Senate fight tables tax relief bill

Senate fight tables tax relief bill
SB 6614 would reduce the 2019 state property tax rate but also redirect $700 million meant for the state budget stabilization account. A dispute broke out during the bill debate on the Senate floor over whether a supermajority vote was required. Created by Dooder - Freepik.com

A narrowly split Washington Senate is at an impasse for the moment over a bill that calls for what some say is an illegal de facto $700 million raid on the state’s budget stabilization account, also known as the rainy-day fund. SB 6614 was tabled after a lively debate over whether it circumvented a super-majority vote requirement and set up a future precedent that could leave the account drained when the next economic recession arrives.

Sponsored by Sen. Mark Mullet (D-5), SB 6614 as originally proposed would have lowered the state property tax rate in 2018 by $.30, a total of $431 million, and replaced that lost revenue in the general fund by withdrawing that amount from the rainy-day fund. The bill cleared the Senate Committee on Ways and Means last month.  The adopted striker amendment introduced by Sen. Christine Rofles (D-23) would push the property tax reduction back to 2019, and funnel $935 million in state property taxes collected in 2019 into the education legacy trust account to fund basic education.

Doing so would redirect roughly $700 million meant to replenish the rainy-day fund.

Proponents say the move will help property tax assessors and government treasurers calculate taxes owed by delaying it by a year, while providing relief to Washingtonians struggling to pay for the largest property tax increase in state history.

“It was unprecedented that we raised the property taxes so high last year,” Rofles said on the Senate floor on Mar. 7. “What is also unprecedented…is that we’re giving some of it back.”

During the floor debate, Mullet also urged support for the bill. “This is better than doing nothing. You can be dogmatic and say it’s ‘my way or nothing,’ and I can honestly say if we did that right now we would get nothing.”

However, Republican sentiment was perhaps best conveyed through a proposed amendment made by Sen. Michael Baumgartner (R-6) to Rofles’ striker. It would have changed the title to “An act relating to violating the public trust, downgrading the state’s bond rating, and ignoring the will of the voters by unconstitutionally raiding the state’s Budget Stabilization Account.”

Baumgartner eventually withdrew it after calling it a “walk like a duck, quack like a duck amendment,” but later called into question the bill’s constitutionality.

Motive impugning aside, Baumgartner’s bill title suggestion bears semblance to new warnings from State Treasurer Duane Davidson. Just before the floor debate, Davidson released a statement calling the $700 million appropriation from the fund a “dangerous precedent” that could also jeopardize the state’s bond ratings.

“Choosing to not save today when we’re experiencing extraordinary revenue growth guarantees that our budget problems will be much greater when the next recession hits,” he wrote further. “If the Legislature chooses to ignore the will of the people and instead tap into what should be Rainy Day Funds – then it should prioritize paying down debt. Our unfunded pension liabilities are our most expensive debt. Washington State’s total pension funding is at roughly 84 percent of its obligations.”

Former Ways and Means chair Sen. John Braun (R-20) also introduced several amendments, none of which were adopted. He said bypassing the supermajority requirement was “creating a problem” and set the stage for a “structural deficit in our underlying budget.”

The rainy-day fund was set up in 2007 through a constitutional amendment approved by 67 percent of voters. It stipulated that funds can only be withdrawn under three conditions:

  • A two-thirds vote of the legislature;
  • If the governor declares a state of emergency; or
  • When state employment growth is estimated to be less than one percent

The Washington Research Council reports that since the 2011–13 biennium, the legislature has spent funds from the account. It also notes that “since 2013–15, the state has experienced ‘extraordinary revenue growth,’ most of which is required to be saved in the rainy-day fund. Instead, the Legislature has spent almost all of it.”

Sen. Doug Ericksen (R-42) warned that SB 6614 would take the state back to the same financial situation it found itself in during the 2007 recession. “It’s not ancient history that we’re repeating here. We’re simply going back 10 years.”

SB 6614 remains held on the calendar.

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