This morning Senate Ways and Means Chair Ed Murray released his caucus’s vision of a go-home budget. It cuts less than the plans advanced by the governor and by House Democrats. Higher education and K-12 spending absorbs no new cuts.

Murray acknowledged two important concerns: He’s not sure he has the 25 votes he needs to get the budget out of the Senate and his plan does not resolve the ongoing budget sustainability problem.

Like the governor and the House, the Senate plan delays a scheduled K-12 apportionment payment until July 1, pushing about $330 million into the next biennium. Oddly, the Senate plans to make the delay permanent by statute, so instead of a double-hit in 2013-2015 the kicked can remains on the other side of the line forever.

Even with the delay, some tax increases (repealing the 1st mortgage B&O deduction and an alternative energy sales tax credit), redirected revenues (liquor funds and shift from dedicated accounts) and other optimistic assumptions (savings from a pension plan merger and unspent agency revenues), the plan leaves a scant $369 million in reserves. Of the reserve balance, $265 million is in the budget stabilization account. Just $104 million is in the unobligated balance.

The Senate proposal makes one key substantive reform, consistent with recommendations made in our recent brief, “the drag of unfunded commitments.” The proposed budget makes funding for I-728 class size reduction contingent on the budget. It will no longer be a carryforward item swelling future budget shortfalls. It’s a start.

On their blog, Senate Democrats have this:

“The budget honors the highest priority of families and communities across the state by making no cuts to current K-12 or higher education funding, recognizing their importance to the future of our residents and our state,” said Sen. Ed Murray, chair of the Senate Ways & Means Committee.

In a statement released shortly after the Democrats’ press conference, Sen. Joe Zarelli, the GOP’s top budget writer, said the proposal failed to live up to the standards set in last year’s bipartisan effort:

Unfortunately, the budget package released today … takes a ‘back to the future’ sort of approach instead. Not only are ‘Olympia cuts’ and gimmicks back in a big way, it would make the gimmick that delays school funding a permanent fixture. It also goes incredibly light on spending reductions, which in turn means a reserve that is too weak to survive even a modest drop in revenue, and it would undo bipartisan entitlement reforms adopted last year. All of it puts state government on course for yet another significant deficit next year.

The risks are high. In the February forecast, the state economist placed a 40 percent probability on the negative scenario. Underscoring the risk are rising gas prices, as AWB president Don Brunell points out in a column in today’s Columbian.

Gasoline is at the highest price ever for this time of year. AAA reports the average price in Washington on Feb. 22 was $3.68 a gallon. That’s up 14 cents in a week and 21 cents in a month. Analysts say gas could hit $4.25 a gallon or higher by late April.

Rising prices for gasoline, diesel and jet fuel increase the cost of virtually everything…

Higher gas prices represent just one of the risks to the fitful economic recovery. We’re a long way from healthy. It’s critical that the state not drain reserves, gamble on unbanked savings, and leave the structural deficit for another year.

There will be a public hearing this afternoon. It’s likely to receive plaudits from groups happy to see shallower cuts and willing to disregard the higher risks that made them possible. More on this later.