House budget proposal lowers taxes, creates new ones
Emry Dinman/Columbia Basin Herald Snow dusted the Capitol Building in Olympia on Tuesday where the legislature was hammering out budget proposals.
The 2018 operating budget proposal released by the Democrat-controlled state House Tuesday seeks longer property tax cuts than those called for in the Senate’s recent proposal, paid for with a capital gains tax that would begin in 2019.
Both the budget proposal from the House and from the Senate provide for property tax relief in 2019 and 2020 using $1.3 billion of unanticipated revenue windfall for this biennium. The proposed swap of a capital gains tax in exchange for extended property tax cuts marks a significant difference from the proposal backed by Senate Democrats and Republican lawmakers and has received mix reactions from members of both parties.
Senate Minority Leader Mark Schoesler, R-Ritzville, said in an interview with the Columbia Basin Herald that in light of the new revenue projections, it would be “unconscionable” to consider new taxes.
“With $2.5 billion in additional resources over the next three years, why on earth would we want a new tax?” Schoesler said.
Sen. Judy Warnick, R-Moses Lake, said that a capital gains tax would impact average people more than Democrat leadership seems to believe.
“It’s interesting how people think [a capital gains tax] only effects the wealthy,” Warnick said. “It will effect more than that, especially our farmers and our senior citizens who have worked all their lives to build a home and pay that home off, then they have to pay this tax if they want to sell.”
Warnick said she is uncertain whether she will vote on the final budget proposal.
For instance, the House proposed larger property tax relief in 2019-2020 paid for with funds from the budget stabilization fund, also known as the rainy day fund. Republican lawmakers have broadly called this funding tactic irresponsible since Democrats first proposed it as a source for $1 billion of funds for K-12 schools, which would finally bring the state fully into compliance with the state Supreme Court’s McCleary decision.
Though the Supreme Court ruled that the legislature passed a largely adequate funding plan for schools in 2017, the court found that the state would not be in compliance until 2019. While Democrats began the legislative session proposing speeding up compliance with an extra $1 billion, the House budget proposal appears to ignore the court’s decision.
It is uncertain how Democrats intend to pass new taxes or draw money from the rainy day fund, Warnick said, as either action would require a 60 percent majority. While Democrats hold majorities in both legislative chambers, they are by the narrowest of margins, holding two more seats in the House and one more seat in the Senate, far from the threshold necessary for Democrats to go it alone.
The Senate budget proposal, Warnick said, was more palatable and more closely resembled what Republicans would have proposed if they held majorities in either the House or the Senate.
There were parts of the House proposal that Republicans found more amenable. A former high school teacher, Rep. Matt Manweller, R-Ellensburg, said that he was pleased to see $17.9 million for experience and regionalization adjustments in teacher pay, which would increase pay for teachers with extensive experience.
“We have a lot of teachers in the 13th who do better,” Manweller said, “We should pay them more.”
Manweller said he was also happy to see the House proposal included cuts to B&O tax rates for manufacturers located in rural counties, bringing them in line with the ‘Boeing rate.’
It has been a point of contention among lawmakers for years that Boeing is given a more favorable tax rate than most other manufacturers, and this proposal would be a significant improvement, Manweller said.
However, portions of the bill calling for a capital gains tax or for money from the rainy day funds were poison pills for Manweller, who said they were not only unreasonable, they were unlikely.
“They don’t have the votes for it in the Senate,” Manweller said.
At a press conference Wednesday, Governor Jay Inslee said that he supported a capital gains tax if implemented “in an appropriate way,” but said he has been advised Senate Democrats don’t have the votes necessary to pass the measure.
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