's share of sales taxes oh do they also get
15 of this one -tenth share of the city's share
i would say the legislation is silent that's
interesting um so in this particular So if that's
the case, a county may collect the full one -tenth
on the city and the county and then an extra
15 % of the one -tenth of the city share. So
the city only ends up getting 85 % of its one
-tenth? That is something that needs to be examined,
is what I would say. Pretty good deal for the
county, I would say. Maybe I shouldn't have brought
it up. I think... That in practice, that I suspect
many of our members will be having conversations
with their city partners and examining various
pathways forward, whether interlocal agreements
or not, and things of that nature. But the legislature,
like I said, the legislation is silent on those
kinds of things. It's interesting how... You
know, we use the expression like belt and suspenders.
Yeah. Funny story. My dad actually does wear
a belt and suspenders. Both. The suspenders do
the work, but he feels like a belt is needed
to create a finished look. But God bless him.
It's going to be. 86 next month. So, yep, belt
and suspenders. But, you know, a lot of times
in legislative construction, you know, we go
out of our way to really enumerate the policy
that we want accomplished. And to the, you know,
to the point of persnicketiness. And in this
case, this almost feels like it's an idea more
than a fully fleshed out piece of legislation.
Does that make sense? It does. Maybe I'm not
being fair. I don't know if you're being fair
or not. I think a lot of thought went into this
this year. A lot of thought on the requirements
and the details around how we want the money
to be used. Agreed. on the actual mechanics of
the local option. And I should really split that
out. Yeah, and I was involved in some of those
discussions around the mechanics piece. And I
know Brad Banks was really involved in some of
those discussions as well with the cities and
with others. And he's going to be in here in
a little while, so I'll ask him about it too.
Please don't tell him that I impugned him. Oh,
you didn't. Yeah, you definitely didn't. Everyone's
okay with me impugning. It's part of our shtick.
I wouldn't tell him anyways. I'd just let him
listen to the shtick. podcast and find out by
himself yeah and then you and he could have a
chat about it afterwards we will undoubtedly
but i give him notes on his podcast i was like
i bet you do via text hey listen to your podcast
you should stop doing a um yeah no you say but
um too much that's probably true actually but
um uh see there i go again You're just talking
about working on the details. Yeah. There were
a lot of conversations about kind of how to do
the implementation piece. I'm not sure how detailed
they got. Well, honestly, is it a feature or
a bug? Yeah, that's true. And I think depending
on your perspective, you can say this is a pretty
good deal. Yeah. And we can figure this out.
Right. And the less we say about it and the less
we do about it. That's good. Because I think
otherwise, to your point about worst -case scenario,
if a county decides to utilize this option, they
are getting one -tenth of 1 % countywide. Right.
Worst -case scenario. Yep. Possibly there's an
avenue where they might get one -tenth of 1 %
and then another 15 % of an additional 1%. Had
there been a... more robust negotiation about
the relationship between the county and city,
we might have been looking at. being required
to share that one -tenth of 1%. Well, there was
some discussion about that, and revenue sharing
had been brought up, and the cities, of course,
were in favor of that. As you can imagine, counties
not so much. We were able to kind of stave that
off in this particular bill, which was a good
outcome for us. So, you know, that's that at
this point. But, you know, who knows what happens
in the future? There's always opportunities for
more changes. Brian, I kind of feel like we've
gone into a lot of detail here, certainly have
unveiled the mystery of the confusion around
how do you bring in half as much revenue and
spend just as much money without having the same
change in your... fun balance at the end so that'll
be a fun little problem to try to solve at some
point offline and we'll have to somehow come
back and inform our listeners if we ever crack
the code i feel strongly that mitch will have
it figured out while he's editing he probably
will he'll be like yeah um editor's note at the
end here's how it was done i don't know why these
guys couldn't figure it out some insider editor's
note i did not figure that out And we've gone
into some of the benefits, some of the new investments.
I should mention there's more money in the budget
than in past years for public defense as well,
which is something that we were really looking
forward to. Not as much nearly as we asked for
or need, but it is more than double what we've
had in the past. So it's definitely a step in
the right direction and a good trend line if
that continues in subsequent budgets. Hopefully
it will. We'll continue fighting for that for
our members. So we've kind of gone through a
lot of that. like one or two things left to say
about this year's budget, how would you wrap
it up? This was an unusually hard session. Yeah.
We had... I agree, by the way. And I think most
people would. You know, we had a legislature
that for the vast majority of them had never
experienced a situation with limited resources.
And I think just from... You know, but ultimately
I think we are grateful for the individuals that
were at the center of these decisions. You know,
you're. team and your staff has done a tremendous
amount of work in educating the legislature about
the role of counties, the value of counties.
