The Washington legislature has agreed to a supplemental operating budget for the 2017-19 biennium that does not include new taxes as originally proposed in the House version. However, it does not include a reduced business and occupation (B&O) tax rate for manufacturers as many had hoped, and some state lawmakers warn that the spending increase included in the budget can’t go on forever.
SB 6032 cleared the House on Mar. 8 with a 54-44 vote, while in the Senate it faced stiffer opposition, approved with a 25-24 majority. The budget increases spending by almost $1 billion, half a billion less than the House’s initial proposal. Although it fully funds new teacher salaries for the upcoming school year, it doesn’t include the new apportionment schedule included in the initial House budget proposal.
The budget also assumes a $400 million reduction in revenue from state property taxes in anticipation of legislation currently moving through the House that cuts the tax rate down to $2.4 per $1,000 in assessed value (AV). It leaves $1.1 billion in the budget stabilization account at the end of the 2017-19 biennium and $1.7 billion at the end of the 2019-21 biennium.
Despite the enormous revenue growth in recent years, some lawmakers have expressed alarm at the equally incredible growth in state spending. The 2016 supplemental operating budget for the 2013-15 biennium brought the price tag to $38 billion. The 2018 supplemental increases the 2017-19 operating budget spending to over $44 billion.
Rep. Bruce Chandler (R-15) is the ranking minority member of the House Appropriations Committee. In a statement he said the spending is growing at an “unsustainable rate. It also relies on a significant budget gimmick to divert money away from the constitutionally protected Budget Stabilization Account, which would take a 60 percent vote of the Legislature. While this gimmick may not be against the law, it is certainly against the spirit of the law.”
That sentiment was shared by Sen. Steve O’Ban (R-28). In a tweet he wrote: “voting on supplemental budget and spending an additional $2.3 billion when we had more than enough funds to give people a full property tax refund in 2018 for the state school levy. A missed opportunity to show taxpayers we hear them and care about the hit they are taking.”
For government transparency advocates, one silver lining included provisions for a tax transparency website similar to the state budget website (fiscal.wa.gov.) Originally proposed in SB 6590 by Sens. Joe Fain (R-47) and Guy Palumbo (D-1), the bill would allow taxpayers to search for all the taxes and tax rates in the state for every taxing district. On top of that, they will be able to calculate potential taxes in a district.
However, the spending increase didn’t include $3.3 million in election costs every biennium, a cost borne by local governments; that’s according to the Association of Washington Counties. Nor did it include any of the proposals introduced this session to reduce the state B&O tax rate for manufacturers. None of the Republican bills managed to get committee hearings, and a Democrat version via HB 2992 never managed to clear the House after passing through the House Finance Committee last month. The reduced tax rate had originally been included in the 2017-19 operating budget, but later vetoed by Governor Jay Inslee ostensibly due to the lack of transparency while crafting it.
However, the lack of transparency is a charge that has been leveled at lawmakers over other issues this session, and now toward Democrat budget writers by Chandler, who said: “last year, we passed a sustainable bipartisan budget that saw input from both sides of the aisle. This year, Republicans were locked out of the process and then asked to vote on a budget less than 24 hours after our members had a chance to read it.”
The bill now awaits Inslee’s signature.