Dear Friends and Neighbors,
The state's main operating budget will be center stage in the legislative agenda for the next few weeks. This week, House Democrats rolled out their proposal, including their “revenue package.” That's Olympia-speak for new taxes. Last week, the Senate Majority Coalition Caucus (SMCC) introduced their budget for the next biennium. With only a few weeks left in the regularly scheduled session, debate and negotiations will be focused on these two plans for the operating, capital and transportation budgets.
House Democrat's proposed operating budget
With any budget proposal, there is good news and bad news. However, the only good news I can find in the House Democrat's budget is now that it has been introduced serious negotiations can begin. It's difficult to take any proposal seriously with a “can't say no” approach to state spending. In fact, the rate of increased spending in the House plan outpaces the earning rate of those who would be obligated to pay for it.
Here is a big picture perspective on the spending:
From 2011-13, we spent $31 billion. In 2015-17 the state spent under $39 billion. The House Democrat's plan would spend a whopping $51 billion for the 2019-21 budget cycle. That's a $20 billion increase in just 8 years. Where is the money going to come from to pay for this? From taxpayers.
The House budget proposal would raise taxes by nearly $3 billion for the next budget cycle, and $5 billion in 2019-21, for a total increase of $8 billion.
While it is being marketed as “family friendly,” it includes a 20% B&O tax increase on day cares, hospitals and grocery distribution. It also includes an income tax in the form of a tax on capital gains – a method I noted in a previous email update is a dangerous choice that could play havoc with our state's budget.
For several decades now, Washington residents have made it clear they are not interested in a state income tax. Beginning in 1932 with Initiative 69, all the way to Initiative 1098 in 2010, supporters of a statewide income tax have failed consistently (on ten separate occasions) to sway voters to their side. Read more about the history of income tax votes in Washington.
Despite these massive tax increases, which rely heavily on risky economic assumptions, the ending fund balance for the four-year outlook would be a mere $12 million. This is a fiscally irresponsible plan for our state.
Another problem is the notable lack of any meaningful levy reform. For decades Washington has struggled with funding education. Local levy reform is an issue of vital importance to our schools and our communities.
The Senate's proposed operating budget
The Senate Majority Coalition Caucus (SMCC) passed its operating budget off the Senate floor last Thursday night with a 25-24 vote. Since Republicans took the reins of the operating budget in the Senate, our state has made historic investments in education funding.
This is dramatically different from when Democrats held the majority in both chambers. That's not just my opinion, the chair of the Washington State Democratic Party said that when Democrats had a supermajority in the Legislature, they underfunded education. You can find her quote in this Seattle Times article.
The Senate's budget clearly prioritizes education as it continues to build on the $4.6 billion 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).
Here is the best news about this budget – your wallets are safe. There is no income tax, no capital gains tax, no carbon tax, and no increased taxes on border county economic activity. And, instead of directing extra money, or “extraordinary revenue growth,” from economic activity into new government policies and programs, the SMCC budget leaves our state's “rainy day” fund intact and healthy at nearly $2 billion.
Additionally, it includes a levy reform plan that would make the state property tax system more equitable and fair. While it's true I do not agree with every point in this budget, the Senate's proposal goes a long way towards proving that with the right priorities, it's possible for government to live within its means.
The state Supreme Court's controversial Hirst decision, on water rights and the use of domestic wells, is not merely a rural issue. If it is not adequately addressed, it could negatively impact land prices and local governments. A legislative “fix” is making its way through the legislative process. Other alternatives have been proposed, but they added bureaucratic burdens on landowners – with increased fees and paperwork.
I recently discussed my opinions on the Hirst decision, and possible solutions, in an op-ed piece that ran in The Daily News/Longview. You can read the column here.
Senate Bill 5239 would ensure permit exempt wells could be used for development. Basically, this bill would take our state back prior to when the Hirst decision was made, and put the onus back on the Department of Ecology to determine impairment. The bill is scheduled for a public hearing in the House Agricultural and Natural Resources Committee and could be voted on by the committee as early as the end of this week.
Telephone Town Hall re-cap
Thank you to everyone who attended my recent telephone town hall. We had a great turn out and discussion. Some of the topics we discussed included education funding, rural economic development, capital gains taxes, and levy reform. If you were unable to attend this event you can listen to the recording.
Additionally, I will be hosting an in-person town hall meeting at the conclusion of the 2017 session. More details will be available as we draw closer to the end of the session. Stay tuned.
Another word on rural economic development
Many rural communities continue to struggle with our state's uneven economic recovery. This map of counties from around our state clearly illustrates an unemployment problem. In December 2016, fourteen counties, including four coastal counties, had an unemployment rate of 8.1 percent or more. Rural and coastal communities, in particular, are suffering from limited growth and unemployment.
So what is being done to help? I'm working with my colleagues, and staff, to develop an economic plan to bring vitality back to rural food and forest product businesses. House Bill 2133 is in it's infancy, but I'm hopeful we will be able to get this bill moving in the next legislative cycle. Here is a list of a few other bills introduced this session targeted at increasing rural economic activity:
- House Bill 1101 would modify the population and population growth criteria used to determine the counties and cities that are required to plan fully under the Growth Management Act (GMA).
- House Bill 1123 would create the Washington Tourism Marketing Authority and use existing revenue to implement a statewide tourism-marketing plan.
- House Bill 1403 would encourage job creation and retention in rural economies through the transparent and accountable provision of targeted tax relief for silicon smelters.
- House Bill 1422 would create the Washington Rural Jobs Act and a program to develop rural growth funds.
- House Bill 1525 would create the Economic Revitalization Act and provide substance to economic development elements of the GMA.
- Listen to my recent radio interviews
Walsh discusses state and federal budgets on KXRO
Walsh talks about House bills and upcoming town hall event
Walsh discusses midpoint of session with KEDO's Bruce Pollock
Walsh talks with KXRO's Kyle Pauley about legislative session
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 email@example.com, or call my office at (360) 786-7806.