In his January 11 State of the State speech, Governor Jay Inslee called for compromise between divided state legislative chambers in order to fully fund basic education. However, Inslee’s hope of bipartisan cooperation will be tempered by sharp differences in what is envisioned for the state by his office and the House Democratic majority, versus the mostly-Republican majority controlling the State Senate.
His budget’s array of proposed new and increased taxes conflicts with Senate Majority Coalition priorities. Just hours earlier, senators approved a two-thirds supermajority rule for advancing to third reading any bills raising state taxes. House Republicans also say Inslee’s speech ignored ways to improve the state’s business climate.
Earlier Bipartisan Cooperation Hailed
In his speech, Inslee cited numerous laws approved with bipartisan support, including:
- The 2013 Dream Act in Washington, allowing undocumented students to get financial aid to attend state colleges;
- The $16 billion 2015 state transportation package;
- $158 million for early learning as part of the state’s 2015-17 budget.
“These things did not happen by accident,” Inslee said. “They happened because we made them happen together. I believe these successes we achieve together should give us even more confidence, even more commitment to work together this year.”
Stagecraft was in no short supply. Seattle pastor Leslie Braxton in an impassioned opening invocation managed to ding hyper-partisanship and plug social services, road and bridge funding, and education. Famed singer Judy Collins appeared live to sing the national anthem. Inslee also summoned for legislative inspiration the imagery of mountain ascent. He set the stage for that flourish by asking guest and famed climber Jim Whittaker, of Washington, to stand up in the House Chamber.
Tax Showdown Looms
However, with the pomp and circumstance already in the rearview mirror, Inslee will have trouble reconciling his $4.4 billion in new tax proposals with the priorities of a determined, fiscally conservative Senate Majority Coalition. Among Inslee’s revenue proposals are an income tax on capital gains, an increased tax on business gross receipts (B&O), and a new carbon tax.
In a 2017 legislative priorities statement titled “Protecting Washington’s Future,” the Senate majority outlined legislative objectives that included:
- “Resisting pressure for damaging tax increases that reduce our economic vitality;”
- “Battling excessive regulation and court rulings that threaten to strangle our economy;”
- “Recognizing the vital contribution of industry to job creation and economic growth.”
The statement also claims Inslee’s $4.4 billion in new taxes would actually be twice that amount, once fully implemented in 2019-21.
B&O Tax Hike Targeted
Following Inslee’s speech, Senate Majority Leader Mark Schoesler (R-9) said an increased B&O tax rate would crush startup businesses.
“Just about the time you’re getting to the point where you’ve got a full-time business, the taxes go up,” he said.
Under Inslee’s proposal, the B&O threshold would go up to $100,000.
Supermajorities, And Simple Majorities
Underscoring their anti-tax stance, the Senate Wednesday adopted a procedural measure known as “Rule 64.” It requires a two-thirds supermajority vote before any Senate bill can receive a floor vote if it includes new taxes. A tax bill that advanced under the rule could then be approved by a simple majority vote in the Senate.
Washington voters six times via ballot initiative have approved a legislative supermajority rule for final approval of new state taxes, but their actions were overturned each time by lawmakers or the State Supreme Court.
Though the more narrowly-focused Rule 64 could be overridden by newly-elected Lieutenant Governor Cyrus Habib, State Sen. Michael Baumgartner (R-6) wrote in a statement that Republicans will fight to keep the rule intact.
“We demonstrated that we are listening to the people, and that there is a clear difference between the political parties,” he said. He added that the rule will “ensure that this will be a session of reform.”
Inslee Eschews One Kind Of Redistribution
While Inslee acknowledged that his proposed budget’s plan to meet K-12 funding challenges “is not the only way,” he added that cutting government agency budgets is not an option.
“There are better ways to finance our schools,” he said.
However, Inslee’s claim to open-mindedness does not match his previous statements, said State House Republicans such as Rep. J.T. Wilcox (R-2). During a Republican response following Inslee’s speech, he said Inslee’s attacks on local school tax levy reform, proposed by then-State Attorney General Rob McKenna during the 2012 gubernatorial race, “poisoned the well” on that potential K-12 funding solution.
“Today the governor paid lip service to alternative paths, but he did his best to close off some of them, too,” he said.
Although McCleary was the centerpiece of his speech, Inslee also focused on mental health system reform, preventing increased college tuition costs, and enacting paid family leave. He also pushed for better ties between high school education and non-college degree jobs.
“For young people who want to join the workforce right out of high school, we want to make sure there is a career path for them,” he said.
Extending Economic Opportunity Across State
However, Republicans such as Wilcox believe Inslee insufficiently addressed the state economy, particularly regional economic disparities that have left some counties out of the state’s prosperity.
“We shouldn’t be a state driven by one hotspot” where all the growth occurs, he added.
The sentiment was shared by State Rep. Gina McCabe (R-14). In a response to Inslee’s speech, she said rural communities in Grays Harbor County and other timber industry-reliant areas have faced “economic devastation,” overshadowed by a booming Central Puget Sound region.
“Seattle’s strong economy has been used as an indicator that the overall state economy is also improving,” she said. “While the success should be celebrated, robust growth is not shared statewide.”