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5 things to watch in Washington Legislature: Taxes, schools, transportation, pot, guns

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OLYMPIA, Washington — The 105-day legislative session begins Monday with the expectation that it could be a tough few months for lawmakers who return to town under a contempt order by a state Supreme Court that has grown increasingly more impatient with their progress on fixing the way the state pays for basic education.

Gov. Jay Inslee has already unveiled a budget proposal that includes some tax increases and elimination of tax breaks; the House and Senate will each present budget proposals in the coming months.

However, many anticipate special sessions because of the challenges presented by that September order by the court. Already, there are differing ideas between the politically-divided chambers on how best to do that, with Democrats saying more revenues are needed for a projected shortfall of more than $2 billion and some Republicans claiming there is a "deficit myth" and saying that the state has enough for existing services and education, and that the focus shouldn't be on higher taxes, but efficient spending.

Republicans hold a majority in the Senate, and Democrats, who have long controlled the House, saw their margin tighten after the last election.

"Nothing's going to happen if they don't work together," said Todd Donovan, political science professor at Western Washington University. "If they're going to pass a budget, everything is going to have to be a compromise."

Here a look at some of the things lawmakers will be dealing with during the upcoming session:

TAXES: Even as state revenues are expected to grow by nearly $3 billion over the next two years, Democrats and Inslee have said that's not enough to address court-ordered obligations like education funding and to pay for things like teacher and state worker raises, which have gone unfunded for years. However, Republican leaders say the improving economy and current incoming revenues should be enough, as long as lawmakers prioritize their spending. Inslee's budget plan proposes a 7 percent capital gains tax on earnings from the sale of stocks, bonds and other assets above $25,000 for individuals and $50,000 for joint filers that he says would bring in almost $800 million. He also says a proposed levy on carbon polluters would raise $380 million and a 50-cent per pack cigarette tax as well as a levy on e-cigarettes and vapor product would raise $56 million.

Inslee's plan would also repeal tax breaks on royalties and for oil refineries, limit sales tax exemption to $10,000 on trade-in value of used cars, and impose a tax on the sale of bottled water to consumers.

"When we raise taxes, we're taking money out of your pocket. And when we do that, we better be sure we exhausted all other ways we spent the existing money we took out of your pocket," Sen. Andy Hill, the Republican chairman of the Senate Ways & Means Committee said at the AP Legislative Preview.

EDUCATION: Lawmakers have been working to respond to a 2012 state Supreme Court ruling that said the Legislature isn't adequately funding education. The decision, known as the McCleary case for the family named in the suit, requires the state to find money to pay for all-day kindergarten across the state, smaller classes in the early grades, as well as student transportation and classroom materials and supplies. It also requires lawmakers to stop relying on local school levies to pay for these basic education costs.

In September, the court held the Legislature in contempt for its lack of progress, but withheld possible punishment until after the legislative session. Possible sanctions include fines for the Legislature or individual lawmakers, having the court rewrite the state budget, and revoking tax exemptions.

Senate Minority Leader Sharon Nelson, D-Maury Island, said that the contempt order "hangs heavily" over lawmakers.

Lawmakers must also decide how to respond to the citizen initiative demanding smaller class sizes in every grade. State officials have estimated the initiative approved in November could add $2 billion to the upcoming two-year state budget.

TRANSPORTATION: Even though lawmakers have long said a transportation package is necessary for projects across the state, they have struggled the past few years to reach agreement. House Democrats passed a $10 billion plan in 2013 that included a 10.5 cent increase in the gas tax but it stalled in the Senate. Last year, Senate Republicans proposed a $12.3 billion transportation revenue package that included an 11 1/2-cent gas tax increase, but it never came up for a vote in the Senate and negotiations between Democrats and Republicans stalled once again. In a column published recently in The Seattle Times, House Democrats' lead on transportation, state Rep. Judy Clibborn, put the pressure on Senate Republicans to act, saying "there are two years worth of negotiations that the Senate can use as a foundation for compromise."

Sen. Curtis King, the Republican chair of the Senate Transportation Committee, said any package this year will indeed start out in the Senate. He said a gas tax increase would be on the table, as long as reforms, like returning transportation-related sales tax to a transportation fund instead of the general state fund, are included.

"I don't like the idea of a gas tax. People in my district aren't going to like it, but we've got to do it," King said.

MARIJUANA: Efforts to merge the state's medical marijuana system with the new voter-approved legal recreation market died in the Legislature last year after a disagreement in the House about potential tax revenue sharing with local governments and strong pushback from the medical marijuana community. Lawmakers had been seeking to overhaul the system in advance of recreational sales starting last summer, but because it had been less than two years since the 2012 passage of Initiative 502, support of two-thirds of the Legislature was required.

This year, only a simple majority is needed in each chamber for any changes. Ideas under discussion include reducing pot taxes to make recreational stores more competitive and eliminating medical dispensaries, which have been largely tolerated by law enforcement even though they aren't allowed under state law. The state could also lift its cap on the number of recreational stores and license dispensaries to sell pot for any purpose. Two bills addressing overhauling the medical system are already in the mix. One by Republican Sen. Ann Rivers would create licenses for medical marijuana dispensaries and require product testing that's at least as strict as what the state requires in its recreational marijuana stores. But the medical stores wouldn't be able to sell smokeable marijuana, they could only sell edibles and marijuana concentrates, such as oil. Another, being drawn up by Democratic Sen. Jeanne Kohl-Welles of Seattle, contemplates getting rid of medical dispensaries altogether. Instead, any shop that meet requirements could be licensed to sell pot for either purpose, with tax breaks offered on marijuana products targeted toward medical use.

GUN POLICY: With the passage of Initiative 594 in November, Washington state created universal background checks for all gun sales and transfers, including many gifts and loans. Following that victory, proponents have promised to go farther this year, saying they will be pushing for measures ranging from increased access to mental health services to holding adults responsible for keeping guns away from children. Groups that opposed I-594 have said they will lobby lawmakers to amend or overturn it. Several groups have already filed a federal lawsuit to block enforcement of part of the law dealing with transfers. Under Washington law, voter-approved initiatives cannot be amended within two years after passage unless lawmakers approve it by a two-thirds vote in both houses.

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