Analysis: Scorecard for the 2010 Wash. Legislature

A year after making billions in cuts to state programs, lawmakers returned to the state capital this year with another ugly budget problem on their hands.

The difference in 2010 was that the Democratic majority could shake loose the constraints of tax-limiting Initiative 960 and balance the budget with higher taxes along with additional cuts, federal money, and accounting maneuvers.

The task took nearly 30 days more than the 60 day-regular session, and produced a budget most everyone could gripe about - just in time for a very busy election season.

Here's a rundown of the winners, losers, and everyone in between.

- TAXPAYERS: Taxes - which to raise, and by how much- were all anyone could talk about this session. Even the nonstarter idea of an income tax on the state's highest earners got tossed around.

In the end, lawmakers approved a "menu" approach that hits a variety of people. One major chunk could be called the unhealthy diet tax plan: If you smoke, eat candy or drink soda or mass-produced beer like Bud, you're going to pay a little more for your vices.

The plan also removes or modifies some tax exemptions, including reversing a court ruling that extended tax breaks to out-of-state direct sales companies. Service businesses including lawyers and accountants also are getting their rates increased, albeit temporarily.

- THE GOVERNOR: Second-term Democrat Chris Gregoire gave lawmakers political cover to raise taxes. Then she stepped back, letting the House and Senate go to work.

Never considered a master of retail politics, Gregoire's on-again, off-again role in the revenue and budget debates caused some confusion in the Capitol.

When the Senate proposed a temporary sales tax increase, Gregoire would not come straight out and say she'd veto. So the Senate stuck to its guns for more than a month.

Forced to call lawmakers back into special session, Gregoire insisted they could be done in seven days. Weeks later, she said she should've made sure Democratic leaders had a firm plan before calling them back.

As the special session dragged on, Gregoire ticked off legislators by complaining to the press that never-ending negotiations were leaving her frustrated, disgusted and fatigued.

She did, however, help bring everything in for a landing. With less than a week to go, Gregoire broke the logjam over taxes by drafting the "go-home" proposal.

- HOUSE VS. SENATE: Battles between the two chambers aren't new, but this year's fight led to the first multi-day special session since 2003, when Republicans held the Senate and Democrats controlled the House.

The Senate said it only had enough votes to raise taxes if a temporary sales tax increase was included, rather than targeted tax hikes on banks, out-of-state shoppers and software developers. The House said it didn't have enough for a sales tax.

Ultimately, Senate Majority Leader Lisa Brown, D-Spokane, gave up the sales tax proposal, while House Speaker Frank Chopp, D-Seattle, sacrificed some of the targeted taxes.

House members also had to swallow a Senate-proposed tax hike on major-label beer, which riled the Democrats' populist, blue-collar standard-bearers.

- TIM EYMAN: A year ago, Eyman's I-960 successfully kept lawmakers from using taxes to bridge a $9 billion deficit. The initiative, approved in 2007, required two-thirds approval from legislators to raise taxes - a significant hurdle compared with the simple majority needed to pass other measures.

But lawmakers can amend initiatives with a simple majority vote after they've been on the books for two years, and Democrats did so over Republicans objections that they were "overturning the will of the people."

Democrats countered by noting that lawmakers from both parties have helped to suspend initiatives over the years to deal with economic emergencies, including voter-approved initiatives on class sizes and teacher pay.

Eyman showed up when Gregoire signed the I-960 suspension, mugging for the cameras as he stood next to Gregoire after she signed the bill, at first posing holding his nose and giving a thumbs down sign.

But Eyman, a master at tapping voter backlash, was already collecting signatures on Initiative 1053, which would reinstate the two-thirds requirement.

- HERE COMES NOVEMBER: Half the Senate is up for re-election, along with all 98 members of the House.

Senate Minority Leader Mike Hewitt, R-Walla Walla, pointed out his "November smile" as Democrats voted to raise taxes.

"With the mood of the public at the national level, as well as at the state level, I think the Republicans are pretty poised for this year," Hewitt said.

Currently, Democrats hold a 31-18 advantage in the Senate and a 61-37 advantage in the House.

Dwight Pelz, chairman of the state Democratic Party, said Democrats may lose a few seats in the Legislature in November, but he's not worried about them losing majority control.

"Voters in Washington state are going to have to take a look at the economy that has faced lawmakers in the past two years," he said. "It was the worst economic challenge facing any legislator since the Great Depression."

