It’s crunch time in Olympia and there’s a lot of work left to do before we can head back home. At the top of the list is agreeing on a two-year operating budget. Now that the Governor, House, and Senate have released their budgets, negotiations must begin so that we can arrive at a final package that meets our obligations and responsibilities. This is always challenging, but even more so this year because of the Republican-controlled Senate. As a result, the Governor will need to call a special session so that we can finish budget negotiations.
This newsletter is longer than usual because I want to make sure you know what is in the House budget proposal, which I believe better reflects the values of Washingtonians.
House Operating Budget
I am very proud of the House budget. It funds our state’s priorities including:
- Fully-funding K-12 education and expanding pre-school opportunities for low income children.
- Expanding healthcare to over 280,000 more people, saving $265 million.
- Protecting the safety net, including care for vulnerable families, seniors, the disabled, and at-risk kids.
- Promoting jobs and economic opportunity.
In response to the McCleary Supreme Court decision, the House budget adds over $1.3 billion of new funding for public schools. If you compared total education spending to the current budget, the House proposal spends $1.9 billion more than the status quo.
You can get many more details about the proposal here and here.
In contrast, the Senate Republican budget writers put forth a budget that adds only $760 million to meet our McCleary obligations.
The Senate budget also cuts deeply into the safety net services that have been devastated by cuts over the last four years. The most damaging cuts include:
- Cutting child care thereby preventing low-income parents from working to support their families;
- Eliminating funding for training programs for low income parents at community and technical colleges;
- Cutting programs that help the disabled and mentally ill stay healthy and off the streets.
See a great graphic that compares the Governor, Senate and House budget proposals here.
House 
Transportation Budget
Last Tuesday, the House passed its $8.4 billion transportation budget. This budget helps finish construction projects on major highway projects and funds the completion of two new ferries currently under construction. Comprised of state, federal, and other funds, the budget provides $4.9 billion for existing capital projects and $3.5 billion for operating programs.
The budget (House Bill 1864) also saves millions of taxpayer dollars by reducing costs and implementing efficiency measures. These include the elimination of less-utilized ferry runs, a five percent reduction in toll operations, and staffing reductions in the Department of Licensing and the Washington State Department of Transportation (WSDOT).
Transit, Bicycle and Pedestrian Enhancement Package
I also support a package that provides additional funding to increase emphasis on tranportation choices for transit riders, bicyclists, and pedestrians. It targets community investments including funding for the Sunset Avenue path in Edmonds, and increases safety to address the nearly 400 statewide fatal and injury collisions involving pedestrians and bicycles each year.
This package includes:
- $300 million for New Transit Project Investments.
- $100 million for New Bicycle & Pedestrian Projects. Increased investments that enhance safety and mobility within our transportation system for people who choose to walk or bike. Supports bicycle paths, sidewalks, provides safe routes from residential areas to transit on state highways, city streets, and county roads.
- $100 million in New Funding to reduce Bicycle and Pedestrian Backlog. Funding to reduce the backlog of current bicycle and pedestrian projects so additional safety investments, including Safe Routes to School backlogs, can be addressed in communities throughout the state.
For more information on the transportation budget, check out this summary.
Closing Exemptions to Open Opportunities
Every two years, our budget writers carefully decide where to spend taxpayer dollars. Now we are looking at the other side of the equation–tax exemptions. This year, a citizens’ commission, the state’s expert audit and review committee, and the House Finance Committee are all reviewing the 640 tax exemptions, breaks, and loopholes in our state’s tax code.
It is estimated that tax exemptions cost about $24 billion each biennium. Many of these exemptions have been on the books since the 1930s. Lawmakers are now examining them closely and asking whether they still make sense. Do they actually create the jobs as they were intended to? Are these exemptions more important than providing a high quality education to the children in our state?
Based on the answers to these questions, the House has proposed reforms that close outdated tax exemptions and shift tax dollars to funding education–our paramount duty.
This week, the House passed HB 2038, the bill that contains these much needed tax reforms for our state. Some highlights include:
- Repealing reduced B&O tax rates and exemptions. About 40 industries in Washington receive a preferential tax rate, paying far less than similar businesses. This bill updates two preferential rates and an exemption that have not created economic benefit and are no longer justified.
- Repealing the sales tax exemptions for bottled water and nonresidents.
- Oil-Related Tax Exemptions. These exemptions were created decades ago and are based on outdated court interpretations, technologies, and business practices.
- Narrowing and Repealing the High Tech Business Exemption. In 2012 JLARC (Joint Legislative Audit and Review Committee) reviewed tax preferences for High Tech R&D and found no clear evidence that the state’s investments were directly creating new jobs.
We took several tax exemptions off the table in response to strong and logical arguments in opposition, including the beer tax and the tax on insurance agents.
Washington is a great place to live in, with a great quality of life. As we continue to recover from the Great Recession, we must make investments which will ensure that future generations are able to enjoy all that Washington has to offer. That means making tough decisions about tax exemptions and loopholes. The tax reforms that the House is proposing level the playing field by removing preferential tax rates which disadvantage other industries. The revenue generated will be invested in public education, which benefits all of us including businesses. A well-educated work force will promote economic vitality and well being, now and into the future.
When we talk about taxes, it is important to emphasize that we have an outdated, unstable revenue system in this state. The House revenue package is a step in the right direction to resolving these problems. We can’t afford to continue down the path we’ve been on.
It is an honor and privilege to serve the people of the 32nd legislative district. I always appreciate hearing from my constituents. We may not always agree, but we know that we are in this together. I look forward to coming to a budget agreement that will reflect our values and make the important investments that are essential for our future.
Sincerely,
Ruth Kagi
State Representative, 32nd Legislative District