Senate passes supplemental budget; House poised to act Monday.

With 11 days left in the 60-day legislative session, lawmakers are moving rapidly toward completing work on the supplemental budget. Friday, the state Senate passed its version. The House completed work on a series of amendments with a final floor vote scheduled to occur on Monday. The Spokesman-Review reports:

On a party-line vote, the Senate passed its supplement to the 2017-19 operating budget, approving nearly $1 billion more for public schools, mostly for increased teacher salaries that would bring the state in line with a Supreme Court decision that the delay lawmakers approved last year didn’t meet their constitutional obligation.

That budget has no new taxes and offers a $431 million cut in state property taxes next year…

The House took up its own supplemental spending plan, and even though representatives went home for the night without passing it, they were closer to the Senate than when they began the day….

Friday… they added nearly $1 billion for the school salaries and made a series of adjustments in education and other programs to cover that.

House Appropriations Committee Chairman Timm Ormsby, D-Spokane, said the change was made in an effort to “check the box” on the last element in the court’s landmark ruling on school funding, and get past the controversy.

The House budget also relies on a new capital gains tax, which requires a separate vote on its own bill.

The S-R notes that the capital gains tax may face a hurdle when (and if) it clears the House.

The Senate budget does not include a capital gains tax, and [Senate Ways and Means Chair Christine] Rolfes said she did not anticipate passing a new tax when the state is collecting more revenue than it expected.

The Senate Ways and Means Committee did, however, recommend passage of SB 6203, a carbon tax not tied to the state budget. The Seattle PI reports,

Washington and seven other states are considering such a tax as means to cut greenhouse gas emissions and pump resources into growing an economy based on energy sources other than fossil fuels… 

“Our bill to put a price on carbon pollution and invest in a clean energy future for Washington just took a big step towards a vote on the floor,” Sen. Kevin Ranker, D-Orcas, wrote on his Facebook page.

Of the  major changes in the House budget introduced Friday, the Washington Research Council writes,

The two biggest changes are that it would fully fund the school staff salary increases in SY 2018–19 ($775.4 million) and it would change the school district apportionment schedule (saving $609.1 million). Both the budget passed by the Senate Ways & Means Committee and the budget proposed by Gov. Inslee would fully fund the salary increases, and Gov. Inslee’s proposal would also make the apportionment change.

Although lawmakers see the surge in state revenues reflected in the February forecast as a solution to some budget challenges, the state treasurer says he’d like to see the money used to buy down debt. KOMO news reports he’s finding few takers.

State Treasurer Duane Davidson says the money could go to repay a portion of the $21 billion the state has racked up in debt, making it the nation’s sixth-most indebted on a per-resident basis, according to S&P Global Ratings. He also supports putting the money in the state’s rainy day fund, or paying toward its $13.8 billion of unfunded pension obligations. Instead, Democratic and Republican lawmakers have proposed cutting property taxes that were raised last year to comply with a 2012 state Supreme Court order to fully-fund basic education.

Association of Washington Business president Kris Johnson suggests lawmakers jettison the capital gains tax and providing tax relief to manufacturers throughout the state.  

…despite claims that it targets the so-called wealthy, a capital gains tax could harm small-business owners who are relying on the sale of their business to fund their retirement.

One area where the House budget seeks to help employers — by lowering the business and occupation (B&O) tax for manufacturers — unfortunately limits support to manufacturers in parts of the state deemed ‘rural’ by the budget writers. It leaves out nine counties, including many that consist largely of rural areas, such as Kitsap and Benton.

Manufacturers in every part of the state need support. Manufacturing employment is down 14.2 percent statewide since 2000, with manufacturing jobs in urban areas declining more than manufacturing jobs in rural areas.

In the next week and a half, lawmakers will reconcile their budget proposals, a task that seems quite manageable. Speaking for AWB Kris Johnson says,

We look forward to working with lawmakers to ensure the final budget is one that fosters growth and opportunity for everyone — in urban and rural areas alike

Sounds right. With the latest revenue forecast, we’ve seen how expanded growth and opportunity has benefitted state coffers. Lawmakers can help make sure that that all parts of the state share in that prosperity.