In recent years, single issues such as basic education funding have competed for attention during Washington state’s legislative sessions and pushed other priorities to the back burner. While during this upcoming session state lawmakers will grapple with the financial implications of Initiative 976, stakeholders and Capitol observers don’t expect any one topic to completely preoccupy discussions.
“It’s really hard for session to be dominated by one thing,” House Minority Leader J.T. Wilcox (R-2) told Lens. However, he added that “it’s possible some of the revenue or revenue-like things that might happen early could take a lot of the air out of the room.”
Topics likely to be examined this session include:
- I-976’s $30 car tab limit and its impact to the multimodal fund;
- A statewide low carbon fuel standard (LCFS) similar to that proposed by the Puget Sound Clean Air Agency (PSCAA);
- A capital gains income tax;
- Sound Transit and ST3’s motor vehicle excise tax (MVET) depreciation schedule;
- Local transportation infrastructure funding; and
- Land-use, rent control and housing reform.
However, stakeholders say many of these issues are unlikely to gain traction. Among them is the capital gains income tax. Similar taxes have been introduced in recent sessions as stand-alone bills or as part of an operating budget proposal, but none have cleared the legislature. Governor Jay Inslee’s past operating budget proposals have also called for a capital gains income tax – though that is not the case with the 2020 supplemental budget.
“If it was going to happen, it was going to happen last year,” Washington Policy Center Government Reform Director Jason Mercier said.
Following last year’s session, 73 percent of Spokane voters approved a ban on a local income tax. According to Mercier, every city precinct voted in favor of the ban. Spokane contains the only legislative districts east of the Cascades represented by Democrats in the state House and Senate.
“It’s really hard (for Inslee) to tell members ‘It’s a vote you should take and bring to the campaign trail,’” he said.
He added that to do so would seem premature, since the state Department of Revenue (DOR) is still studying the possibility of an income tax. The legislature last year in its budget appropriated $2 million for the study, which won’t be due until December. Mercier has recently reported on emails obtained from DOR that reveal the legal hurdles the tax would face.
Wilcox said that DOR “explicitly trying to set up a bill for the purpose of a court case inflames people a little bit. That makes it look like there’s a lot at stake.”
Mercier is more optimistic: “All these things add up to no new taxes this session,” though he added that “there’ll be a lot of drum-beating.”
A similar fate may be in store for the LCFS, which has been proposed in the past two legislative sessions. In those cases, opponents and advocates alike relied on data from California and Oregon’s programs. Since then, however, PSCAA has released an analysis for its regional LCFS proposal which estimated that gas prices would increase by $.57 per gallon. Not only is it an election year, but lawmakers are also working on a possible transportation package for the 2021 session that could be more difficult to pass if an LCFS is in place.
“We feel the same about that (LCFS) as we always have,” Wilcox said. “That’s a hell of a tax.”
Among other priorities, stakeholders within the housing and building industry have been concerned with easing restrictions and costs for new construction, while at the same time city and regional government advocates have pushed for maintaining local autonomy on zoning.
Last year, stakeholders were able to find a compromise via HB 1923, which provides a “menu” of housing options for cities, exempts certain construction from the appeal process and provides grants to cover mitigation costs.
Allison Butcher, Senior Policy Analyst with the Master Builders Association of King and Snohomish Counties, told Lens the organization hopes to expand on some of the menu options in that law, while also pushing for accessory dwelling units (ADU) within single-family zoning in urban growth areas along with the ability to build a duplex on single-family parcels.
Butcher said while they’re “cautiously optimistic” that some of these goals can be achieved this session, she added that any major Growth Management Act (GMA) reform is unlikely to occur.
Local government advocates cited a similar challenge with their transportation needs. Last year, a Joint Transportation Committee report revealed the state’s 281 cities have a $1 billion annual funding gap for local infrastructure maintenance and preservation. To remedy that, the Association of Washington Cities (AWC) is advocating a statewide transportation package that provides local road funding. Another possibility under consideration is allowing cities new local revenue options.
“We’re going to make a strong effort to get something passed this year and have a frank conversation with the legislature about the state of our transportations systems and their long-term financial situation,” AWC Government Relations Advocate Logan Bahr said.
Much of the session is expected to revolve around the large revenue gap created by I-976, which also removed the statutory authority of transportation benefit districts to collect car tab fees. The state Office of Financial Management estimates the initiative will reduce revenue by $1.9 billion over the next six years. Although a court injunction currently blocks implementation of I-976, key lawmakers have said they plan to incorporate it into the transportation budget.
The Washington State Department of Transportation has already released a list of deferred projects for the legislature’s consideration. However, Washington Policy Center Transportation Mariya Frost argues that those projects are funded by the state gas tax – not car tabs. She told Lens that those projects should be removed from the list. “It will require the department of Transportation to be more transparent and honest about how they compiled that list, so that lawmakers have all the information they need to make that decision.”
She added that even if I-976 is struck down in court, “the legislature has an obligation to implement the will of the voters, of their constituents. I understand there are creative challenges for the legislature in having to make cuts and be cost efficient, but that’s what people want and expect. I don’t think that’s unreasonable, and I think they’re fully capable of meeting that expectation”.
Wilcox agrees. “I think that we should fix whatever constitutional problem there might be with it and pass it. We’re not interested in crippling transportation, not even transit. We are interested in giving the voters a sense that their vote matters.”
The legislative session begins Jan. 13.