Research Council assess House and Senate budget proposals

Although budgets proposals seem to move swiftly (a week or less from unveiling to public hearing to committee vote to floor vote), it’s important to understand what’s being discussed in Olympia. Once the Senate budget is passed, probably this week, things will slow down as negotiators work to reconcile differences before the scheduled April 28 end of the regular legislative session.

To that end, a new Washington Research Council policy brief reviewing the Senate budget chair’s proposal provides a clear overview of that chamber’s proposal. The Senate held its public hearing Monday; the budget proposal was released the preceding Friday afternoon.

Briefly:

The 2019–21 operating budget proposed by the Senate Ways and Means Committee Chair would increase appropriations from funds subject to the outlook by $7.511 billion (16.8 percent) over 2017–19. Of that, $1.667 billion is due to spending on new policy, while maintenance level changes (the cost of continuing current services, including the response to the McCleary decision on school funding) make up the rest.

Like the House budget proposal, the Senate Chair’s proposal includes a tax package.It would increase revenues by $518 million in 2019–21, largely due to increases in the real estate excise tax for properties with selling prices over $1 million. Senate Democrats have also proposed a capital gains tax in conjunction with the budget; revenues from the capital gains tax would be used to reduce other taxes and create a working families tax credit.

Although this proposal would increase spending by less than the House proposal and relies on less risky revenue sources, it still represents a substantial increase over 2017–19. This is on top of a 16.9 percent increase in 2017–19 and a 13.6 percent increase in 2015–17. Should an economic downturn occur in the next few years, this significant increase in spending could prove to be unsustainable.

The WRC has also published a blog post detailing how the budget passed by the House changed from unveiling to adoption. Another post compares the House-passed budget with that being considered in the Senate.

As passed by the House, the 2019–21 operating budget would appropriate $52.934 billion from funds subject to the outlook. If you include the $389.6 million that would be spent from a new workforce education investment account on higher education and career connected learning, the amount appropriated would be $53.324 billion…

Meanwhile, the operating budget proposed by the Senate Ways and Means Committee Chair would appropriate $52.172 billion from funds subject to the outlook.

A key takeaway from the WRC analysis is found in the conclusion of the policy brief.

…the Legislature should take care to write a budget that is sustainable in the years to come. Given the likely end of this remarkable period of economic expansion, spending and tax increases should be limited lest they prove to be unsustainable.

Right.