Governor’s supplemental budget proposal boosts spending nearly $1 billion, taps reserves and includes new carbon tax

Gov. Jay Inslee has released his 2018 supplemental budget proposal (highlights, main page with links). The governor proposes nearly $1 billion in new spending, primarily funded by tapping reserves. A still-unspecified carbon tax would be imposed to rebuild reserves.

The Washington Research Council writes,

Gov. Inslee’s 2018 supplemental operating budget would increase near general fund–state plus opportunity pathways (NGFS+) spending by $960.8 million. This would put 2017–19 appropriations at $44.669 billion.

To comply with the Supreme Court’s order that the Legislature needs to fully fund K–12 salaries by school year 2018–19 (rather than SY 2019–20), the proposal would increase spending by $761.4 million in state fiscal year 2019. (The full cost for salaries for SY 2018–19 would be about $950 million, but a few months of SY 2018–19 fall in state FY 2020, which is in the 2019–21 biennium.)

From the governor’s Medium page

“Let’s fund the final step of McCleary this year,” Inslee said. “The Legislature has invested billions of dollars in our schools over the past five years, including in a bipartisan effort to tackle the heaviest and most complicated part of the plan this past session related to local levies and compensation for educators. Our students and their teachers are counting on us to deliver the full funding they need — and we can deliver that full funding now.”

The Seattle Times reports,

As part of a 2018 supplemental budget proposal announced Thursday, Inslee asked the Legislature to dip into the reserves to hasten a state investment in salaries for teachers and other public-school employees.

To backfill the withdrawal, Inslee, a Democrat, said he’ll once again propose a tax on carbon pollution, with details to come next month.

Inslee, of course, has called for a carbon tax before. And the Times reports,

The governor declined to offer details of his carbon proposal Thursday, saying it would be rolled out in January. Similar proposals have stalled in the Legislature in the past, and voters rejected a controversial carbon-tax initiative in 2016.

The Associated Press reports suggests some uncertainty both as to what the tax would look like this time around and how it would be used.

His plan assumes passage of a carbon tax he says will be introduced next month that would restore that money back to the reserves in the next biennium; the tax would be used in later years for environmental projects, Inslee’s budget office said. However, Inslee later said that revenue growth could also address that backfill.

The tax is expected to put about $1.5 billion back into reserves, though the rate and other details about its scope won’t be known until a bill is presented.

The Seattle Time reports some early opposition.

State Sen. John Braun, R-Centralia, the ranking Republican on the Senate Ways and Means Committee, said he was concerned with the carbon tax as well as the drawing down of budget reserves.

“It’s important that we show discipline by keeping a sizable balance in the ‘Rainy Day Fund’ and budget reserve so we can weather an unexpected economic downturn or state revenue drop,” Braun said in a statement.

The governor’s budget begins the fiscal debate. Lawmakers return to Olympia in January for a 60-day session.