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Washington Legislature OKs two-year state budget

The Washington Legislature passed a two-year budget just before midnight Sunday.

OLYMPIA, Wash — The Washington Legislature adjourned its 105-day legislative session Sunday at midnight after sending Gov. Jay Inslee a new two-year state budget and several revenue bills that pay for increased funding to programs ranging from special education to mental health, as well as a clean energy measure that was a centerpiece of his legislative agenda.

The $52.4 billion budget passed the House on a 57-41 vote shortly after clearing the Senate on a 27-21 vote. The rapid votes, just before a midnight deadline, came after it appeared lawmakers would go into overtime to resolve an impasse on a bill to lift limits on voter-approved local taxes for schools, known as the "levy lid." School officials had warned that teacher and staff layoffs would occur if legislative action wasn't taken.

Once a deal on the levy measure was struck, both chambers raced to pass their remaining bills and the budget.

"This truly has been an epic legislative session of unprecedented scope and achievements for the people of Washington," Gov. Jay Inslee said during a news conference after the Legislature adjourned, surrounded by lawmakers.

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More than $800 million in new revenue was passed by the Legislature ahead of passage of the underlying budget, including an increase in business and occupation taxes on large banks and a change to the state's real estate excise tax.

Lawmakers adjourned after two nights in a row where they worked overnight, passing tax bills tied to the budget until nearly sunrise.

The budget spends more in several areas of state government, including special education in the K-12 system and the state's behavioral health system.

About $22 million is spent on safety measures at Western State Hospital, the state's largest psychiatric facility, which has lost federal certification and funding and has been plagued by problems for years that ranged from assaults on health care workers to escapes by dangerous patients. An additional $47 million over the next two years is designated to create a network of regional behavioral health facilities in an effort to change the way mental and behavioral health care are delivered in the state by shifting capacity away from those state facilities.

The measure also funds several of Inslee's environmental priorities, including a measure that seeks to eliminate fossil fuels such as natural gas and coal from the state's electricity supply by 2045.

Republicans had decried the middle-of-the-night adoption of tax increases following recent revenue forecasts that showed more money coming into the state.  Budget writers in the Democratic-led chambers reached agreement on the budget Thursday, but full details of the budget were not made public until Saturday.

"This was not transparent, it was written in the dark of the night," Republican Rep. Jacquelin Maycumber said during floor debate.

The revenue package has several elements, including moving the real estate excise tax from a flat tax to a graduated one based on the selling price of the home.

It also looks to increase business and occupation taxes not only on large banks, but also on other professional services and on large technology companies such as Amazon and Microsoft. That increase in taxes on large tech companies would raise about $376 million over the next years to invest in higher education, including expanding grants to fully cover the cost of public college tuition for families earning up to $50,000 a year.

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"We are building a really solid foundation for the young people of our state, for the working people of our state, for the companies and businesses of this state and for the future of the state with this budget," said Democratic Sen. Christine Rolfes, the chief budget writer in the Senate.

An excise tax on vaping products was also passed, and changes were made to current tax exemptions, including amending the current sales tax break for residents who live in states that don't have a sales tax, like Oregon. Under the plan, non-residents would be able to request sales tax refunds of more than $25 and would be limited to one refund per year.

Users of vaping products will pay new taxes under a bill designed to create a new public health account. Funds raised will go towards cancer research and public health efforts to stopping smoking.

Devices that use what are considered "closed systems" will require a new 27 cent per milliliter fee. Open system users will pay nine cents per milliliter for vaping liquids.

Sage Prengel, assistant manager at Olympia's South Sound Vapor Lounge, said he expects his store to go out of business when the taxes go into effect this fall. He said customers will find the same products elsewhere.

"They're going to see our prices compared to online or going to the reservation. That's what's going to kill the industry," said Prengel.

House Majority Leader, Rep. J.T. Wilcox, said Sunday was "a pretty good day for the Democratic party and a pretty bad day for taxpayers."

Wilcox, a Republican from Yelm, said while small businesses are targeted in the tax increases, everyone in the state will be impacted.

"There are businesses that are going to pass that cost onto consumers," said Wilcox.

RELATED: Washington Legislature lifts ‘levy lid’ on taxes collected by schools

Republican Sen. John Braun said that the budget wasn't sustainable, and he worried that the state would have to cut services if the economy hits a downturn.

"I just think it's unwise and certainly risky to grow the budget like this," he said. "We've been in a strong economy for a long time, but it's not going to last forever."

The Legislature also passed a new two-year transportation budget for roads projects Sunday, and a capital budget that pays for construction projects across the state, including infrastructure for K-12 schools and behavioral and mental health.

Also Sunday night, the House and Senate each passed Initiative 1000, a measure that would allow the state to use hiring and recruitment goals — but not quotas — to bring minority candidates into state jobs, education and contracting. The measure loosens restrictions enacted in a separate 1998 initiative that banned government discrimination or preferential treatment based on factors like race or gender.

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