OLYMPIA – House Democrats unveiled their 2015-17 operating budget plan on Friday – a budget that will add $3.2 billion in additional K-12 investments over the next two years compared to the 2013-15 budget. The HDC proposal is the first budget proposal on the table that puts the state in full compliance with the Supreme Court’s McCleary ruling, which mandates the state adequately fund basic education by 2018.
“After seven years of cuts totaling more than $12 billion, we have to take an honest look at the state of our state,” said House Majority Leader Rep. Pat Sullivan (D-Covington). “We have to ask: ‘Is this really what we want?’ This budget is a stand against mediocrity. Just being ‘Okay’ is not acceptable.”
“This budget keeps our promises to Washington’s one million kids,” said Rep. Ross Hunter (D-Medina), House Appropriations Chair. “We’re making the biggest investment in student success, mental health, and middle-class families that our state has seen in decades. It’s a responsible budget that meets the needs of our state and balances over four years.”
Highlights included in the House Democratic Budget Proposal:
- $3.2 billion – Additional K-12 spending, a 21% increase in funding over last biennium
- $1.4 billion in K-12 policy adds that will count towards that state’s McCleary obligation including:
- K-3 class size reduction
- Full funding for all-day kindergarten for every child in the state
- Materials, supplies and operating costs
- Supports to prepare students for college and careers
- The remaining $1.8 billion investment pays for the policy decisions made towards fully funding education in the 2013-15 budget.
- $1.4 billion in K-12 policy adds that will count towards that state’s McCleary obligation including:
- $385 million – Restore cost-of-living adjustments for school employees.
- $227 million – Expansion of quality early learning and childhood education.
- $256 million – Investments in higher education including two years of tuition freezes, student financial aid, and high-demand, high-salary degrees.
- $100 million – New mental health capacity to ensure that people get the help they need in their time of crisis.
- $9.6 million – Restore previous cuts to the state’s Food Assistance program that feeds hungry children, families, and seniors in the state.
As a result of an unfair and outdated tax structure, state revenues are becoming increasingly inadequate to pay for essential state services like basic education, health care, and prisons. The state doesn’t have adequate resources despite a growing economy. After seven years and $12 billion in budget cuts stemming from the Great Recession, many lawmakers believe now is time to act on revenue reform.
“We have the most unfair tax structure in the nation,” said Rep. Reuven Carlyle (D-Seattle), House Finance committee chair. “Our tax system hurts working families, the middle class, and small businesses, while the wealthiest individuals and corporations don’t pay their fair share. It’s time to build fairness in the system so that we can make critical investments in our state’s economy.”
The budget proposal includes a revenue package that takes a step toward restoring fairness in the system and generates the revenue needed to pay for essential state services. Those proposals include:
- Ask the wealthy to pay their fair share by imposing a 5% excise tax on capital gains profits.
- Revenues from the capital gains tax would go into a new “Student Investment Fund” to be used for K-12 and higher education investments.
- Reinstate the increase on the B&O service tax rate by .3%.
- A similar policy was enacted temporarily during the Great Recession.
- The proposal also increases the Small Business B&O Tax Credit for service businesses by nearly double, eliminating B&O tax for an additional 15,000 businesses each year. Services businesses making up to $100,000 in taxable income would pay no B&O taxes at all.
- Bring fairness to our home-grown online retailers by taxing transactions from out-of-state online retailers.
- Repeal and narrow seven of the 650 tax exemptions that have proven to be outdated, costly, and inefficient.
The total amount of revenue raised though this proposal is $1.5 billion. Additional details of the revenue package can be found here.
- K-12 and Teachers
- Early Learning and Higher Education
- Mental Health & Safety Net
- The Fair Share Tax
- Back to Business Plan
- Close Costly Tax Breaks
The operating budget, HB 1106, is scheduled for a public hearing on Monday, March 30 at 1:30 p.m.
