No additional tax increases – or cuts – in budget proposals

No additional tax increases – or cuts – in budget proposals
The House and Senate supplemental operating budget proposals contain no new tax hikes, but also no cuts despite more than $1 billion in surplus revenue since last year. Photo: freepik.com

The state House and Senate operating budget proposals released Feb. 24 call for no additional taxes outside of the business and occupation tax increase approved earlier this session. However, neither budgets cut taxes in response to a state Economic and Forecast Council (ERFC) report this month showing more than $1 billion in surplus revenue compared to a March 2019 forecast.

Both budget proposals would increase spending from the state general fund between $1.1-1.2 billion, raising the total biennial budget spending to $53.6 billion.

Although Inslee’s operating budget called for withdrawing $300 million from the budget stabilization account to fund homelessness programs, House Caucus Majority Leader Pat Sullivan (D-47) told reporters at a Feb. 24 press conference that their budget does not take money from the account. “Although it’s a supplemental budget, we’ve used good economic news to invest in programs and services that will have a huge impact on our children and our grandchildren.”

Significant House budget spending increases includes:

  • $42.3 million into the Workforce Education Investment Account;
  • $58 million to fund a $300 per month per-child subsidy rate in foster care;
  • $169 million into the Medicaid Quality Improvement Program; and
  • $46 million to fund new staffing models for state hospitals along with safety initiatives.

When asked by a reporter why no tax cuts were included, House Appropriations Committee Chair Timm Ormsby (D-3) said: “the need for programs and services…was the best use of the resources that were available. The needs of the programs and services side outweighed the needs on the tax expenditure side.”

House Appropriations Committee ranking member Rep. Drew Stokesbary (R-31) said in a statement that the budget spends “every last dime instead of providing any tax relief or making wise long-term investments.”

In addition to funding a business plan for a state bank, the Senate budget adds $115 million in new spending for homelessness shelters and programs and $100 for climate resiliency programs that include forest health restoration. If approved, the state Office of Financial Management would submit a prioritized list of investments to “strengthen the resiliency of communities and the natural environment.” Last week, Commissioner of Public Lands Hilary Franz released her climate resilience plan.

Senate Ways and Means Chair Christine Rolfes (D-23) told reporters at a Feb. 24 press conference “it’s not about climate change. Right now this fund is to protect us, to protect our economy, to protect our resources.”

“We’ve created a budget that I believe is sustainable, it’s stable, it reflects economic prosperity,” Rofles said. “But it’s also to tinged with the reality that the prosperity that we’ve been facing isn’t going to continue forever. We’re setting ourselves up to be safe when we come back next January.”

However, Stokesbary said the spending increase “makes it increasingly likely that new taxes will be necessary next year.”

Ways and Means Committee ranking member Sen. John Braun (R-20) offered a similar warning in a statement. “While there are good things in this proposal, that’s to be expected from so much additional spending. The lack of really meaningful tax relief in this plan is more evidence of the government greed we saw with the billions in unnecessary tax increases approved last year and the billion-dollar business-tax hike approved just a couple of weeks ago.”

SB 6168 is scheduled for a Feb. 25 public hearing in the Ways and Means Committee, while HB 2325 is scheduled for a Feb. 26 public hearing in the Appropriations Committee.

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