- CONSTRUCTION: Construction has been especially hard hit in Washington state over the past year, with the industry losing more than 26,000 jobs between March of 2009 and last month. Those losses accounted for 39 percent of all statewide job losses during that period, economists said, and lawmakers are trying to reverse that trend.

The new statewide capital budget contained more than $450 million in new projects across the state, including $30 million for affordable housing. And lawmakers also sent about $500 million in bonds to the November ballot, so voters can weigh in on a proposal for energy-efficient renovations at schools around the state.

The idea is to spur construction jobs by paying for energy-efficiency renovations at public schools and universities. Rep. Hans Dunshee, the Snohomish Democrat who pushed for the plan, says it would create about 30,000 jobs.

- LABOR: Considering the crushing financial straits, organized labor didn't fare too poorly in 2010. State Labor Council President Rick Bender called it a "bittersweet" session.

Union leaders didn't get another increase in unemployment benefits, but they also held off business-backed changes to the workers' compensation system. Two major transportation projects in the Seattle area that could affect union workers - replacements for the Alaskan Way Viaduct and the State Route 520 bridge - remained on track, despite perennial skirmishes over their design.

Roughly 1,500 state employee jobs could be lost through further budget cuts. But state workers also got experience-based raises, contributions to their health benefits and a pretty soft "furlough" bill that wrings administrative savings from agencies before mandating any unpaid time off.

The politically active Service Employees International Union also saw ups and downs in the session. SEIU's home-care worker branch, Local 775, said the final budget delivered small cuts in their services while also avoiding further deep cuts to adult day health services.

- K-12 EDUCATION: The Obama administration's Race to the Top education reform program got plenty of focus during the legislative session. But lawmakers and Gregoire also passed separate efforts to improve the state's K-12 system, even working across the political divide to drive major changes.

Washington stayed away from the first round of the $4.35 billion Race to the Top grant competition, which the federal government is using to prod states toward reform. But the state intends to apply for the second round of grants this summer.

Reforms spurred by the competition include a greater ability for the state to intervene in failing schools.

The bill also changes the way principals and teachers are evaluated, bumps automatic tenure rights to 3 years instead of 2 years for many teachers, and paves the way for nonprofit organizations to issue teacher certifications.

Top officials already are downplaying any expectations that Washington could collect lots of federal cash, with Gregoire saying that win or lose, the reforms were worthwhile.

Another package of reforms is meant to drive more spending into the K-12 education system, a goal underscored by the state's recent loss in a lawsuit challenging its financial commitment to education.

When fully implemented, the plan could increase the state's commitment to education by billions of dollars. At present, Washington spends about $13.5 billion over each two-year budget period on public education.

- BUSINESS: To quote the Association of Washington Business: "How did business fare in the 2010 Legislature? Depends on your business."

Many business lobbyists pushed legislators to satisfy their thirst for revenue with an across-the-board sales-tax increase. Their argument: It's easy to implement, raises a lot of money, and spreads the pain instead of picking on selected interest groups.

It didn't work. So, service businesses will see a temporary increase in their business-tax rate, which is charged against gross receipts. That includes everyone from lawyers and accountants to janitors and hairdressers - most businesses that don't charge sales tax.

Pop bottlers are getting a temporary tax hike as well, despite a late-session push and threats of a repeal campaign. Manufacturers of mass-market beers - microbrews are exempt - also will pay more for a few years, while candy and bottled water will now be subject to the sales tax.

Lawmakers did try to soften the blow of the new taxes by extending or creating exemptions, credits and more for local businesses.

Banks also killed a House plan to end the tax break for interest earned on a property's first mortgage.

- ENVIRONMENT: Environmentalists didn't succeed in their main goal this session: increasing the state's existing hazardous substances tax, which was approved by voters in 1988, for water cleanup projects. But they were up against fierce lobbying from business groups who argued that raising the tax on oil, pesticides and other chemicals would hamper state refineries and hurt the average consumer at the gas pump. For several days, the Capitol was filled with refinery workers in bright blue coveralls. The measure never made it out of the House. Environmentalists also lost a drive to dump a tax exemption for the state's only coal-fired power plant. Environmentalists were able to tout some gains though, with lawmakers approving a ban on the chemical bisphenol A from children's drink containers and sports bottles, and the passage of the nation's first ban on copper brake pads.

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On the Net:

Legislature: http://www.leg.wa.gov

Governor: http://www.governor.wa.gov