Budget documents can be viewed at: http://fiscal.wa.gov/BudgetOBillsHouse.aspx
Washington state would lead the fight against cancer under legislation introduced by Sen. Cyrus Habib, D-Kirkland and Rep. Ross Hunter, D-Medina. The legislation, SB 5808 in the Senate and HB 2194 in the House, would raise the tax on cigarettes by 50 cents per pack and invest the money in cancer research, prevention and care.
Both Habib and Hunter are cancer survivors. Habib lost his sight at the age of eight due to a rare form of childhood eye cancer, and Hunter survived non-Hodgkin’s lymphoma.
“This is a transformative opportunity for cancer research and for Washington,” said Habib. “As federal funding for cancer research diminishes, the states need to step up and support this critical and growing research sector. We have the opportunity to make Washington a national leader in cancer research, create jobs and grow our economy in the biotechnology sector, while providing the best possible cancer care and prevention for Washingtonians and people across the world. This bill will quite literally save lives.”
“As a two-time cancer survivor, I know the importance of high-quality treatment,” said Hunter. “The Seattle area has long been at the leading edge of cancer research and I want to make sure we stay that way. This funding will improve lives around the world and have a significant economic benefit here in Washington.”
Cancer is the leading cause of death in Washington and is the leading cause of childhood mortality due to disease. Many of the state’s high rates of cancer can be prevented and treated, particularly if detected early and patients have access to the most effective care, the lawmakers said. Washington has an existing infrastructure of world-class cancer research and care centers for children and adults that can develop and apply new techniques for the prevention of cancer and care of cancer patients throughout the state.
The funds raised by the proposal would be used to fund research programs at the Fred Hutchinson Cancer Research Center, the University of Washington Medical School and other local research institutions. The proposal would prioritize sustained investments in research with the greatest potential to improve health outcomes and grow our economy. The research proposals would be reviewed by independent, scientific committees to ensure efficiency and accountability. Texas and other states have created similar dedicated funds for cancer research.
The proposal would encourage the growth of biotechnology facilities in Washington, like the Juno Therapeutics immunotherapy research and manufacturing facilities recently announced in the Puget Sound region. These and other innovative new treatments are already improving care at local hospitals like Seattle Children’s hospital.
SB 5808, the Senate version of the bill, has passed out of the Senate Health Care Committee with strong bipartisan support. The lawmakers are optimistic that the policy will be incorporated in the budget proposals soon to be presented in the House and the Senate.
Just before session started this year I had a chance to attend the Facing Race legislative forum. Hosted by several local and national organizations, it was a chance for me to hear stories and facts about a variety of social justice topics, including Legal Financial Obligations. Some of the repeating themes were how hard it is for indigent people to get out from LFOs after they are released from prison, and how disproportionately people of color are impacted by this system.
LFOs are the fees, fines and costs that people convicted of crimes are charged in addition to their criminal penalties, like jail time. In Washington the average LFO amount is $2,450 and the interest rate on these is 12%. Considering up to 60% of former inmates are still unemployed a year after they get out of jail, requiring them to pay such large fines can put them into a crippling spiral of debt, homelessness, and recidivism.
People who commit crimes should pay for the hurt and damage they caused – hence our criminal justice and prison system. The goal here is to provide a deterrent and take people who are likely to commit new crimes out of circulation. Once they get out of prison, society has a huge interest in encouraging them to get jobs, find housing, support themselves and their children, and in general become contributing citizens. A person with unpayable LFOs can’t achieve any of these things.
There are several other problems with the LFO system. There are a number of disturbing statistics that suggest people of color, who are already disproportionally represented in the criminal justice system (black residents are five times more likely than white residents to be in prison), face unequal levying of fines. This reliance on revenue from fees and fines creates a compromising position for law enforcement – forcing a choice between a just enforcement of the law or raising revenue. I do not want us to land in a situation like that of Ferguson, where a report by the Department of Justice sites high court fines and fees as a contributing factor in the unraveling of the criminal justice system in that city.
