Today’s updated Washington state revenue forecast projects tax revenues to increase relative to previous forecasts by about $170 million for the remainder of the current 2013-15 state budget cycle and by about $140 million for following 2015-17 cycle. While the improved forecast is welcome news, the added resources will fall far short of the extra billions of dollars needed to maintain current investments and implement court-mandated improvements to schools in Washington state in the coming years.
To adequately fund basic education reforms policymakers will have to consider making sensible and equitable adjustments to the state tax system in order to generate the needed resources.
While opponents of taxes that support health care, community colleges and universities, public safety, and other investments argue that school improvements can be funded without tax increases, reality says otherwise.
The updated forecast projects state tax revenues will grow at an average rate of 4 percent per year through June 2019. However, just maintaining today’s reduced levels of public services, which were cut by more than $10 billion during the Great Recession, requires revenues to grow by at least 4.5 percent each year. And, that doesn’t account for the billions of additional dollars that must be invested in schools to improve basic education.
Despite recent improvements in revenue projections, it’s important to note that state tax revenues remain far below pre-recession levels, once the costs associated with rising fuel and energy prices and other factors of inflation are taken into account. As the graph below shows, as of June 2014, revenues remained about $900 million below 2008 levels. They aren’t projected to fully recover until 2017.
New Census data released today shows that Washington state was one of a handful of states where poverty increased between 2012 and 2013, while median income remained stagnant. The new numbers shed further light on the state’s uneven economic recovery and should serve as a call-to-action for lawmakers.
Washington state, New Jersey, and New Mexico were the only three states to see an increase in the total number of people living in poverty. Washington state-specific data include (see fact sheet):
- One in seven people (14.1 percent) live below the poverty line. This is up from 13.5 percent in 2012. For a family of three, the poverty line is defined as earning less than $19,530 per year.
- Child poverty remains stuck at 18 percent. The total number of children living in poverty was largely unchanged in 2013, except for children under five who experienced a small decline.
- Median household income remained stagnant. Median household income did not change between 2012 and 2013, but is still lower than it was before the Great Recession, which ended five years ago. However, the richest 5 percent of Washingtonians saw their earnings increase by 6 percent in 2013, while low and moderate income families experienced little, if any, growth (1).
The latest numbers are shocking, but not surprising given the high – and growing – degree of income inequality in Washington state. Lawmakers should be very concerned – an economy that works for such a small share of the population is not a recipe for long-term social and economic progress. If median income continues to stagnate while the costs of higher education, medical care, housing, and child care outpace inflation, more Washingtonians will struggle to meet basic needs (see fact sheet).
Rising poverty and stagnant incomes do not have to be a permanent part of the economic landscape. An equitable economy that gives everyone the chance to get ahead is the only path forward to keep Washington state a place where individuals, families, businesses, and communities can thrive.
Policymakers should pursue the following strategies to support an economy that works for all Washingtonians:
Raise wages for workers. Research shows that raising the minimum wage, combined with earned income tax credits (EITCs), provide significant boosts for working families earning modest wages. In addition, EITCs – like Washington’s yet-to-be funded Working Families Tax Rebate (WFTR) – are also the most powerful anti-poverty tool that we have.
- Invest in policies that support 21st century workers and their families. Recent health insurance enrollment data is a prime example of how these types of investments can help children and families in our state. Policymakers can further these trends by expanding and strengthening early childhood education, job training, and efficient transportation.
- Stop taxing poor people at a rate higher than any other state. Washington state has the most upside down tax system in the nation. Low income families pay a far greater share of their income in taxes than the highest income families – in fact, the poorest families pay 6 times more than the richest 1 percent. Relying on those with the least ability to pay to keep our revenue system going is neither responsible nor sustainable.
Reducing income inequality and poverty is possible if lawmakers establish a shared goal to make it happen. The cost of doing nothing is too great and puts the future of our children, families, businesses, and the economy at risk.
(1) Data analysis of income gains by quintile provided by Dr. Jennifer Romich with the University of Washington’s West Coast Poverty Center.
Census data released today shows that the number of people without health care coverage in Washington state (960,000) remained unchanged between 2012 and 2013. The new data, however, is not recent enough to capture the impact of Washington state’s implementation of the Affordable Care Act (ACA), which has enrolled over a half million people since the close of open enrollment earlier this year.
Washington state lawmakers were smart to embrace the ACA. As a result of our state’s decision to expand Medicaid and create a state-based Exchange, Washington Healthplanfinder, 552,000 Washingtonians were able to access affordable health care this year.
Next year’s Census data will begin to show the benefits of expanding health care coverage under the ACA in Washington state, but other national data collection efforts are already giving a preview. Data from the Centers of Disease Control show the national rate of uninsured is at its lowest since the late 1990s, and the Congressional Budget Office projects an additional 12 million people will become insured by the end of 2014. The CBO also reports that the ACA will decrease the federal deficit even more so than initially projected.
In response to today’s Supreme Court ruling in the McCleary case, executive director Remy Trupin issued the following statement:
With today’s ruling, attention now turns to the upcoming legislative session, one of the most important in recent memory.