You know, you're just complimenting yourself
when you say that, right? No, I'm just a hired
guy and I'm just here to pass a few housing bills.
You're part of the team too. And I think that,
you know, I think the work that this association
has done is reflected in this final document.
Well, I hope so. You know, thank you for saying
that. I hope so. And the other thing that I think
that you said that's really remarkable and something
that I've been reflecting on personally. really
not just this year, but over the last couple
of years, is you're right. Most of these legislators
and frankly, most of our members have not been
through a session like this or a time period
like this where they've had severely restricted
or reduced resources. You know, the people that
I served with, the members that you served when
you were here on staff are no longer here. There's
one. that I can think of, just one that I can
think of that is still here as a member of WASAC
who was here during the Great Recession throughout
the entire thing. And that's not counting me.
I'm not counting myself because I'm no longer
a member, right? I'm staff. And that's not true
of the legislature, but it certainly is true
of the vast majority of the legislature. I mean,
there are some members who were there. during
the Great Recession, right? Senator Braun was
the lead budget writer for the Senate, I believe,
during those years or shortly thereafter. I'm
pretty sure it was during those years. And there
are some other members of that body, that esteemed
body on both sides, who were there at the time.
But the majority of it's turned over. They don't
know what it's like to do this. They have not
had the experience that their colleagues who
came before them had. And so a lot of that institutional
knowledge is gone. And this is new for many of
them. That is Remarkable. In my opinion. Yeah.
Remarkable. Yeah. It's about, it's like five
on either side. Like top. Is it really that,
that few? Yeah. I mean, we could go through them,
but we don't, it's already late enough, but yeah.
Yeah. Tomiko Santos. Right. Springer. Yeah. Springer.
Orcott. Right. Something like that. And then
Chesler. Fitzgibbon. I think he was around, wasn't
he? I don't know. Yeah. But anyways, regardless,
there weren't very many. It's very few. Yeah.
It's yeah. Yeah. Interesting. Well, thank you,
Paul. Yeah. Well, thanks for taking the time.
Appreciate you having brought in. And thanks
for spending the time. to kind of look through
this and uncover the little mystery there that
is going to keep me awake at night now. Obviously,
you've done some research and your knowledge
and experience working with the budget and your
knack or interest in just kind of figuring it
out year for year, I think is always very informative.
It's a great insight that I think a lot of people
don't bring to the table when they think about
the state budget. And so having you here to chat
about it with us is really a pleasure. So I appreciate
it. Thank you, Paul. Enjoying it always. Yeah,
me too. And you mentioned before that you were
a contract lobbyist for WASAC this year, which
I think is the first time in a long time. Yes.
Which is great. And I just want to say, now that
the session's over, that it was a pleasure working
with you this year, Brian. You made some good
progress for us on our housing stuff. Congratulations
on getting - Thank you. House Bill 5471 or Senate
Bill 5471 passed. We knew what you meant. Yeah,
for us. I've said this to other people and I'll
say it to you as well. During this session, the
budget and the fiscal situation were so, they
were so large in every room. It was like the
elephant in every room, right? And if you didn't
have a bill that either cut expenses or brought
new revenue to the table, it was going to be
really hard. to get attention, right? It was
going to be really hard for you to find traction
and to pass that bill. And the fact that, you
know, we gave you four bills and you passed one
of them on housing is something to be damn proud
of. And I think you really deserve a pat on the
back. And I just want to congratulate you for
that because that was not easy this year. You
know, anything that wasn't... you know, helping
the fiscal situation just wasn't getting the
airtime or the attention that it deserves. So
the fact that you got that through is, is a testament
to your skill and your ability. And we really
appreciate it. So thank you, Paul. You bet. All
right. Well, Brian, big plans for now that session's
over and you're heading off to interim, going
to hang out on the boat for a while or run through
the woods for the next 32 days straight or, you
know, mostly now are, you know, We shift from...
kind of on the ground lobbying to now kind of
figuring out what's going on and how to implement
what happened and kind of the, the communication
part of the job. So is that the, Oh my gosh,
what did we just do? Sort of time. It's about,
uh, you know, it's, it's, um, it's, it's, you
know, it's commission meetings and council meetings
for the next, it's the road show for the next,
uh, two weeks after after action reports. And
yeah, here's what happened and here's how it
happened. Exactly. It's my favorite part of my
job. I mean, we live in a beautiful state with
lots of great communities. There are worse things
to do than get on the road around here, that's
for sure. Exactly. Well, Brian, take care until
we see you next time, okay? Yep. Thanks for tuning
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