Another problem is the sheer un-collectability of the LFOs. Analysis by House staff indicated that 80% or more of these obligations are uncollectible, mostly because the offenders are indigent. It’s also expensive for the government, because once many of the people fail to pay they are thrown back in jail, which costs way more money than the amount of the unpaid fines.
House bill 1390 addresses some of the problems of LFOs. The bill stops collecting usurious interest on non-restitution portions of LFOs, and ensures that courts can’t impose costs on defendants who are indigent at the time of sentencing. A lot of these court costs were created in an effort to keep the court system whole in times of shrinking state support, and in hindsight were a bad decision.
The bill passed out of the House on Monday with only 4 nay votes. It’s now sitting in the Senate’s Law and Justice committee. I sincerely hope they follow their House colleagues and take this reasonable step to reduce recidivism and help people put their lives back together. I encourage you to read this report by the ACLU of Washington and Columbia Legal Services on how a broken LFO system has created modern day debtor’s prisons. And as always, thanks for the thoughtful feedback on this issue that several of you sent in to my office.
Budget & Policy analysis of data from 2012 ACS 3yr data and Washington State Department of Corrections Fact Card, June 2014; http://www.doc.wa.gov/aboutdoc/docs/msFactCard_000.pdf
 “Latino defendants face significantly higher fines than white defendants, even after the seriousness of the offense and offender’s record are taken into account.” Washington State Minority and Justice Commission, “The Assessment and Consequences of Legal Financial Obligations in Washington State,” August 2008
OLYMPIA – With just over a month to go in the 2015 session, lawmakers from the 48th legislative district will host a town hall to provide an update on bills working through the Legislature in Olympia.
Senator Cyrus Habib, Representative Ross Hunter, and Representative Joan McBride will be available to take questions and seek feedback from the community at a town hall meeting on Saturday, March 14 at Redmond City Hall.
“We count on your input to help us make important decisions on issues like funding education, investing in transportation, creating jobs and protecting our environment,” said Sen. Habib. “As we pass the halfway point of the legislative session, your feedback will help us make the right decisions for the 48th district and for all of Washington state. I hope that you’ll be able to attend our town hall event, and if you can’t come please feel free to contact any of our offices so we can still hear from you!
“We’re half way through session and just wrapped up several days of passing bills off the House floor,” said Rep. Hunter. “Our focus now for the next few weeks will be on rolling out a responsible and balanced budget proposal that meets our constitutional obligation to fund education without damaging mental health or other key parts of the budget.”
“I am honored to carry the message of the 48th district down here in Olympia,” said Rep. McBride. “Although the legislative session is halfway over we have much important work still ahead of us. I look forward to having a meaningful dialogue and hearing the comments and concerns of the people of the 48th district.”
The Eastside lawmakers will provide a brief overview of the challenges and opportunities facing the state in the current legislative session at the town hall. They also want to hear from 48th district residents on what issues are important to them.
The 105-day legislative session is scheduled to adjourn for the year on April 26.
48th Legislative District Town Hall
Redmond City Hall
15670 NE 85th St.
10 a.m. – noon
Saturday, March 14, 2015
I am really enjoying these posts from Linda Myrick’s 4th graders at Somerset Elementary in Bellevue. This particular piece needs broad circulation, and I will be sending it to all the members of the House. We have three more days of floor debate this week and the advice is very topical.
State legislatures typically meet for a relatively short period of time each year and consequently are very deadline driven. Congress works on things until they are ready to be brought forward, but in most states (including Washington) the dates are relentless and serve to help the body focus on what is likely to get done this session and what is not.
Friday, Feb. 27 was our first fiscal cutoff – the date by which all bills that spend money have to pass out of a fiscal committee or they die. Like deaths in bad movies, sometimes dead bills come back to life and wander around like zombies, but most of the bills that didn’t pass out of the Appropriations committee are dead for real. The one big exception is bills that either raise money or cause a deep structural revision in how we fund things. These are Necessary to Implement the Budget, or NTIB. This is a coveted status as it means you are exempt from cutoff dates.
