Senate Democrats’ budget plan increases state spending by 12%

OLYMPIA — Funding for health care, education and efforts to curb houselessness are promised in a $59.2 billion state budget proposal unveiled March 25 by Democrats in the Washington state Senate.

“This is an ambitious set of priorities that will guide a sustainable recovery. It is a budget that meets the moment,” said Christine Rolfes, D-Brainbridge Island, the chair of the Senate Ways & Means Committee.

The Democrats’ 2021-23 budget proposal increases spending from 2019-21 by about 12%, not counting federal relief. The state Economic and Revenue Forecast Council assumes there will be an upswing in revenue in the next two years. But optimistic views of the economy have not stopped the momentum of a controversial capital gains tax proposal.

The 7% tax on capital gains of more than $250,000, which passed the Senate and is on its way to the House, would generate an estimated $357 million between 2021 and 2023 to fund the Fair Start for Kids Act.

Republicans are opposed to the tax, which they say is unconstitutional and unnecessary.

“The Democrats have chosen to hitch their budget to a revenue source that is even less reliable – a capital-gains income tax, which has a 50-50 chance of being found constitutional,” Sen. Lynda Wilson, R-Vancouver, said.

While other proposed tax collections were scrapped, including an increase on health care premiums and a tax on sugary drinks, the Senate majority assumes taxes on carbon and the Low Carbon Fuel Standard will both pass the Legislature. The cap-and-trade tax, also known as Senate Bill 5126, is estimated to bring in more than $500 million by 2023.

This plan would also take about $1.8 billion from the state’s rainy day fund. Republicans had planned to tap the fund for COVID-19-related efforts.

In addressing houselessness, about $850 million in federal money to support affordable housing is included, with $495 million toward rental assistance. Another $201 million would fund foreclosure prevention.

The Office of Independent Investigations — also known as House Bill 1267 — would get $26 million from this budget, a measure to hire a panel of independent experts to evaluate findings from police investigations. The proposal includes $12 million for other policing reform legislation passed this session.

More than $1 billion in one-time federal funding would go toward vaccination efforts and other pandemic health responses, especially with funds set aside to safely reopen schools. The proposal dedicates another $150 million of state money to public health services.

The budget proposal differs from Senate Republicans’ plan, whose $55.5 billion proposal in February focused more on tax relief. Still, both sides prioritized funding for the Working Families Tax Credit and small business relief.

Both proposals include more money toward wildfire services and expanded behavioral health services.

“Our state budgets always spend a lot of money, but this money is being used to stabilize our economy, to stabilize our health care, to stabilize our schools,” Rolfes said.

Other programs funded by the Democrats' proposal include:

• $300 million for additional Immigrant Relief Fund payments to individuals;
• $59 million in federal dollars for mental health and substance abuse grants;
• $200 million in federal money for expanded Paid Family Leave for individuals forced out of work during the pandemic;
• $100 million to reduce rates on the Washington Health Benefit Exchange;
• $170 million in combined funding for crisis response, additional beds in community-based settings, and increased Medicaid reimbursement.