After months of partisan deadlock and weeks of brinksmanship as a government shutdown loomed, Washington legislative budget negotiators have reached an “agreement in principle” on a two-year budget designed to fully fund schools, as required by the state Supreme Court.



The deal came together early Wednesday morning following an all-night, marathon negotiating session at the Capitol.

No details on the deal were immediately released, but Senate Majority Leader Mark Schoesler, a Republican, said he believes the budget will help equalize school funding statewide.

“No longer will a student in Washington be funded on their zip code,” Schoesler told reporters gathered in the Senate wings.

House Majority Leader Pat Sullivan, a Democrat, also predicted it will pass constitutional muster.

“It will get my vote, I can tell you that,” Sullivan said. “And I wouldn’t be voting for it if I didn’t believe it satisfied the McCleary case.”

McCleary is the name of Washington Supreme Court case that says the state is not amply funding public schools. The 2017-19 operating budget is viewed as the third and final down payment on that 2012 ruling.

Lawmakers left the costliest and most difficult piece for last—shifting the responsibility for funding teacher and staff salaries from local districts back onto the state. The cost to fully fund the McCleary obligation over the next four years has been pegged at more than $7 billion.

Last spring, Senate Republicans proposed to solve McCleary with a new state property tax levy for schools of $1.55 per $1,000 of assessed value, along with the elimination of local maintenance and operation school levies. Republicans pitched the levy swap as a tax break for most Washington property owners.

Democrats panned the idea saying it would harm school districts and unfairly jack up property taxes in central Puget Sound.

By contrast, House Democrats proposed a multi-billion dollar tax package that included a new capital gains tax, changes to the real estate excise tax and a plan to capture sales tax from more online sales. But they never voted on the tax package, leading Senate Republicans to say they wouldn’t negotiate with “ghost dollars.”

Gov. Jay Inslee, a Democrat, later took the capital gains tax off the table, even though he supports the idea as a way to make Washington’s tax system less regressive.

The final budget and tax deal is likely to include elements from both plans.

Lawmakers now have less than 72 hours to pass the budget and send it to Inslee for his signature before midnight on Friday, June 30, the end of the fiscal year. That would avert a partial government shutdown on Saturday, July 1, including the temporary layoff of more than 30,000 state employees and the shuttering of state parks just before the Fourth of July holiday.

“We could have some unforeseen disaster, but we are all committed,” said Senate Majority Leader Mark Schoesler. “I will continue to believe we will not shut government down.”

“Yes, it will avoid a government shutdown,” added House Majority Leader Pat Sullivan, a Democrat.

Despite the clock running out on the session, legislative leaders said they wouldn’t release details of the budget until noon on Thursday, after they brief their respective caucuses. Voting on the budget could happen as early as Thursday afternoon or evening. That would leave very little time for lobbyists or the public to scrutinize the budget.

After the budget is signed into law, lawmakers will have 30 days to report back to the Supreme Court, which has retained jurisdiction in the McCleary case. The state is currently in contempt of court and paying a $100,000-a-day fine for not complying with a previous court order. If the justices aren’t satisfied, they could increase the current fine or impose a more dramatic sanction, like invalidating all tax exemptions.

Besides education funding, the budget is expected to put more money into mental health and into addressing homelessness. The budget may also create a new Department of Children, Youth and Families.

This is the third time since 2013 that Washington lawmakers have taken budget negotiations right up to the end of the fiscal year before forging a bipartisan agreement.

The legislature has been in session continuously since January and is currently meeting in a third, 30-day special session.

