In closing days of session, Senate considers new proposal to lower state property tax and reduce reserves.

The Washington Research Council has a good initial analysis of a striking amendment introduced last night. WRC analyst Emily Makings writes,

Last night, Sen. Rolfes introduced a striking amendment to SSB 6614 that would reduce the state property tax for CY 2019 and ultimately reduce revenues deposited in the budget stabilization account (BSA, or rainy day fund).

…The striker would not transfer funds out of the BSA. However, it specifies that $935 million of the property taxes collected would be deposited in the education legacy trust account (ELTA) in FY 2019 “for the support of common schools.” (The education legacy trust account is part of the near general fund–state plus opportunity pathways (NGSF+) rolled-up account. The state discusses the budget in terms of the NGFS+.)

…by redirecting $935 million from the GFS to the ELTA, the striker would reduce the amount that is constitutionally required to be deposited in the BSA. The impact to the BSA would be less than $935 million, but I haven’t seen an official estimate of the fiscal impact. According to Sen. Braun, it would mean that BSA funds would be reduced by “more than $700 million.”

If that’s correct, it’s not clear to me at this point why the $935 million figure was chosen. The bills assumed in the budgets would withdraw amounts from the BSA to cover the costs of property tax rate reductions. But this striker would seemingly redirect from the BSA more than necessary to cover the rate reduction. The CY 2019 rate reduction in HB 2993 is larger, yet it would reduce revenues by only $438.8 million in CY 2019.

Sen. Braun’s post, to which Makings refers, is a strongly-worded objection to the striker.

Although state government expects to take in $2.3 billion in additional tax revenue, the Senate Democrat majority is still looking to raid budget reserves using what Sen. John Braun called a felony budget gimmick. Braun said the Democrats’ proposed amendment to Senate Bill 6614 violates the spirit and intent of voter-approved protections that place extraordinary revenue growth into the budget stabilization account, more widely known as the rainy day fund.

“After the Great Recession exposed Olympia’s failure to capture and protect unanticipated revenue, the voters approved critically important safeguards against overspending in good economic times,” said Braun, R-Centralia, who serves as ranking minority member on the Senate Ways and Means Committee. “This proposal from the Senate majority creates a constitutional crisis by rejecting the overwhelming demand from 67 percent of voters for fiscal responsibility and accountability. It sets an incredibly dangerous precedent for future state budget decisions.”

The Democrats’ proposed amendment to the bill would funnel $935 million in property tax revenues to the education legacy trust account. Redirecting the funds lowers general fund revenues, which Braun says circumvents the spirit of the law by reducing the amount of money going into the rainy day fund by more than $700 million.

The WRC cites a report that an agreement has been reached with the other chamber.

According to Walker Orenstein of the News Tribune, the House “is on board” with the striker. Orenstein also reports: “Rolfes said the move is just normal budgeting and necessary to cut property taxes because the GOP wouldn’t support the previous plan that tapped the rainy day fund.” The Senate didn’t vote on this last night but could today.

In the closing days of the session, things move quickly, though not always smoothly. The debate may be interesting.