The State legislature has been held in contempt for the first time in its history and the Court made clear that failure to pass a budget and plan for achieving full funding of basic education by 2018 will result in sanctions or other remedial measures. The message to lawmakers is this: act in 2015 or face a Court that has just issued its last warning.
As our amicus filing articulated, there is no responsible way to meet the funding requirements of McCleary without raising new revenue. We were encouraged that Justice Johnson referenced our brief during the contempt hearing on September 3rd, questioning the value of the hundreds of tax breaks on the state’s books when matched against the priority of educating our children.
Closing wasteful tax loopholes is a good place to start. In the coming months, we look forward to working with lawmakers and advocates to advance the full range of revenue solutions needed to ensure prosperity for all our kids.
Today, lawyers for the state will go before justices of the Washington Supreme Court in the latest showdown in the McCleary case on education funding. The Court has ordered state lawmakers to defend their lack of progress on meeting the requirements of the ruling, which calls for billions in new funding for K-12 schools by 2018. They face contempt charges and other possible sanctions.
In August, we filed an amicus brief with the State Supreme Court, making the case that new revenue was needed to adequately fund our schools and invest in a host of other services that kids need to succeed inside and outside the classroom. Ahead of the hearing this afternoon, our executive director Remy Trupin released the following statement:
The arguments in today's hearing and the ruling to follow will set the tone in the debate over education funding and the state budget during the 2015 legislative session.
We'll continue to track the developments in the McCleary case going forward, as it will determine much about the well-being of our children, communities, and economy in the years to come.
This week, over one million kids across Washington state are headed back to the classroom to begin another school year. Meanwhile, state lawmakers are headed back to court where they face contempt for lack of progress in fulfilling our constitutional obligation to fully fund basic education. It is a dramatic prelude to what will most definitely be a challenging budget year for policymakers. To make the best decisions for Washington state’s kids and our collective well-being in the future, it is imperative that policymakers recognize that the success of our kids depends on support both inside and outside the classroom.
For the nearly one in three (625,000) kids living in families that struggle to make ends meet in Washington state, the start of another school year presents a unique set of challenges. Kids that don’t have secure housing or adequate food find it difficult to perform well in school or attend on a regular basis. With unemployment still high, many of their parents lack stable employment, the stress of which can ripple throughout the family. In Washington state:
- Four of every 10 (39 percent) children are living in families that are struggling to cover the cost of housing. Last year over 30,000 kids in Washington’s public education system were homeless.
- One of every five children (20 percent) in our state live in households that have difficulty putting food on the table.
- Nearly one in three of kids (31 percent) have parents that are unable to find secure employment.
- Each of these indicators is far worse for children of color, who will represent the majority of school age children in the United States this year.
Research shows the impact of such adverse experiences can last a lifetime. In Washington state, lack of economic security is the number one adverse experience children face.
If we want to improve the educational outcomes for our kids, they need more than K-12. To be sure, a high quality K-12 education is essential for a child’s future success and is a basic right guaranteed to them under our state constitution. But resources outside the classroom are equally as important in setting them up for success in school and beyond. High quality early learning, access to affordable higher education, supports for parents trying to make ends meet while seeking employment, and health and human services that provide stability for children are critical investments for our kids, communities, and economy.
Some policymakers think our state can’t afford to make these investments in our children and families. We know the opposite is true - we can’t afford not to.
So, as students walk into their classrooms tomorrow and policymakers consider the education funding challenges before them, they should remember it takes a high quality K-12 system and a lot more to support children’s success in school. Let’s not pit education funding against other equally important investments that are essential to our collective future as a state. When our kids do better, we all do better.
To learn more about the economic well being of kids in Washington, take a look at our blog post for the 2014 KIDS COUNT database. For more information about our take on the education funding debate, read the amicus brief Pacifica Law Group filed on our behalf.
Please join us and our partners of the Reclaiming Prosperity series on Saturday, September 27th for a special event with former U.S. Secretary of Labor Robert Reich.
Tickets are only $5 at Town Hall. Click here to get yours before they sell out.
Now a professor of public policy at the University of California at Berkeley, Reich was named one of the 10 most effective cabinet secretaries of the 20th century by Time Magazine. He is the author of 13 books including Aftershock and Beyond Outrage, and presented the Sundance award-winning documentary Inequality for All.
Reich recently commended Seattle for leading a long-overdue movement toward a living wage. At Town Hall on September 27th, he will discuss national income inequality trends, the effect these trends are having on the poorest of the poor, how the income gap is “undermining our democracy,” and why Seattle got it right. Reich will be joined by an expert panel for an onstage Q&A.
Click here to get your tickets before they are gone! The program will run from 7:30 - 9:00 p.m. Doors open at 6:00 p.m.
We are proud sponsors of the Reclaiming Prosperity series. Additional partners include Citizen University, True Patriot, OneAmerica, Fuse Washington, the Progress Alliance, Working Washington, and Seattle University Law School.