It’s in the books. Inslee signs state budget, approves tax increases.

Gov. Jay Inslee yesterday signed the state’s $52.4 billion operating budget. As Jim Camden reports in the Spokesman-Review, it’s a big deal.

Gov. Jay Inslee praised a record $52.4 billion operating budget for its boosts to spending on schools, mental health, affordable housing and environmental programs – and ignored calls to veto some of the tax increases needed to pay for it – as he signed the last bills from what he called “the most productive” legislation session in his lifetime.

“Our economy is strong, the strongest in the nation,” Inslee said as he prepared to sign the operating budget. That economy is expected to pour $5.1 billion more into the state coffers in the upcoming two-year budget cycle than it generated for the current cycle, which ends June 30.

So, the budget is now in the books. And the books are a little complicated. That $54.2 billion “record budget” understates things a bit, as the Washington Research Council has documented. A WRC policy brief reports,

Operating appropriations for 2019–21, as passed by the Legislature, are $52.852 billion—an 18.3 percent increase over 2017–19 appropriations. This is the largest increase in at least 25 years, and it comes after significant increases of 13.6 percent in 2015–17 and 16.9 percent in 2017–19.

They get to the $52.8 by including the new workforce education fund established by the Legislature and signed by the governor.

In 2019, the Legislature created the workforce education investment account (WEIA) to fund higher education programs. As these programs would typically be funded through the NGFO, it is appropriate for budget transparency purposes to roll up the WEIA with the NGFO (though the WEIA is not included in the four-year balanced budget requirement).

So add another $375 million and, voila, a $52.8 billion budget, representing an 18.3 percent increase.

The Seattle Times reports the governor wants agencies to boost spending another $175 million for culvert repairs.

Gov. Jay Inslee, determined to put more money toward helping salmon survival, on Tuesday directed the state to boost funding for court-ordered culvert repairs by $175 million over the next two years.

The money would be spent to fix or replace highway culverts that block salmon migration, and goes beyond what the Legislature set aside for the job….

“The fate of our salmon is intrinsically tied to our tribes, our orca, our economy and our very identity,” Inslee wrote in a statement. “That’s why I am directing my Department of Transportation to immediately ramp up its culvert repair program and I am using budget flexibility provided by the legislature to increase culvert repair spending to $275 million in the next biennium.”…

The move directs the transportation department to take money from projects that spent less than what they were allotted in the 2017-19 budget, and put those funds toward culverts, according to a statement by the agency.

As most of the news stories report, the budget includes several controversial tax increases and was sharply criticized by Republican lawmakers for lifting spending too much. Austin Jenkins, for Northwest News Network, writes

In a statement, state Sen. John Braun, the ranking Republican on the Ways and Means Committee, decried the 2019-21 budget as “an avalanche of unncessary new taxes and a record state operating budget to spend them.”

Braun and other lawmakers had called on Inslee to veto the higher business and occupation tax on big banks, calling its last-minute passage at the end of the legislative session “flawed.” They also questioned the constitutionality of the tax on the grounds it treats in-state and out-of-state banks differently.

Separately, more than 30 mostly Republican lawmakers signed a letter to Inslee requesting he veto the conversion of the non-resident sales tax exemption to a remittance program to protect businesses on the Washington-Oregon border.

On that sales tax exemption, The Columbian reports border county retailers worry about the business impact.

On Monday, 38 Republican legislators signed a letter to Inslee urging him to not sign ESSB 5997, saying the bill would put too many retailers at a disadvantage. Also, the bill could have an adverse effect on replacing the Interstate 5 Bridge and relations between Oregon and Washington legislators, the letter said.

“Angering those legislators by angering their constituents will harm our ability to create a cooperative atmosphere needed to resolve this important transportation issue,” the letter says.

Other groups that sent a letter to Inslee opposing the bill included the Greater Vancouver Chamber of Commerce, Identity Clark County, the Washington Retail Association and the Washington State Auto Dealers Association.

The chamber’s letter, signed by president and CEO John McDonagh, also took a jab at the Legislature.

“Gov. Inslee, I stand ready to fill a room with local merchants who can share with you their concerns directly,” McDonagh wrote, “as the process in the Legislature did not allow for comment during the session. These are businesses who make up the unique fabric of our communities, and it would be disastrous for any of them to close or move their establishments to Oregon.”

Inslee had also been urged to veto a tax on large banks that was passed in the waning hours of the session. The S-R reports,

Large international banks with branches in Washington and net annual income of at least $1 billion will see the biggest increase, with a special jump in business and occupation taxes that local banks won’t have to pay, from the current 1.5% of gross receipts to 2.7%. The tax was passed on a fast-track with little advance warning of its hearing, then moved to a floor vote in the House the same day and passed in the Senate without a hearing in the Financial Institutions Committee that has jurisdiction over bank policy.

Republicans and the Democratic chairman of the Financial Institutions Committee, Sen. Mark Mullet, asked Inslee to veto the bill.

He chose not to veto the measure.

As we began, the budget is now in the books. And with legitimate questions raised about the sustainability of the budget, we hope that in two years we can report the books are balanced.