Lawmakers wrap up 60-day session: No carbon or capital gains tax. Some property tax relief, but none for manufacturers.

Lawmakers concluded the 2018 legislative session last night. Aided by dramatic revenue growth, they adopted a supplemental budget that includes no new taxes, provides some property tax relief and accelerates compliance with the state Supreme Court’s McCleary school funding order. They also failed to reinstate manufacturing tax relief adopted last year but vetoed by Gov. Inslee. And they used a “creative” maneuver to divert money from the budget stabilization account, allowing them to access the funds without a supermajority vote.

As the Associated Press reports, the budget was adopted by slim majorities along party lines.

The Senate passed the plan with a 25-24 vote shortly after the House passed it 54-44 on the last day of the 60-day legislative session…

Republican Sen. Joe Fain decried the lack of Republican involvement in the budget negotiations and encouraged bipartisanship in the future. Democrats hold narrow majorities in both chambers

“I am just praying and hoping and asking that we return to the bipartisan progress that we’ve made in this state over the last few years,” he said.

Much of the Republican concern centered on the way property tax relief was addressed, as we wrote earlier this week. The Spokesman-Review reported on the controversy before the vote was taken,

Under the state Constitution, extra tax money coming into the state General Fund is put in a reserve account, which can only be tapped by a 60 percent super majority. Democrats are calling for the money that will cover their proposed tax cut to go into the special Education Legacy Trust Fund, arguing it is coming from property taxes that were raised for schools. That would bypass the general fund, and keep it from automatically going into the reserve account.

State Treasurer Duane Davidson, a Republican, issued a letter saying the move was shortsighted and could jeopardize the state’s bond rating.

“I urge the Legislature to not start a terrible precedent of diverting Rainy Day funding,” Davidson said. They should put the money in the Rainy Day fund “adjourn and then go home.”

The majority held and the diversion went through. As the Seattle Times reports,

The tactic allowed Democrats to skirt the 60 percent vote threshold to dip into those budget reserves, which would have required Republican support.

The News Tribune also covered the budget, reporting,

Overall, the supplemental budget adds roughly $750 million in net spending to the current two-year budget.

Many Republicans objected, saying the spending will make it tough to avoid raising taxes or cutting government programs in the future.

“My problem is we giveth, then we got a downturn in our economy we’ve got to take away,” said state Sen. Maureen Walsh, a Walla Walla Republican, in a Thursday floor speech. “That’s not responsible budgeting.”

Sen. Christine Rolfes, D-Bainbridge Island, said on the floor Thursday that the budget was a success.

Rolfes said Democrats this year hoped to bring the state into compliance with McCleary, give a property-tax cut, invest in mental health, leave a budget with healthy reserves and pass a budget without an overtime special session.

With the influx of new revenues from Washington’s strong economy, it looked as if the Legislature would reinstate the tax relief for manufacturers that received bipartisan support last year, only to fall to the governor’s veto. Association of Washington Business president Kris Johnson said in a statement,

“We are disappointed legislators did not do more to address Washington’s urban-rural economic divide. While there were a few successes, including a fix for the Hirst court decision on water rights, there were also many missed opportunities.

“At the top of the list is the Legislature’s failure to support manufacturers by lowering the business and occupation (B&O) tax rate. Last year, a strong bipartisan majority agreed to include tax relief for manufacturers as part of the state budget, but it was unfortunately vetoed by the governor. This year, lawmakers put the issue back on the table by considering legislation that would have reduced the B&O tax on manufacturers — a part of the economy that’s lost jobs over the last two decades — but it failed to pass. This is especially disappointing considering the widespread recognition among lawmakers about the need to boost the economy in rural Washington and the extraordinary growth in state revenue that made the tax relief feasible.”

More on the 2018 session at the Northwest News Network and Everett Herald