The Times - Serving Waitsburg, Dayton and the Touchet Valley

DAYTON – Republicans are in a stronger position in the Washington state legislature this year, and the state's economy is stronger as well. Those are two factors that State Representative Terry Nealey, Republican from Dayton, will look forward to as he heads to Olympia this month for his sixth legislative session.

The 2015 session of the Washington State legislature opens Monday. This year's regular 105-day session will last until early May. The state house and senate must agree on a two-year budget, which will go into effect July 1, before they adjourn. A special session could extend legislators' time in Olympia.

November's legislative elections increased Republicans' clout in both the state house and senate. Republicans now hold a four-seat majority in the state Senate, including one senator listed as a Democrat but who caucuses with the Republicans. The Democrats' majority in the state House narrowed to just four seats. This was a strong Republican showing in a state in which all but one state-wide elected official is a Democrat.

In spite of the Republicans' increased strength, Democratic Governor Jay Inslee has proposed some significant tax increases for the coming year, to help pay for new programs.

"The governor is saying the state needs to increase taxes between 2 and 6 billion to pay for 'program enhancements'," Nealey said in a statement released last month. However, because of a strengthening state economy, Nealey says that state government will see an increase in revenue of $3 billion in the coming two-year budget cycle. "That's without raising taxes," he said.

Nealey said that much of that revenue increase will be spent on increases in non-discretionary expenses, such as school enrollment growth, higher Medicaid costs and other programs that are locked in.

"...I believe we need to enter this legislative session with the goal of balancing the state budget within existing tax collections," Nealey added. "However, we do have to hold open the possibility that additional revenues will be needed."

Nealey's clout has increased significantly since he was first elected in 2009. He returns as the ranking House Republican on the Finance Committee. That committee is responsible for setting taxes and determining how the state gets much of its revenue. He also represents House Republicans on the The Washington State Economic and Revenue Forecast Council.

"The governor's tax increase proposals will likely come through [the finance] committee for consideration," Nealey said in a press release after his reappointment was announced. "So I expect there will be some lengthy and healthy debates as we decide the best way to fund state government for the next two years and beyond."

Nealey, who represents Washington's 16th legislative district, which includes Columbia and Walla Walla Counties, and parts of Benton and Franklin Counties, was also appointed this year to the House Technology and Economic Development Committee.

In an interview last month, Nealey outlined some of the important issues the legislature will face in the coming session. "This is the longer session, in which we set the coming two-year budget," he said.

Two-year budget

The annual state budget for the next biennium will be about $35 billion. Creating the plan to raise that money is the job of Nealey's Finance Committee. He said that the primary sources of revenue the committee must address include sales taxes, business and occupations tax, property taxes and real estate excise taxes, which are taxes on the sale of real property.

Depending on what the legislature decides to do about funding education, they face a budget hole of between $1 billion and $4 billion per year.

One area at which the finance committee will look closely is B&O tax preferences. Nealey said that many industries in the state get special B&O tax credits, and that there may be a move to reduce some of the preferences. "B&O taxes are inherently unfair," he said, because they are based on gross revenues. "Many of those preferences are important, to allow industries in the state to be competitive."

Education

Nealey said that the major budget issue facing the legislature again this session is education. An already contentious issue has been made worse by a voter initiative that passed in November.

The first issue is a state Supreme Court directive, called the "McCleary Decision," which was handed down in January 2012. It said that the state legislature was not doing enough to meet the state constitution's requirement that the state fund "basic education." Nealey said that state budget experts estimate that the legislature will need come up with an additional $1 billion in the next biennium in order to satisfy the courts.

"I believe we should do a better job of funding education," Nealey said. "There will be a lot work done on that in this session in that area."

In addition, in November voters in the state barely passed Initiative 1351, which mandated smaller class sizes in the state's public schools. It is estimated that the cost to meet that requirement will be between $2 billion and $4 billion in the coming budget.

"There's some question whether the requirements of that measure can even be met," Nealey said. "Many school districts are saying they simply don't have the facilities to meet it."

He said that there may be an effort this session to strike down the initiative. That would take a two-thirds approval by both chambers of the legislature. Nealey said there's a feeling among many legislators that that's not a wise use of state education funds.

"There will be a lot of bills put forward this year on how to address our education needs," he added.

Gun Control

Another hot topic in the legislature this year will likely be addressing issues relating to Initiative 594, which was passed by the state's voters in November and requires background checks for all gun sales and transfers. There is disagreement among experts as to what constitutes a "transfer."

While it's unlikely that the legislature will attempt to overturn I-594, Nealey says that he expects a lot of bills to be put forward to more clearly define what types of "transfers" will require background checks.

And while any change to the initiative language will require two-thirds legislative approval, Nealey said, "I think there will be a lot of support from both parties to eliminate the confusion," about what constitutes a "transfer." Gifts to family members or museums, and temporary loans could be exceptions.

Marijuana

Recreational marijuana has been legal in Washington for two years, and the state has begun issuing licenses to businesses for growing, processing and selling marijuana. But there are still many contentious issues relating to pot businesses.

The first is whether local jurisdictions can legally place an outright ban on marijuana businesses. Many bans have been passed by local entities, including Walla Walla County and the City of Dayton, and several bans in the state have been upheld by local courts. But state-wide courts have not yet ruled.

Nealey says that the legislature will likely see a number of bills which will attempt to establish what local jurisdictions' rights are.

In a related issue, Nealey said that the legislature will need to consider how marijuana taxes are distributed. I 502 established high taxes for growing, processing and selling pot, but all revenues currently go to the state, with none passed back to cities and counties.

"There is a lot of pressure from local entities to get some of those taxes to help defray the cost of administration and enforcement of recreational marijuana sales," he said. "On the other hand, with the state of the budget, we're going to be hesitant to give up any funding."

Transportation

Courtesy photo

State Representative Terry Nealey observes the action on the house floor.

The legislature must again struggle with how to deal with some dysfunctional transportation projects. Nealey said that while there is a huge need for improving transportation infrastructure, mismanagement of current projects has been a big problem.

"Cost overruns on the new I-520 bridge have been huge," Nealey said. "And then there's the downtown Seattle tunnel fiasco."

The Department of Transportation really needs some reforms," he added. "We'll be having a lot of discussion about transportation."

Nealey, 67, retired from his Dayton law practice at the end of December, after a 40-year career. He said he will enthusiastically complete his current term in the legislature and make a decision next year about whether to run for another term.

Nealey and his wife, Jan, have rented a house in Olympia for the upcoming session. They were to leave for Olympia Wednesday, to get settled in before the session opens on Monday.