Legislative Commentary: March 28, 2019

Dear Friends,

This week brought some happy news for those in the Legislature who like to spend, spend, spend. The year’s first state revenue forecast, released Wednesday, basically predicts there should be another $860 million available for the next state budget, on top of the billions that were already waiting when this year’s session began.

I’m encouraged by the revenue forecast for a different reason: because there already was plenty of revenue to pay for existing programs and services, and improve on priorities like special education and mental-health treatment, we now have hundreds of millions more reasons to talk about finally offering some relief to the hardworking taxpayers across our state.

There was no voting in the Senate chamber this week, as the Senate committees are instead focused on looking at House-approved bills. That allowed for more visitors from back home, including Palouse city administrator Kyle Dixon and Mayor Michael Echanove; Colin Hastings, executive director of the Pasco Chamber of Commerce, and Pasco business owner Rolando Rodriguez (accompanied by a fellow legislator, Rep. Alex Ybarra of Quincy, who serves the 13th Legislative District); Columbia Basin College President Rebekah Woods; and board members from Inland Power & Light.

Also, Monday was the day designated by Latino leaders to make their session visit to the Capitol. For me that included time not only with familiar faces but also with several officials representing their respective home countries: Consul General Miguel Velasquez, on behalf of Peru; Consul Clary Monzón, representing El Salvador; Consul General Edgardo Chávez, representing Honduras; Consul General Claudia Gatica, representing Guatemala; and on behalf of Mexico, Deputy Consul Eduardo Sosa.

New revenue figures make new taxes completely unnecessary…

Here’s how I put it in my January 11 commentary: “I can tell you there is absolutely no need for new taxes this year, considering how state government is in such good financial shape … The Legislature’s budget-writers will have more than enough revenue available to cover the cost of maintaining services and programs, while increasing the state’s investments in special education and mental-health services—two of the Senate Republican priorities for 2019.”

Now that the first of the year’s quarterly revenue forecasts is in hand, there is less than zero need for new or higher taxes, because state government is in even better financial shape than we could have imagined. Our side’s budget leader, Sen. John Braun of Lewis County, calls it the “best budget situation of the 21st century.” His latest Economic Sense policy paper lays out in detail how the Legislature is in a position to continue every state service or program at its current level and still have a whopping $3.75 billion left. That’s more than enough for the major new investments in special education and mental health we want to see.

What else could be done with so much revenue? To start with, the Legislature could give some of it back to taxpayers in the form of tax reductions. Back in January, I co-sponsored a bill to lower the state sales and use tax. SB 5610 didn’t get any attention then, but we could certainly have that discussion now.

I’d be open to making a larger deposit to the rainy-day fund, remembering how the Democratic majority blocked a scheduled $700 million deposit last year. And there are some smart ways to invest some of the extra revenue, like in the court-ordered replacement of culverts statewide to improve fish passage. The governor and his fellow Democrats have proposed raising taxes to pay for that work (through SB 5130), but why not use some of the surplus to get it done? That would be a win for taxpayers and for salmon (and orcas)—unlike the foolish idea of breaching the lower Snake River dams.

…but Democrats are still introducing tax proposals

In spite of the very positive revenue forecast, our Democrat colleagues are still coming up with ways to raise taxes. The Senate’s majority has proposed SB 5991 to increase the tax on real-estate transactions, just like SB 5130 would – but instead of putting the proceeds toward culvert removal, the revenue it generates would supposedly go toward education. And this new bill couldn’t be challenged by the people through a referendum.

Over in the House of Representatives, the majority has proposed House Bill 2145, which is another attempt to do away with the 1% annual limit on property-tax growth (approved by the voters through Initiative 747 in 2001).

The Senate’s Democratic majority has also revived a bill to lift the bipartisan cap on local school levies. The new SB 5313 would allow districts to pursue a 67% increase in their local levies, which is a smaller tax in statewide terms than the previous version of the bill. But it’s still a property-tax increase, plain and simple, right when most property owners are seeing lower school-related taxes due to the bipartisan decisions we made about school funding in 2017. This updated proposal also would put a lot more pressure on districts to pursue larger local levies, using state funding as a hammer. That’s a problem, because when school districts rely too much on local dollars, it moves the state closer to another lawsuit like the McCleary ruling that put a cloud over the Legislature for six long years.

These proposals are on top of the various Democrat tax ideas already on the table, from Governor Inslee’s energy tax to a bushel of taxes for transportation to the first-ever state income tax.

The House and Senate majorities are expected to release their 2019-21 budget proposals next week. But I also expect they will downplay the new-tax angle as much as possible, and focus on the “spend, spend, spend” part.