Legislative Commentary: February 21, 2019

Dear Friends,

This fifth week of the 2019 legislative session began with a snow day for a lot of people, due to the 18 or so inches that fell (and stayed) around the Olympia area in a four-day period. But by today, the “snowmageddon” (or “snowpocalypse”) was mostly over. Instead, we were met with the newest of the tax threats coming from the majority party, which are so far-reaching they could be called “taxmageddon.” Keep reading for the details.

Even though road conditions slowly got better as the week went on, the weather really did a number on the visits to my Senate office. But David Buri, with Eastern Washington University, still knows from his years as a 9th District legislator how to reach the Capitol in spite of adverse winter conditions; it was a pleasure to visit with my former seatmate and members of the EWU board of trustees. I also had a couple of other meetings involving 9th District concerns – one about livestock ID, and another about broadband.

The snow didn’t keep me from speaking yesterday with employers gathered at the Association of Washington Business headquarters several blocks from the Capitol. But the because of the “snow day,” the committee hearing on my SB 5590 was cancelled -- it’s been rescheduled for this coming Monday in front of the K-12 Education committee. That’s my bill to give school districts the option of creating a fund to handle certain capital projects on a cash basis instead of rolling them into a bond issue.

Our scheduled sit-down with the reporters covering the Capitol also got put off. We’ll try that again in the coming week, assuming the weather cooperates, as there’s much to discuss.

List of majority-Democrat tax proposals gets longer

Democrats have a few more seats in the Senate this year than in 2018, and to use the baseball term, they seem to be “swinging for the fences” when it comes to new and higher taxes. March 1 is the deadline for the budget committee to take action on Senate bills, unless they’re considered part of the upcoming budget package. Here are some examples of tax bills that are moving along the committee path.

-SB 5116 – higher rates for electricity: How’d you like to pay higher rates for your electricity, and then pay still more to subsidize others so they don’t see their utility bill grow as much? Then you’ll appreciate the governor’s so-called “clean energy” legislation (Senate Bill 5116), which came before our Senate budget committee Tuesday.

There are many reasons to be concerned about the governor’s proposal. For the moment I’ll zero in on how forcing electric utilities to go all-renewable and consider the “social cost of carbon,” as the bill puts it, would treat people differently based on income level.

SB 5116 wouldn’t expect everyone to pay the same higher rates – meaning the “regressive” approach that was contained in the governor’s failed energy-tax last year. Instead, it would basically go easy on low-income households and expect middle-income customers to make up the difference.

Judging from the way representatives of electrical utilities answered questions in committee, I’d say about each middle-income household would be on the hook for $10-12 more per month. That’s by the time a utility passes along the higher cost of electricity from wind or solar, and the cost of “socializing” power so low-income people don’t get hit as hard financially.

If power was in short supply, and wind and solar represented the best answer, I might feel differently about the governor’s plan. But in our state, with its abundance of affordable hydropower, and a governor who has failed year after year to move his energy agenda forward, this legislation feels like it is motivated by politics, not economics.

-SB 5313 – higher property taxes for K-12: In 2017, the Republicans and Democrats leading the Legislature agreed on tax reforms that would put state government back into the position of primary provider for K-12 education, as the state constitution requires. The once-in-a-generation changes we made were essential to addressing the issues raised in the multi-year McCleary education-funding lawsuit.

To address the constitutional concern, and the funding inequities between school districts that led to the lawsuit in the first place, lawmakers agreed to put a “lid” on what school districts could raise through local levies. We offset that by increasing the state portion of the property tax for schools. Although everyone should have realized it would take time to get used to the new approach, many school districts don’t want to wait. They already want to do away with the cap on local levies.

State government has been sued over education funding twice in my memory (the first time being in the late ‘70s; McCleary is the second) and lost both times when the cases reached the state Supreme Court. Lifting the levy lid from where we set it in 2017 would move state government down the path toward another lawsuit, but the governor wants to take that risk. His proposal, introduced as Senate Bill 5313, was endorsed by the Senate’s K-12 committee today.

The bill is not a direct tax increase; it would simply give schools the option to propose a property-tax hike to their voters. But seeing how the Seattle School District already ignored the 2017 levy cap with the levy it put on the Feb. 12 ballot, there is no doubt that other districts will be pressured to pursue higher property taxes, if the levy lid is lifted.

-SB 5323 – proposed plastic-bag ban equals $150 million tax: This is another bill that came before our budget committee for a public hearing Tuesday. SB 5323 would ban single-use plastic bags across the state, and grocers would have to charge 10 cents for each full-size paper bag. That’s double what is being charged in places like Olympia, which already has a city-level ban on such plastic bags. The 10-cent charge means a nice margin for grocers who are able to buy paper sacks for 2-3 cents apiece, but here’s what really caught my attention: the state would also collect an estimated $10 million per two-year budget cycle, just from the sales tax generated by the 10-cent bags!

It’s estimated that consumers in our state use 2.5 billion bags a year. Imposing a 10-cent fee for a paper bag is expected to drop the demand to 700 million bags annually. That’s $70 million a year going to grocers, plus an estimated $6.3 million a year from applying state/local taxes to the total purchase. In all, SB 5323 would cost consumers more than $75 million a year, or $150 million per two-year budget cycle. That’s just to walk out of the store.