Over 200 bills were referred to Appropriations, and only 91 passed out before we adjourned at about 10 p.m. on Friday. This year, given our budget concerns, we were pretty brutal on spending proposals. Lots of interesting ideas either had “null and void” clauses, or had most of the spending ripped out before we passed the bill. (A “null and void” clause means that if the bill isn’t specifically funded in the budget, it’s as if the bill didn’t pass, and it never gets published in the law books. These allow us to continue to work on bills until we make funding decisions in the budget.)
Many bills this year proposed grant programs. These ranged from tens of thousands up to tens of millions. In almost all cases we removed these from the bills, as we can fund grant programs in the budget without putting them permanently into statute.
The budget this year is going to need to focus on a handful of priorities:
- Funding “basic education” so that we comply with the constitution as per the Supreme Court’s McCleary decision.
- Fixing our mental health system to respond to the emergency room boarding decision from last year and the upcoming “Trueblood” decision that will require us to take action more quickly on forensic cases where the suspect is waiting for an evaluation or treatment in a jail cell.
There are lots of other things we are going to need to do (like early learning, higher education, adequate rates for the facilities housing our low-income senior and disabled populations, etc.) but these two are the top of the list. Large requested increases in funding in other areas are going to be very difficult to do, and my committee avoided most spending increases. We did pass out a number of expensive mental health bills that are going to need to be more carefully organized. The bills come from two different committees and the ideas in them overlap. You will see more work on this in the next two weeks.
One big issue we addressed was the idea of creating a new medical school at Washington State University (HB 1559). The bill was quite contentious. The basic pitch from the proponents of the new medical school is that we need to create more doctors willing to serve in rural Washington. This is indisputably true – the question is how, and at what cost?
First, the biggest determinant of where doctors will actually practice is where their residency is located. Most residencies in Washington are currently west of the mountains, and there are not enough to support all the medical school graduates we have today, let alone new ones. To get new residents in Eastern Washington will require subsidies and complicated work to maximize federal reimbursement.
The next largest determinant of where a new doc will set up shop is the offer of loan repayment assistance. Our state has a program that helps new docs with loan repayment if they practice in a rural or otherwise underserved area. It has been suspended for the past four years of the recession, but I want to bring it back this year. It is not large enough to solve the problem and would need to be expanded, probably by at least twice as much.
We are currently training 40 first year and 20 second year medical school students through the University of Washington medical school in Spokane. This program costs about $5 million a year. Those students are part of a multi-state program set up by the late Sen. Warren Magnuson called the Washington, Wyoming, Alaska, Montana and Idaho Collaboration, or WWAMI. Unless we are going to shrink the UW program (which would be a mistake, as it is the top rated family practice medical school in the country) we need to continue to operate the Spokane UW operation, and shift the money back from WSU to the UW.
I tried to amend HB 1559 to require the state to fund the following items before WSU could create a new medical school:
- $16 million for new residencies
- $8 million for loan repayment assistance
- $9.8 million to reimburse the UW for the Spokane-based program
- Whatever it actually costs to run a WSU med school (as opposed to just capital and start-up costs)
I did not have the votes to sustain the amendment and withdrew it. However, we should be very, very clear that just setting up a medical school in Eastern Washington won’t magically convince new doctors to reside there. There is much discussion that needs to happen before a decision on a WSU medical facility is made, and I welcome your thoughts.
Really, really good advice from the 4th graders in Linda Myrick’s class at Somerset Elementary in Bellevue.
Again, fabulous advice for State Legislators from Linda Myrick’s 4th grade class at Somerset Elementary in Bellevue.
Last week’s newsletter on Gov. Inslee’s Carbon Action Pricing Model got a lot of comments – about three times the normal amount. Thanks for reading it! The bill has arrived in the Appropriations committee and we will spend some time looking at it before taking action, so I have time to work through all the details.
Readers of my newsletter and blog brought up a few concerns that I felt I should respond to. Here are my responses to the most common ones.
