OLYMPIA – House Democrats unveiled their proposed 2017-19 operating budget on Monday – a budget that will add $7.1 billion in additional K-12 investments over the next four years and will bring the state in full compliance on fully funding basic education.
In stark contrast to the proposed Senate Republican budget, the House Democratic budget makes key investments in early learning, higher education, human services, housing and homelessness, civil legal aid, parks, and quality care for the state’s aging and developmental disabilities population.
“This budget is about families and about their success,” said Rep. Timm Ormsby, chair of the House Appropriations committee. “It is a contract between generations that keeps our promise to 1.1 million school kids.”
Highlights included in the House Democratic Budget Proposal:
- $7.1 billion – Additional K-12 investments:
- The Learning Assistance Program to accelerate student growth and close the opportunity gap.
- Parent engagement coordinators because families play a critical role in student success.
- Guidance counselors to prepare the next generation for life after high school – college and career.
- Addressing the teacher shortage crisis by:
- Raising beginning teacher salaries.
- Investing in their ongoing professional learning.
- Fairly compensating teachers.
- Including teacher COLAs as part of basic education.
- $400 million – Higher education investments to freeze college tuition at current levels for all students and provide State Need Grant assistance to 6,000 additional students.
- $106 million – Expansion of quality early learning programs and childcare resources for working families.
- $350 million – Mental health investments to better integrate our health systems and ensure that people, especially children, get the help they need in their time of crisis.
- $428 million – Health care investments for public health, long-term care, and fighting back on the growing opioid crisis.
As a result of an upside down tax structure, state revenues are becoming increasingly inadequate to pay for essential state services. The state has lost the ability, despite a growing economy, to meet all of its needs including fully funding education. After steep budget cuts stemming from the Great Recession, many lawmakers believe the state’s revenue system needs an overhaul.
“Washington state has the most upside down, regressive tax system in the country. Nothing about this system creates strong schools for our kids, helps build a strong middle class, or promotes a thriving business climate,” said Rep. Kris Lytton, chair of the House Finance committee. “Today, we’re solving the education funding challenge by being bold. Our plan is investing in a strong economy. We’re enacting tax code reform that creates a path to rebuilding a strong middle class and prosperity for all Washingtonians.”
The budget proposal includes a revenue package that takes a step toward fixing the tax code and generates the revenue needed to pay for public schools and essential state services. Those proposals include:
Building Wealth for Working Families (Real Estate Excise Tax Reform)
- Homeownership is one of the best ways to move into the middle class. Homes are one of the only major assets the average American can afford to invest in for their retirement. This proposal changes the current real estate tax rate to a progressive rate that will lower costs for working families buying a home under $250,000 and raises the rate for homes over $1 million.
Ending the corporate tax break on capital gains
- Only nine states still allow the tax break on capital gains. This proposal introduces a 7% excise tax on the sale of corporate stocks, bonds, and other gains with exemptions to protect retirement accounts, single-family homes, and more. This tax generally affects less than 2 percent of Washington tax filers.
- Washington businesses are at a competitive disadvantage against out-of-state online retailers who don’t have to remit sales tax. The House Democratic proposal levels the playing field by giving online marketplaces a choice: They can either collect and remit retail sales tax for Washington sales, just like every other business. Or they can report specific sales and use tax data to the Department of Revenue for collection.
Small Business Tax Relief
- The current Business & Occupation tax is an imbalanced tax burden that must fixed. The plan introduces a 20 percent increase in B&O tax rate on the state’s highest grossing businesses, while also reducing the tax liability for 72 percent of businesses to zero. Additionally, this plan creates a new small business deduction of $100,000 to businesses with taxable revenue between $250,000 and $500,000.
Closing Costly Tax Breaks
- Washington state has 694 tax exemptions on the books, which results in roughly $30 billion in taxes not collected each year. In past years, we’ve proposed closing these tax breaks and we are continuing to push for these to be closed. They are not worth the cost to our kids’ education—we should prioritize our kids over unnecessary and costly tax breaks.
The House operating budget proposal will be heard in the House Appropriations committee today at 3:30 p.m. The revenue package will be heard in the House Finance committee next week.