Although two budgets have been approved, legislative negotiations are stalled. It’s a little reminiscent of the Mariners old slogan, “two outs, so what?” except the two budgets that are out are different in kind. The Senate approved, arguably, a balanced budget; the House budget relies on some $3 billion in taxes that the House has yet to approve.
Senate Republicans have said all along that they are reluctant to begin serious budget talks until the House completes its budget work by passing a revenue package. Jim Camden reports in the Spokesman-Review that they’re sticking to that position.
Because of the differences in the two spending plans, and the contention by Republicans that the House Democratic tax package couldn’t pass the full House, little negotiations are taking place on a compromise budget.
“There’ve been conversations, but negotiations are very, very difficult,” Schoesler said.
Camden writes that House Democrats prefer to wait.
But while the House Finance Committee is expected to vote on the package as early as Tuesday morning, Democratic leaders have said they don’t plan to bring it to the full House until budget negotiations are complete.
The difference in stances over this proposal for a significant change in state taxes makes it increasingly likely the Legislature will not pass a two-year budget in the 19 days left in the regular session, and will need a special session as it did in seven of the last eight years.
The story reports on yesterday’s Finance Committee hearing. Short form: Most business groups testified against the proposed taxes; a number of social service and education advocates spoke in favor of increased revenues.
An op-ed by Association of Washington Business president Kris Johnson explains business concerns.
Raising taxes on “the wealthy” might seem like a great idea until you realize that many of the proposals coming out of the state Capitol would apply to small-business owners who don’t meet most folks’ definition of wealthy.
For example, a proposed 66 percent increase in the business and occupation (B&O) tax on service-sector businesses would apply to hair dressers, child care providers and car repair shops. In many rural areas, these are among the last remaining businesses.
Likewise, a proposed 7.9 percent capital gains income tax wouldn’t just apply to wealthy investors, but also to small-business owners who, after years of hard work building equity in their business, sell their business to support their retirement.
We recommend reading the whole thing. Johnson also emphasizes a theme we’ve hit on frequently: The state economy is not uniformly robust.
Worse, these tax proposals come at a time when only pockets of the state are seeing solid job growth, while the majority of the state is still struggling with chronically-high unemployment. In January, state job numbers show that 27 of Washington’s 39 counties had unemployment rates of 7.1 percent or higher – nine of those counties were above 9.1 percent.
The employer community has reasons to be concerned about the impact of the proposed revenues on economic vitality, particularly in still-struggling communities and on marginal businesses. As well, as the Yakima Herald-Republic editorial board says, the public has an interest in the budget negotiations.
Difficult negotiations, for certain.