April 1, 2019
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Senate Democrats unveil $52.2 billion budget plan with new taxes

Both chambers can get to work on final budget negotiations now that the Senate majority has unveiled its budget plan. On Friday the Senate proposed spending $52.2 billion in the 2019-21 budget that they said prioritized education and behavioral health. The Senate proposal is $687.9 million less than the $52.6 billion House Democratic budget, which passed the House Appropriations Committee last Wednesday.

The Senate would increase spending by $7.5 billion over the current 2017-19 budget. The proposal would increase state tax revenues by $421 million by making the state's real estate excise tax into a graduated tax. It would also add $63 million to state tax coffers by changing the non-resident sales tax exemption into a refund program (an issue of concern for border communities like Spokane and Vancouver), increasing B&O taxes for travel agents, and increasing B&O taxes for prescription drug resellers.

“Where more revenue is needed to address our state’s growing needs, the budget strategy is careful not to increase the burden on middle-class households,” said Sen. Christine Rolfes, D-Bainbridge Island.

The Senate's proposed capital gains tax would exact an 8.9 percent tax on capital gains profits above $250,000. However, unlike the House, the Senate budget does not rely on the tax in order to balance. Rather, revenue from the tax would be used to reduce taxes for small businesses and fund a working families tax credit.

"Our tax code is broken and we're trying to put forward a thoughtful proposal that will help fix our state's upside down tax code," said Senate Majority Leader Andy Billig.

Still, opponents of a capital gains tax say that it is an unconstitutional tax on income (a point The Walla Walla Union-Bulletin also emphasized last week.) The issue also faces an uncertain future in the Legislature. At least one Senate Democrat, Sen. Mark Mullet, D-Issaquah, has said he would vote against it.

The House budget would tax capital gains at 9.9 percent. Crosscut takes a look at both chambers' capital gains tax proposals.

Sen. John Braun, the ranking Republican on the Senate Ways & Means Committee, said he appreciates that his Democratic colleagues have put forth a budget that has fewer tax increases than House Democrats, but he said new taxes of any kind aren't necessary.

“The Legislature is well-positioned this year to pass a budget that would support major new investments in bipartisan priorities, like special education and mental-health treatment, without any new taxes. Unfortunately, the budget proposals that are now on the table include new taxes – however, the Senate approach is a much better start than what we’re seeing from the House," Braun said.

Meanwhile, in the House, The Herald took a look at the role of the minority party in the budget discussion and concluded, "Democrats are in charge but GOP is helping steer the debate."

The Columbian's editorial board said that with $5.6 billion in increased tax income already, the Legislature should do the fiscally responsible thing -- say no to tax increases.

Contact Clay Hill, AWB government affairs director for tax and fiscal policy, to learn more.

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Spring Meeting
A Better Way Forward

Four reforms to rein in state spending, avoid higher taxes

By Rep. Drew Stokesbary, R-Auburn

Last week, House Democrats unveiled their $53 billion state operating budget proposal for the upcoming 2019-21 biennium. Unsurprisingly, their budget dramatically increases state spending -- funded by new taxes on businesses, home sales and capital income -- proving yet again that it's easy to spend money that isn't yours.

All told, their proposal grows spending by more than $8.5 billion beyond current levels. For context, when I was first elected in 2014, the state budget spent $33.7 billion. Between economic growth and new taxes, state revenue will have increased by about 57 percent in five years.

Has your salary grown by 57 percent since 2014? Probably not, as average annual wage growth is hovering below 4 percent.

Structural issues are largely responsible for this alarming rate of budget growth. Each year, lawmakers enact all sorts of new programs and services, predicated on promises of long-term savings and improved social and health outcomes. Once enacted, these programs are almost always automatically funded in subsequent years, with virtually no oversight or review by the Legislature.

The result: spending persistently outpaces revenue, enabling our most essential services to be held hostage in exchange for new taxes.

There is a better way...

Read the full guest editorial in The Seattle Times
Facts From the Tri-Cities

Salmon and dams can coexist

By Kennewick May Don Britain; Pasco Mayor Matt Wakins; Richland Mayor Robert Thompson; and West Richland Mayor Brent Gerry

For more than 20 years. there has been an ongoing debate about the impact of the four Snake River dams on the Pacific Northwest's salmon population. Since the 1970s, billions of dollars have been spent to upgrade the dams and to improve salmon habitat.

The results? According to the Bonneville Power Administration (BPA), the average number of returning salmon and steelhead are more than double what they were when counts first began when the Bonneville Dam started operations in 1938. Despite this clear evidence that dams and fish can coexist, the debate continues.

More recently, the struggles of the southern resident orca population have further stoked the debate. No one disagrees that the health and future of the orca population must be preserved. However, the numbers clearly show that removing the dams will not save the orcas...

Ironically, at the same time there is a push for the Washington state Legislature to fund this study on the impacts of removing the dams, there are also several bills to push for carbon reduction. If the goal in Washington is to reduce carbon, the existing clean hydropower resources play an essential role in keeping our air clean. These dams generate some of the cheapest, most reliable, carbon-free electricity in the Pacific Northwest...

Read the full guest column in The Seattle Times
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