Why should we act – China, India, etc. are far larger than us and aren’t acting…
There are two ways to respond to this concern. First, I can quote Mahatma Gandhi “You must be the change you wish to see in the world.” This may be unsatisfying to some readers.
Second, I can point to how much of the world’s economy (and carbon emitters) will soon be covered by some kind of carbon pricing scheme, including China. The following graphic from Sightline shows the expansion of carbon pricing strategies, including planned rollouts over the next few years. We would not be acting alone. For more detail read the Sightline article.
Cap and Trade or Carbon Tax? Why one over the other?
Lots of people had very firm opinions about the greater simplicity of a carbon tax instead of a cap and trade system. Many others wondered why I even brought it up.
A cap and trade system decides annually how much carbon is allowed to be produced in the economy and auctions out allowances. It adjusts for “edge effects” like the coal power plant partially owned by PSE in Montana that produces a lot of the electricity in the state by adding charges to the power that’s imported, aiming to get PSE to shift to a lower-carbon source. The price floats as carbon producers try to find the best way to make their product and produce less carbon as a by-product.
There are concerns that the auction system can be rigged, or that there will be undue influence by large players in the system. These are legitimate concerns and can be best addressed by having lots of transparency over the market.
With a carbon tax on the other hand, the state sets the price of carbon, and then the amount of carbon produced by companies in the system adjusts to match the price. It’s simpler – there are no auctions, and the permits can’t be traded. I’ll point you back to my friends at Sightline for a more in-depth explanation of the difference between these two.
In reality, both systems would be implemented with some constraints that would make them act more like each other. If you had perfect information about what the market would do, the two systems would end up identical – you could set the tax rate at exactly the level that would make the amount of carbon you want produced happen or vice-versa. A cap and trade system always has a floor price and a ceiling, making them look somewhat like the tax model.
There has been a lot of research in the Governor’s office on the cap and trade model, and he believes this is the best solution for our state. We’re looking at carbon tax alternatives so we can make an informed decision, but I think either system can work.
The University of Washington is a big producer of carbon. Isn’t this a problem?
The UW has a steam plant that produces a fair amount of carbon, meaning they would have to buy permits. Just like other power producers they should look carefully at alternatives to how they run the plant today – the alternatives may turn out to be less expensive than the current system once all the external costs are taking into consideration.
The UW gets direct general fund subsidies. We can fix any problem the UW has with a direct appropriation. They would then be in the same financial position, but have some upside if they could find a way to reduce their carbon output, and they would be more motivated to do so.
Everyone knows that companies pass costs like this down to the consumer.
Everyone “knows” lots of things that just aren’t true. Some of the costs will most certainly be passed through to consumers, but not all. The reference I give is to a study of gas taxes, which are much more direct than the proposal here.
Since we need to raise revenue to fund the education increases called for by McCleary (or, if you prefer the Republican frame, the non-education expenses pushed out of the budget by the McCleary-driven education increases) it seems to me that we have two options: a tax that applies mostly to Washington taxpayers, or one that to some extent taxes large out-of-state companies. I’d prefer the latter.
As I mentioned, the bill has now arrived in my committee. Because it raises revenue it is exempt from cutoffs that apply to bills that are not “necessary to implement the budget” as we say down here. This gives us a couple of weeks to organize a strong hearing, get feedback from economists, etc. I have some questions to still address, and want to read through the text of the proposal another time before I’m comfortable with it. Thank you for all of your thoughtful feedback on this and other issues I’ve been writing about.
More pearls of wisdom from 4th graders in Linda Myrick’s class at Somerset elementary in Bellevue. not sure if this is a McCleary reference, but it’s probably pretty good advice in general.
1611 116th Ave NE,
Bellevue, WA 98004
PO Box 40600
I’m proud to represent Bellevue, Redmond, Kirkland, Medina, Clyde Hill, Hunts Point, Yarrow Point and a little bit of Issaquah in the Washington State House of Representatives.
I am chairman of the Appropriations Committee, responsible for crafting biennial budgets. I also chair the Washington State Economic and Revenue Forecast Council.