Dear Friends and Neighbors,
I want to thank all of you who were able to participate in the telephone town hall Sen. Linda Evans Parlette, Rep. Brad Hawkins and I held on March 20. We had over 4,600 people on the line at one time or another and there were 642 people on the line at the same time at one point during the call. The telephone town halls are a great way to reach many people at once given the large geographic area of our legislative district. I believe the participation numbers reflect how many people in our district are engaged and interested what is happening with their state government.
Budget time, here's an overview of what's happening
Less than four months into office, the campaign promises by Gov. Jay Inslee that he wouldn't raise taxes have already been broken. He recently came out with a budget outline that would raise about $1.2 billion in taxes to pay for more government spending. His plan would roll back a series of tax breaks for businesses and individuals, and would make permanent tax increases that were supposed to be temporary and set to expire this year on June 30, 2013. The temporary taxes were part of an $890 million tax package passed by the Legislature in 2010. Included in that tax package in 2010 were increased business and occupation (B&O) taxes, an increased tax on beer, soda, bottled water and many others. Some of those taxes were repealed by Initiative 1107.
Here is a breakdown of the taxes:
MAKING 'TEMPORARY' TAXES PERMANENT
- 50-cent beer tax, and expanding it to microbreweries ($127 million)
- 0.3 percent B&O tax on service businesses ($534 million), including:
- barbers and beauty shop owners
- funeral directors
- music teachers
- real estate agents
- school bus operators
ENDING TAX INCENTIVES = TAX INCREASES ON:
- vehicle trade-ins when purchasing a new car: $94.8 million
- local residential phone service: $83.2 million
- computer software: $78.5 million
- most state businesses that were given lower rates in order to locate or expand in Washington: $66.2 million
- non-residents who shop in Washington stores: $63.7 million
- bottled water: $51.5 million
- recycled fuel environmental programs at Washington's oil refineries: $40.8 million
- resellers of prescription drugs: $29 million
- long-term rental of commercial land/buildings: $27.8 million
- import commerce: $24.1 million
- farm equipment: $5.6 million
The governor explained that allowing temporary tax increases to continue is not breaking his no-tax campaign promise because it is not an actual tax increase. I tend to disagree and when you repeal exemptions and extend temporary taxes, you are raising taxes. The media seems to agree as well and you can read more here, here, and here.
Campaign promises and semantics aside, we do not need to raise taxes. Washington state is expected to take in $2 billion more in the coming budget cycle. We should be able to prioritize spending in the budget – fund education first, protect our most vulnerable citizens and keep our communities safe by funding public safety with the 6.6 percent increase in tax collections. I am guessing many employers and families trying to make ends meet would love to see that kind of increase in their income. Unfortunately, the governor is proposing more ways to take money out of the pockets of employers and taxpayers.
The governor wants to raise taxes on the very people our own State Treasurer Jim McIntire is saying we tax too much. He recently said our tax system over-taxes working families and was quoted:
“You don't often hear a Democrat say we over-tax business, but we do,” McIntire said. “I want to be really clear that it's a problem in the state.”
You can read the article by clicking “Democratic state treasurer says Wash. business taxes are too high.”
While the governor's plan is simply a proposal, it sends the wrong message. We have an increase in tax revenue, even though our economy is still limping along, but he wants to ask citizens for another $1.2 billion to increase spending. Maybe he should take a look at the Senate.
Senate budget proposal
The Majority Coalition Caucus in the Senate passed a bipartisan budget proposal last week by a vote of 30-18. It does NOT raises taxes, yet increases funding for education by $1 billion to address the McCleary decision. It is about priorities. The governor feels taxes are needed to fund education, whereas the Senate is showing what House Republicans have been saying all along: If you prioritize you can fund the core functions of your government and adequately fund education as required by the McCleary decision and our state Supreme Court without asking for more taxpayer dollars. While the Senate budget may not be exactly what House Republicans would draft, it does approach our principles and priorities.
House Democrat budget proposal
On Wednesday, House Democrats introduced a budget similar to Gov. Inslee's. It would:
- increase taxes by $1.3 billion;
- spend $13 million less on higher education than the Senate budget, and permit tuition increases of 10 percent at UW/WSU and 6 percent at other two and four-year institutions (the Senate budget lowers tuition);
- make $757 million in one-time fund transfers, including tapping ALL of the state's rainy-day fund ($575 million, of which $238 million would be spent and $337 million would be left to comprise an unrestricted ending fund balance); and,
- raise state spending to an unsustainable level of $34.51 billion, which is a $3.3 billion increase from current appropriations and equates to a 10.4 percent increase from the 2011-13 budget cycle. This is approximately $1.95 billion more than the $32.56 billion the state expects to bring in. It is also spends $75 million more than Gov. Jay Inslee proposed and nearly $1.2 billion more than the bipartisan, no-new-taxes Senate operating budget approved last week.
Below are some charts comparing the three budgets.
|Governor||House Democrats||Senate Coalition|
|Make “temporary” taxes permanent?||yes||yes||no|
|B&O tax increases?||yes||yes||no|
|McCleary education funding||$1.2 billion||$1.2 billion
(House Republicans: $903 million, but
|Higher education tuition (four-year)||5% increase||5% increase||3% decrease|
|Reserves or ending balance||$532 million||$337 million||$611 million|
(not including rainy day fund)
|$34.4 billion||$34.5 billion||$33.3 billion|
I also want to point out that the House Democrats leave zero dollars in the Budget Stabilization Account (rainy day fund), the governor leaves approximately $268 million, while the Senate bipartisan budget leaves over $576 million in that fund.
For more on the Senate plan you can click Senate Operating Budget. For more on the governor's plan you can click Inslee's Budget and Tax Plan. And, click House Democrat Plan for more information on their proposal.
Now the negotiations begin so we can find votes for an agreed upon budget by April 28.
If you have any questions on the budget process or anything else happening in Olympia please do not hesitate to contact my office.