What does a budget negotiation look like, anyway?

There's a lot of confusion about what a budget negotiation looks like. I started going into negotiations in 2013, with Gary Alexander and have been involved in them, usually at the end of the process every year since. I think Pat Sullivan is the only legislator who has been doing it longer than me, but I don't want to leave a false impression. There is a tremendous difference between the Majority negotiators, who actually write and pass budgets, and the Minority negotiators who try to make a difference on the margin, can do that if they are crafty and determined, and can also help pass a budget in the end if there was good cooperation.

The last few years, my major purpose was to have enough involvement so that I could communicate the budget priorities to the caucus and then to the public. I've learned enough to know that a minority can have the most impact by getting their priorities incorporated into either of the majority budgets early and then try to be ready when individual issues arise.

House Republicans worked hard for months in a small group led by Bruce Chandler and including our Assistant Ranking Members Drew MacEwen and Drew Stokesbary. I sat in as schedule allowed, but being Floor Leader provides a lot of schedule conflicts. I also deeply value the relationship I have with Senators John Braun and Joe Fain and checked in with them quite often as they crafted the initial Senate budget that was passed earlier in the year.

The budgets passed in both chambers have become negotiating positions. Democrat budgets start sky-high and appeal to every one of their important interest groups. Republicans start low, partly because that is a general fit with conservative philosophy and also because it is necessary to start low in order to have a chance of meeting at a reasonable figure in the end. Behind the scenes, experienced budget writers are setting the stage for later negotiating positions and hoping the other side can be induced to "buy back" items that are going to be conceded anyway.

Because of the hi-lo positions, it sets up an interesting context for the negotiation. The low Republican budget is a hard vote. Very few of the stakeholders who testify in hearings are less than outraged with that first budget, but every further move that Republicans make will be seen as an improvement. Democrats start with an easier vote and the House Appropriations hearing is punctuated by "Thank You's" from most people testifying. Because of the starting position, however, every subsequent move will be seen as an erosion and that makes their moves more difficult.

The last couple of years have been somewhat unique because democratic positions have featured progressive revenue in large chunks ranging from a capital gains tax, to higher B&O taxes combined with more exclusions and closure of featured tax incentives. It weakens their position when they don't bring them for a floor vote. It is easy to conclude that these are to appeal to base voters, but not intended to be serious to the extent of taking risky votes. It's true that neither side passes all the budget bills ahead of time, but failure to fund major parts of a budget is a credibility problem beyond the routine bills.

I was less involved with the budget this year than in past years and really didn't have a part in negotiations until the last two days, but those were the critical days and I was struck by the very different tone this year. Because there is a great deal of strategy going on with budget negotiations it is tempting to try to assign motives to every word and move of the opposite side. The major players this year seemed to do a good job of avoiding paranoia. John Braun for the Senate and Timm Ormsby for the House were deeply committed to getting the best deal, but both keep their egos in check to an unusual extent for prominent politicians. I didn't see any personal animosity this year. I also saw a strong desire to understand the other sides point of view and accommodate it whenever it would advance the negotiation. Joe Fain was also a part of the later Senate negotiation team and Joe is a skilled practitioner of the Art of the Possible...the most timeless rule of politics.

It's true that stakeholders of whatever type have become critical in politics. Both parties have supporters and there are fewer and fewer that maintain good contacts with both sides. That's too bad because this rigidity makes compromise far more difficult. I'm not a fan of absolutely open negotiations. I think that would do far more to empower special interests, who are very good at motivating their base, than it would to empower the everyday voter and taxpayer. It would probably make compromise even more difficult to achieve. I don't blame the press for wanting more information, that's their job, but if a better result is the goal, I think some ability to explore options in private is best.

Most people picture negotiations as a group of sweaty, red-faced politicians staring at each other across a table late at night until someone uncorks an inspiring speech that either

intimidates the other side into capitulation or stuns them with deep intellectual brilliance....Sometimes that happens, on individual issues but the reality is far less dramatic. All the major moves are made after an exchange of paper offers and surprisingly careful staff analysis of impacts. Although much is made of all the potential mistakes caused by last minute negotiation, the reality is that it's rare to be presented with a new option. Almost every possibility has been explored in the previous months.

I've told people for a few years that budget reality is that the Senate Republicans writes most of the budget and the House Democrats decide when it will pass. That's not totally fair, but there is a kernel of truth in it. Most of us could have predicted this budget fairly accurately in January. I and most others never believed that there would be capital gains or any of the major revenue items desired by democrats. They do accomplish a lot for their stakeholders, however because budget writers from both sides know what will have to be accommodated to reach enough agreement to vote out a budget. Because of the high hopes raised by the initial high spending level voted on by House Democrats, it is much more difficult for them to make later moves. I think that's one of the reasons we go long.

It's important to note, however that my first term began in 2011 when Republicans were in the Minority in both chambers. We still went into special session...

There are a lot of press and communication games. Some of them are honest briefings, some are strategic, some are mischief and some are simply cries for attention. The serious budget writers are usually the ones who say the least. It's very frustrating to be a minority negotiator and so there is a constant temptation to be the one who gets quoted in the newspaper. Most resist that, some can't.

One of the things I like the least is the calculated attempts of some to make it harder to reach agreement. This takes the shape of demonizing the other side or demonizing some issue that will be part of a negotiation. I've always thought that since I might end up voting on an overall solution that I support, in spite of elements that I don't, it was counter-productive to demonize parts. Others feel differently about that. After observing that a few weeks ago I wrote a post expressing my commitment to be silent about the negotiation until we had the deal.

In the end we had a deal that is perhaps the most conflicting budget I have seen. I and many republicans were deeply committed to property tax reform that created flat rates across the state and provided relief to most of the poorest parts of the state. In the event, we did that, although the outcome was better in some areas than in others. We were not interested in creating new taxes and we didn't do that.

There were elements that we didn't like at all. Although we didn't create new taxes, none of us are happy with the extension of sales tax to bottled water or the burden on taxpayers of applying sales tax across a broader range of internet transactions.

What makes me and many others most uncomfortable is the growth rate of the budget. It's around 6.5% per year. That's not as high as the crazy rates before the recession, but not sustainable in the long run. Because we moved a lot of local tax to the state level, that is not all new government activity or new revenue from the taxpayers. Adjusting for that movement of property tax from local to the state level means that our growth is around 5% per year. That's better, but still not sustainable.

It was critical to address the neglect of schools that led to the McCleary decision and the crippling local levy tax rates that resulted in rural kids getting far less educational resources than urban kids. The Legislature has been consumed by this since my second year as a Representative. I'm glad that our General Fund is now 53% K-12 rather than 43% as it was when I was first elected. That means we did do our job of prioritizing education in the budget.

It's equally critical now that we hold the line. We've made a huge move to fund our top priority. Our top priority now needs to be controlling spending so that we can sustain this. Its easy to grow government. Having served during the Great Recession budget crisis I learned a great deal. Advocates for more social spending are sincere and will do their best to create beneficial programs, however when a crash comes, as it does about every decade, the correction never hurts the politicians, the bureaucrats or the advocates. It always hurts the people who need help the most.

We should all be advocates for a sustainable growth rate now. That's not a huge ask, it probably means going from 5% to 3% long-term. We can do that.

I hope this perspective adds some value. It's partisan in spots, but I'm elected to a partisan position and I tried to be as fair as I could be.