The House has passed legislation delaying the long-term care tax and changing the program. The Seattle Times reports,
Washington House lawmakers Wednesday approved a pair of key bills to delay the payroll tax collections for WA Cares until July 2023 and make broad changes to the first-of-its-kind long-term care program in the face of criticism.
House Bill 1732, which delays the payroll tax, passed 91-6, with just a handful of Republicans in opposition. It now heads to the Senate.
Lawmakers also approved House Bill 1733 Wednesday, 67-29, to allow some people not likely to receive benefits, or who already have some coverage, to permanently opt out of the program and the tax.
Under the proposal, an estimated 150,000 people working in Washington but living in other states could opt out, as well as temporary workers with nonimmigrant visas, partners or spouses of members of active military and some disabled veterans.
In Crosscut, Melissa Santos reports on the legislation,
The changes keep the program, the only one of its kind in the nation, in place. Not everyone agrees it’s necessary.
Republicans, meanwhile, want to repeal the program entirely and start from scratch with something new. They’ve raised concerns about the size of the payroll tax and the program’s future solvency — as well as whether the benefit amount is sufficient for what workers are being asked to pay. A worker earning Washington state’s average annual wage of $76,741 would pay $445 per year in payroll taxes to support the program.
“At some point, the Legislature needs to recognize this program is not the solution; it’s not the answer,” said state Rep. Peter Abbarno, R-Centralia, at a Tuesday press conference.
Solvency remains a concern, she reports.
Already, the 0.58% payroll tax isn’t projected to keep the program solvent for the next 75 years. According to the most recent available analysis, the WA Cares fund is projected to run out of money in just over 50 years, by 2075, unless the Legislature raises the payroll tax slightly.
Alternatively, the program’s financial outlook could be improved if the program is allowed to invest in stocks, which offer a higher average rate of return. That change is something Washington voters recently rejected at the ballot box, however.
The new proposal to delay the WA Cares program and open it to near retirees, HB 1732, is projected to slightly decrease the cost of the program over time. But the other proposal, HB 1733, is projected to increase the long-term care program’s costs, since it could cause more people to opt out, including many high-wage earners.
That means that the state may need to raise the payroll tax even further to cover the costs of that bill, should it be signed into law.