Finally we have movement in the 2013-15 budget process. The House Democrats’ have released a new proposal, which Rep. Pat Sullivan called a “substantial compromise.” The proposal would increase near general fund-state plus opportunity pathways (NGFS+) spending by $2.453 billion over 2011-13 and leave $606 million in reserves. It does not tap the budget stabilization account, but it does make $509 million in other fund transfers. The proposal assumes passage of HB 2064 (estate taxes) and HB 1971 (communications services reform).

Some notable items in the new proposal:

• According to Rep. Hunter, about $700 million is included for public schools specifically in response to the McCleary Decision. (The House-passed budget had included about $1.3 billion associated with McCleary.)
• The proposal would adopt a new schedule for apportionment payments to school districts, saving $142.6 million.
• It would not increase salary allocations for public school employees (something that increased spending by $247 million in the House-passed version).
• It assumes 3 percent tuition increases for resident undergrads, and it increases funds for the state need grant and the College Bound scholarship program (but at lower levels than as passed by the House).
• It assumes that expansion of Medicaid under federal health care reform will save the state $318.6 million. Previously, the House had assumed it would save $266.3 million. Rep. Hunter noted in a press conference earlier today that the change is due to new information from the Centers for Medicare and Medicaid Services.
• It continues to assume $20 million in savings from Lean management. Additionally, it follows the Senate’s example and assumes $5 million in IT savings as well as $39.3 million in “increased collection of existing sales tax.”

The House Appropriations Committee has a comparison of the policy items in each budget version.

Additionally, the proposal is accompanied by HB 2034, which would increase taxes by $255.6 million in 2013-15. The proposal would:

• Increase business and occupation (B&O) rates for travel agents and tour operators;
• Apply the sales tax to bottled water;
• Apply the sales tax to purchases by non-residents;
• Narrow the high-tech R&D B&O credit;
• Apply the sales and use tax to investments in high-tech R&D facilities, machinery and equipment;
• Increase the B&O rate for resellers and warehousers of prescription drugs;
• Apply the use tax to extracted fuel.

For more on these tax proposals, see this policy brief. Also, for background on the previous budget proposals see here, here and here.