February 15, 2018

Democratic leaders talk property and carbon taxes, state budgets with AWB (w/video)

By: Andrew Lenderman   Comments: 0

Sen. Andy Billig, D-Spokane, and House Majority Leader Pat Sullivan, D-Covington, respond to a comment during Q&A with AWB members at the Feb. 15, 2018, Lobby Lunch for Democratic leadership. (Photo: Brian Mittge/AWB)

Call it the tale of two taxes.

Legislators will propose property tax relief for Washington property owners soon, House Majority Leader Pat Sullivan told AWB members and lobbyists Thursday. But at the same time, there’s a capital gains tax proposal in the Washington House of Representatives that would tie the two taxes together, lowering one, and raising the other.

Sullivan and Senate Deputy Majority Leader Andy Billig addressed AWB members and lobbyists at the third and final 2018 Lobby Lunch this week, giving updates on the state budget, rural broadband and whether the governor’s carbon tax proposal has the votes to make it out of the 2018 session.

Both Democratic leaders spoke briefly before opening the floor to questions, including one regarding how the strong state revenue forecast, released shortly before Lobby Lunch, affected the Legislature’s plans on taxes.

House Majority Leader Pat Sullivan, D-Covington, and Sen. Andy Billig, D-Spokane, at AWB's Feb. 15, 2018, Lobby Lunch for Democratic leadership.
“It doesn’t change our plans,” Sullivan said. “There was no proposal in the House or in the Senate that I’m aware of that was seriously considering to raise revenues. So we had planned on doing budgets in both the House and the Senate within existing resources. You know, I think the question now is that, people are going to town hall meetings on Saturday and I can guarantee you the number one thing they’re going to hear about is property taxes.”

Sullivan said there could be proposals on property tax relief introduced in the next few days.

“So it’s not a discussion about raising taxes but more about how we can reduce the property tax burden on our residents,” Sullivan said.

That's because, Sullivan explained, “The capital gains proposal in the House doesn’t raise taxes. It actually reduces property taxes at commensurate rates.”

In essence, it’s an offset – pass a new capital gains tax and lower property taxes with the collections.

AWB testified against that proposal, House Bill 2967, in a hearing this morning. The bill would “ask the state's citizens to reduce the state property tax levy and replace it with the capital gains excise tax,” according to the bill summary.

Billed as a tax on “high-income earners,” AWB Government affairs Director Clay Hill expressed the business community’s opposition to the bill before the House Finance Committee, noting that the tax would not be applied uniformly or broadly, something he said good tax policy should do, and would affect residents other than high-income earners.

Also this week, Gov. Jay Inslee continued to push for a carbon tax, enlisting the support of former U.S. Secretary of State John Kerry.

Sullivan and Billig gave the audience their perspective.

“Unless there’s a bipartisan vote in the House, it’s not going to go anywhere,” Sullivan said. “We made it clear over the last several sessions that we don’t have 50 votes in the House to pass a carbon tax.”

Billig said it’s an open question in the Senate.

Sen. Andy Billig, D-Spokane, and House Majority Leader Pat Sullivan, D-Covington, at AWB's Feb. 15, 2018, Lobby Lunch for Democratic leadership.
“I think it’s open, whether it’s got the support on the floor,” Billig said. “It would have to be bipartisan…but I think it could be.”

The tax discussion is underway as state officials report the biggest state revenue collections in many years. Washington’s projected tax collections for the 2017-19 state budget have increased by nearly $628 million, the state Office of Financial Management announced Thursday. Officials also project an increase of $660 million for the 2019-21 budget.

Despite the good news, both Billig and Sullivan said the budget faces pressure.

“We’re going to be really careful not to just say let’s just spend it all, because we’re just making our problem worse in January,” Billig said.

Sullivan said when new revenues come in, “basically we’re using it to plug holes” rather than investments in tax exceptions or new programs.

“You can’t just spend all that new revenue,” Sullivan said.

Audience members also pushed Sullivan and Billig to support AWB’s Rural Jobs agenda, which includes removing barriers to economic development and greater access to broadband in underserved areas. Billig said rural broadband is a “foundational” issue.

“If you don’t have it, it’s hard to do anything else,” Billig said, like paying taxes or ordering parts.

For more information about issues that affect Washington employers, please contact the AWB Government Affairs team here.

2018 Lobby Lunch Series: February 15th - Deomcratic Leadership from Association of WA Business Vimeo page.