House Democrats yesterday released their proposed 2019-2021 state budget. Here’s video of their late morning press conference and their 34-page summary package.
PSHB 1109 makes 2019-21 appropriations of $52.8 billion NGF-O and $100.2 billion in Total Budgeted funds. NGF-O policy level increases are a net $2.3 billion. In Total Budgeted funds, policy level increases are a net $4.7 billion.
The Appropriations Committee then held a public hearing on the budget within hours of its release.
The Seattle Times reports the budget
… would be funded by a roughly $1.4 billion in new or higher taxes over the two years.
That package includes adjustments to the state’s real estate excise tax and an increase in part of the business-and-occupation tax. It rolls back tax preferences for travel agents and tour operators, on the sale of bullion and replaces the out-of-state sales-tax exemption with a refund option.
Its largest component is a new capital-gains tax.
Last week’s revenue forecast boosted anticipated collections $861 million, enough to fund current services without new taxes. The House majority, however, chose to make a number of policy additions to the budget. The ST reports,
Their 2019-2021 operating budget plan would provide for increased K-12 education costs and expand early-childhood learning, Washington’s college state need grant and community college programs for high-demand programs, such as nursing.
It boosts spending on Washington’s problematic mental-health system, providing money for the proposed University of Washington psychiatric teaching hospital and an expansion of community mental-health beds.
Republicans contend the new revenues are unnecessary.
Rep. Drew Stokesbary, R-Auburn, argued that the growth of existing tax collections, combined with budget tweaks and policy changes, could raise spending without new taxes over the next four years.
Stokesbary has a video explaining his take on the state budget.
The Washington Research Council provided its initial assessment of the House proposal.
The House Appropriations Chair has proposed a 2019–21 operating budget that would appropriate $52.811 billion from funds subject to the outlook (NGFO). That’s a 18.2 percent increase over enacted 2017–19 appropriations. Of the $8.150 billion increase, $5.834 billion is maintenance level (the cost of continuing current services) and $2.316 billion is from new policies.
Revenues for 2019–21 are currently estimated to be $5.565 billion higher than 2017–19 revenues were when the 2018 supplemental budget was adopted. At that time, even with $1.144 billion less in estimated revenues for 2019–21 (and $1.116 billion less for 2017–19), the budget balanced over four years—including the maintenance level costs associated with the McCleary decision (as I’ve mentioned).
On top of these expected revenue increases, the proposal includes $979 million in new taxes in 2019–21 (growing to $2.173 billion in 2021–23)—including a 9.9 percent capital gains tax and a graduated real estate excise tax. (Additionally, the proposal would increase business and occupation taxes for certain sectors. The revenues would go to a new account not included in the NGFO and could be used only for higher education.)
The Association of Washington Business also reported on the budget.
Last March, based on the February 2018 revenue forecast, lawmakers were able to write a budget that balanced over four years, through 2019-21, when they anticipated only $49 billion in revenue. Clay Hill, AWB government affairs director for tax and fiscal policy, takes a deep dive into the numbers in this blog post at Olympia Business Watch.
“What leaves many scratching their heads is that Democrat budget leaders have been saying the 2019-21 budget cannot be built without new revenue — even though it balanced last March and the forecasted revenue for the next biennium is now $1.6 billion greater than it was last March,” Hill writes.
The Walla Walla Union-Bulletin yesterday editorialized that there is no need for a tax increase.
We strongly believe lawmakers and the governor should make every effort to write a no-new taxes budget. Spend only what is available, or even a bit less…
Our concern over new taxes goes beyond asking taxpayers to dig deeper in their pockets.
One of the proposed new taxes, a capital-gains tax, seems to be unconstitutional in Washington state. Since capital gains are considered income by the IRS, then a capital-gains tax is clearly an income tax, and such a tax is not allowed under the state constitution.
It is also unwanted by Washingtonians.
And, as the Seattle Times reported, a capital gains tax may face tough sledding in the Senate.
Republicans have long opposed the capital-gains tax, calling it unconstitutional. And in December, three Democratic senators said they were not inclined to support a similar capital-gains tax proposal from Gov. Jay Inslee — raising questions on whether it can pass the Legislature.
A Senate budget is also expected within days. Much more on all this soon.
