Inslee signs supplemental budget, includes wildfire money

OLYMPIA — Washington Gov. Jay Inslee signed a supplemental budget on Monday that puts more money into the state’s mental health hospitals, pays for the cost of last summer’s devastating wildfires and spares the state auditor’s office from a budget cut.

The budget increases spending from the two-year $38.2 billion plan adopted last year by about $211 million and does not come with tax increases. Instead, it uses extra money in the state’s general fund, directs money away from state functions and other measures to pay for new priorities.

Inslee vetoed a provision of the budget originally passed by the Legislature in late March intended to shift $10 million away from the state auditor’s Performance Audit account. The audits are used to make sure government is running properly and efficiently.

“We think these performance audits have value for the state,” Inslee said Monday. “They help us perfect operations, and we thought it was important to keep this significant investment in this service.”

Deputy State Auditor Jan Jutte, in a letter to Inslee, said $5 million in her office’s reserves would be given to the state’s general fund instead. Washington’s auditor, Troy Kelley, is currently on trial in a federal fraud case related to private business activities before he took office.

Inslee also took a red pen to other areas of the budget, some dealing with money reserved for the 2017-2019 biennium as part of a requirement to balance the budget over four years.

One veto negated a proposal to take away money from the state’s Public Works Assistance Account starting in 2017. The account gives out loans to local governments for infrastructure projects.

Another vetoed measure would have directed the Department of Revenue to waive tax penalties for national corporations such as broadcasting companies that currently aren’t paying certain state royalty taxes in an effort to make them start paying. Director of the Office of Financial Management David Schumacher said the Department of Revenue can still waive the penalties or go another route to recoup unpaid taxes.

While the budget no longer balances over four years, Schumacher said when the state uses money from the emergency fund, it only has to balance the budget for the next two. The state crafts a new operating budget every two years.

Inslee said he is concerned about the billions of dollars lawmakers expect to pay in meeting a Supreme Court ruling ordering the state to fix the way it pays for education rather than the comparatively small amount of money now missing in the four-year budget projection.

“If you’re worried about that issue, these are just sort of specks of sand on a huge beach,” he said.

Republican Sen. Andy Hill, the Senate’s lead budget writer, estimated the vetoes make the budget unbalanced by more than $200 million in the four-year outlook, a projection made “specifically to impose discipline to have a sustainable budget,” he said in an interview on Monday. Not balancing the budget makes complying with the court’s ruling, known as McCleary, even more difficult, he added.

“He’s digging a hole that’s a lot bigger,” Hill said. “And $200 million is not a small amount of money.”

Officials from Inslee’s office and the Office of Financial Management did not have an estimate Monday for how unbalanced the budget is in the 2017-2019 cycle.