Both the House and Senate Democrats have introduced their budget proposals – operating, transportation and capital. We sent out a budget alert last Tuesday with highlights from the House budgets. This week our Bulletin contains an overview of the Senate proposals and our budget matrix has been updated with amendments that have been adopted on the House budget proposals.

Cities generally fare well in both chambers’ budgets. State shared revenues remain intact and both contain additional funding for 19 Basic Law Enforcement Academy classes each year. The biggest difference is how they treat the Public Works Trust Fund (PWTF). Unfortunately, the House budget continues to undermine the fund by transferring an additional $160 million to the operating budget. However, the Senate proposal does not include any sweep.

Check out our budget highlight sheet that summarizes the key differences for cities among the various budgets and indicates which are best for cities, along with some talking points. Please use it to reach out to your legislators and let them know what budget proposals are best for cities.

Revenue source comparisons

The real differences between the House and Senate proposals are how they address new revenue. The House proposed three new revenue sources (graduated REET, capital gains on extraordinary revenue, and B&O tax rate increases) generating $1.4 billion in the next two years. By contrast, the Senate proposed only a new graduated REET (real estate excise tax) and ending some tax preferences to generate about $513 million for the operating biennium. However, the Senate Democrats do propose a capital gains tax, but use the new revenue on proposed tax reductions. Additionally, the Senate introduced a change in the Hazardous Substances Tax that increases revenue for the Model Toxics Control Account (MTCA) and stormwater programs.

What’s up next?

The Senate will likely vote on its budget proposal later this week. Then the budget writers for the two chambers will meet over the next few weeks to develop compromise spending and revenue proposals.

It’s not too late to let your legislators know about cities’ budget priorities – particularly the need to follow the Senate’s lead and not sweep additional money from the PWTF.

While the budget action heats up, policy bills have a deadline looming – April 3 is the next bill cutoff deadline. Next will be the fiscal committee cutoff on April 9.

Want to keep tabs on key bills?

Check out our updated Hot Sheet for the week of April 1.