April 8, 2019
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AWB to Legislature: No need for taxes, and save for a rainy day

The state Senate passed its proposed $52.2 billion operating budget Thursday night as lawmakers move into the final few weeks of the session. Last week, House Democrats passed a $52.8 billion budget that includes $1.4 billion in new taxes. The Washington Research Council compared the two budgets.

Among the issues of contention: a proposal to increase the ability for local school districts to raise their property tax levies. During a late-night committee meeting, the measure was amended to add funding for charter schools and to restrict use of the funds, ensuring that they aren't used for basic teacher compensation -- a situation that Sen. Mark Mullet, D-Issaquah, said could lead to what he called "a McCleary 2.0."

Both chambers’ proposed budgets represent a significant increase in spending over the previous state budget at a time when lawmakers should be preparing the state for the inevitable economic downturn. By comparison, the 2017-19 budget was roughly $44 billion.

The Lens News took at look at the capital gains income tax, which both chambers have proposed creating, in this story. AWB's Clay Hill testified before House Finance Committee on Thursday in opposition to the tax, noting that this tax on income would be both unconstitutional as well as unreliably volatile. He noted that voters have repeatedly rejected any income tax measure. To base a budget and spending on revenue from a new tax that could have the rug pulled out from under it by a recession, the courts or the electorate would be challenging, he said.

Hill also testified against a proposed graduated real estate excise tax, saying it would hit industrial and commercial property hard, with a disproportionate geographic impact.

Hill was also scheduled to testify Monday afternoon in opposition to SB 5961, which would impose a 8.9 percent capital gains tax and pair it with other various forms of tax relief, such as the small business tax credit and over-the-counter medication, among others.

TVW has video of Hill's testimony.

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Spring Meeting
Practical Education

Expand career-connected learning across Washington state

By Maud Daudon

If you're a Washington business owner or manager wondering where to find skilled workers, you're not alone. And if you're a Washington parent or high school student, wondering how to get from school to a great job, you're not alone either.

You may also be the solution to each other's problem.

Last summer, the Career Connect Washington initiative convened groups of parents to discuss education and career preparation in Washington state. As part of a 10-year effort, we are learning how to better help students connect to both jobs and advanced education so they will be well positioned to step into the state's job market. Business, labor and education organizations are all stepping up; we need the Legislature to act as well...

Read the full guest column in The Seattle Times
Fiscally Unwise

A Capital Gains Tax Would Not Improve Budget Sustainability

By The Washington Research Council

Although the March revenue forecast increased estimated state revenues for the 2017-19 and 2019-21 biennia, the House Appropriations Committee Chair proposed a new capital gains tax along with his 2019-21 operating budget. The Senate is also considering a capital gains tax, although in this case the proceeds would be used to reduce other taxes rather than to increase the operating budget.

A capital gains tax would be highly volatile. Taxpayers can arrange their affairs to avoid them, and the value of capital gains realized by Washington taxpayers varies significantly year to year. Also, swings in capital gains are much bigger in percentage terms than swings in state sales tax revenue. Volatile taxes require stronger reserves to manage downturns, but the House bill would avoid constitutionally-required transfers to the rainy day fund by directing revenues from the tax to the education legacy trust account.

Additionally, a capital gains tax would certainly be challenged as an unconstitutional income tax. Even if it were eventually found to be constitutional, a court case would likely mean that any revenues would be suspended until after 2019-21. Building the budget around such a tax would be risky at best...

Read the full report from the Washington Research Council
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