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Dear Friends and Neighbors,
It's budget time at the Capitol. Last week, the Senate Republican's unveiled their 2017-19 state operating plan. This week, the House Democrat's introduced their operating budget proposal. With only a few weeks left in the regularly scheduled session debate and discussion will be centered on these proposals.
It will be important for Republicans and Democrats to sit down together and come to agreement on budgeting priorities. I'm hopeful by working together we can accomplish the task at hand and finish session on schedule, April 23.
A town hall meeting thank you!
On Sunday, March 12th, my seatmate Rep. Christine Kilduff, D-University Place, and I went “bravely where few politicians have gone before.” We held a bipartisan town hall meeting to a standing room only crowd in Steilacoom.
First, I would like to thank Rep. Kilduff, and complement her on all the hard work she does for our district. We may not agree on every public policy issue (as you are about to note in this email update on the budget), but we are united in our determination to help the people in our communities and in our state.
Next, I would like to thank everyone who attended. Discussion was lively, and respectful, on topics that ranged from funding for education, state employee contracts, and mental health, to legislative proposals to help fix the problems with Sound Transit 3.
Washington does not have a revenue problem
It's always good news to find out you have more money in your pocket than you expected. The same holds true when it comes to the state budget. The state's quarterly economic revenue forecast was released a couple weeks ago. Washington state is expected to take in an additional $247 million for the 2015-17 budget cycle and $303 million for the 2017-19 budget cycle. Along with the $3 billion over the previous biennium revenue that the state is taking in, that's an increase of $3.5 billion. It's clear our state does not have a revenue problem.
Read more about the revenue forecast here.
House Democrats introduced their operating budget proposal
While I appreciate the money the House plan would like to invest in many state provided services, it does so on the backs of taxpayers. In fact, the rate of increased spending outpaces the earning rate of those obligated to pay for it.
The House budget proposal raises taxes by nearly $3 billion for the next budget cycle, and $5 billion in 2019-21, for a total increase of $8 billion. It includes a non-family friendly 20% Business and Occupation (B&O) tax rate increase of 20 percent on day-cares, hospitals, and grocery distribution.
The plan relies on an income tax in the form of a tax on capital gains – something voters have rejected on ten separate occasions. Read more about the history of income tax votes in Washington.
Despite the plan's massive tax increases, which rely heavily on risky economic assumptions, the ending balance for the four-year outlook would be a pitiful $12 million. This is fiscally irresponsible for our state.
Senate operating budget makes education funding its priority
Since Republicans took the reins of the operating budget in the Senate, our state has continued to make historic investments in education funding. The Senate's budget proposal clearly prioritizes education as it continues to build on the $4.6 billion (36 percent) in additional education spending made over the last two budget cycles.
In fact with this proposal, 50 percent of the operating budget would be dedicated to education. With this plan education funding will have doubled in a less than a decade (2011 – $13 billion; 2021 = $27 billion).
As I noted in a previous email update, levy reform is vitally important for our school districts and our state. The Senate's plan includes a state-wide property tax system that is more equitable and fair. The general idea is to reduce inequities in how school districts are able to raise money. This change will equalize local property tax levy rates and spread the tax burden for schools across the state. Because a levy swap would result in property-rich districts paying more than property-poor districts, rates would be decreased for our communities.
Keep your money in your pocket
One of the best pieces of news about the Senates proposal is you can keep your money in your pocket. There is no income tax, no carbon tax, and no increased taxes on border county economic activity. Even better news, a portion of the “extraordinary revenue” from new economic activity will be transferred to the Budget Stabilization Account (BSA). This budget leaves our state's “rainy day” fund intact and healthy at nearly $2 billion.
The new revenue noted above gives the budget a boost. The Senate's operating budget proposal would spend $43 billion over the next 2017-19 budget cycle – a 13 percent increase from the current budget. The Senate Majority Coalition Caucus (SMCC) passed their operating budget proposal off the Senate floor last week with a 25-24 vote. It has now arrived in the House for more debate, discussion and negotiation.
Mental health funding in the Senate's operating budget plan
The Senate proposal also includes significant investments in mental health funding including:
- $53 million for state hospital improvements in accordance with Center for Medicare and Medicaid Services.
- $18 million for community bed placement, in order to discharge patients from state hospitals and for discharge/financial specialists.
- $9 million for 48 private community psychiatric hospital beds and a 7.5 percent increase to current in patient rates in community psychiatric settings.
- $7 million to operate six new crisis walk-in/stabilization centers.
- $16 million to maintain and increase forensic beds at state hospitals and at contracted facilities to reduce wait times for competence restoration services.
- $3 million is saved by closing two civil wards at Western State Hospital.
Sound Transit 3 (ST3) update
My office has received several emails and calls from people upset about the much higher car tab bills that are beginning to land in their mailboxes. ST3's massive $54 billion measure was approved by voters in King, Snohomish and Pierce counties last November.
Tax increases for sales tax (increased to 1.4 percent), property tax ($25 per $100,000 home value, including commercial property) and car tabs ($110 per $10,000 vehicle value) started in January.
Although Proposition 1 (Sound Transit/ST3) failed in Pierce County (44.3 percent), and was only narrowly approved in Snohomish County (51 percent), the voting numbers in King County tipped the difference in favor of the measure. Projects funded in ST3 include light rail, bus and park-and-ride projects over the next 25 years.
Here is a list of legislation I've co-sponsored in the House to bring some relief:
As you may be aware, Sound Transit currently uses an inflated formula based on the Manufacturer's Suggested Retail Price (MSRP) to calculate a vehicle's taxable value. House Bill 2132 would tie the formula to the Kelley Blue book value of a vehicle (versus the MSRP currently being used by Sound Transit).
House Bill 2168 would prevent the Department of Licensing (DOL) from collecting car-tab fees based on the MSRP. It would only authorize the transit's contract with the Department of Licensing for the collection of car-tab fees if the tax was based solely on the Kelley Blue Book value, or national automobile dealers association values, whichever is lower. The Senate version of this bill is scheduled for a hearing in the Senate Transportation Committee this week.
Currently, Sound Transit board members are appointed by county executives in King, Pierce and Snohomish counties. Given Sound Transit's significant taxing authority and responsibility for large infrastructure projects, they need to be directly accountable to taxpayers. House Bill 1029 would divide Sound Transit's service area into 19 districts, equal in population, and end political appointments to the Sound Transit Board. One director would be elected from each district, and all directors would be barred from holding any other political office. Sen. Steve O'Ban has sponsored the Senate companion, Senate Bill 5001.
Read more about the effort to make Sound Transit accountable to voters
As always, I welcome your thoughts, comments and concerns. If you have an idea for how state government can work better, please contact me. My door is always open. You can reach me by email at firstname.lastname@example.org, or call my office at (360) 786-7890.
424 John L. O'Brien Building | P.O. Box 40600 | Olympia, WA 98504-0600
(360) 786-7890 | Toll-free: (800) 562-6000