Schmudget Blog


Governor’s proposal to salvage community investments shows need for systemic tax reform

Posted by Kelli Smith at Dec 15, 2017 12:30 PM |
Filed under: State Budget
By Kelli Smith, policy analyst, and Andy Nicholas, associate director of fiscal policy

In his 2018 supplemental budget, Governor Inslee proposes to make progress on funding investments that support communities across Washington state. In an attempt to patch up the legislature’s flawed 2017-19 budget, the governor resorts to drawing down reserves to meet immediate needs, but he also plans to raise much-needed additional revenue through a new proposed tax on carbon emissions. Although the governor’s proposal is a reasonable step forward, the funding shortfalls the state is currently facing were foreseeable. The need to reduce the essential rainy day fund could have been avoided had lawmakers used the many opportunities they’ve had over the last several years to enact long-term solutions to fix our broken tax code.

Some highlights of the governor’s proposal

The governor’s proposed budget contains some promising investments. In the area of education, he proposes raising teacher salaries during the next school year. The legislature’s failure to fund adequate salaries for educators in the current state budget prompted the state Supreme Court to intervene and require salaries to be boosted by September 2018. Under the governor’s proposal, total funding for schools would increase by about $950 million compared to current funding levels. Around $600 million of that additional investment is generated by a one-time accounting trick – reducing the amount of funds that will be allocated to school districts in the coming school year with an offsetting funding increase in the following, 2019-20 school year, which falls just outside the current state budget period. 

To support healthy people and communities, the governor proposes to inject more than $100 million in additional resources to help ensure Washingtonians can access effective mental health treatment. Most of the funding would be used to improve care at state psychiatric hospitals, which have been under the scrutiny of the courts and the federal government after years of chronic underfunding led to inhumane conditions at those facilities. The legislature added funding for psychiatric hospitals in the current budget, but not enough to comply with federal standards. The governor’s proposed supplemental budget is a reasonable step toward meeting our state’s mental health needs, but significantly more funding will be needed in the years ahead to build a reliable and adequate mental health system.

The foreseeable shortfalls from the legislature’s budget

In late June, after multiple special legislative sessions and months of stalemates, lawmakers hastily enacted the current 2017-19 budget. That budget penciled out with the use of short-sighted fixes and temporary accounting gimmicks. For example, the legislature assumed they’d see about $100 million in unrealistic savings from efforts to reduce the costs of prescription drugs and provide health care to Washingtonians with low incomes. In addition, lawmakers underestimated the cost of efforts to fight wildfires by at least $40 million. The governor addresses all of these flaws in his 2018 supplemental budget, mostly by tapping budget reserves.

Most important, legislators failed to enact any long-term reforms to equip our tax code to meet the changing needs of our communities. Until it is reformed, our inadequate tax code will continue hampering efforts to build thriving communities in every corner of Washington state. While the state economy and the capacity to fund important investments has grown enormously since the Great Recession, the tax code has made it impossible to do so.

The truth about school funding and community investments 

In the last several years, lawmakers made significant investments in public schools, but the reality is that those boosts don’t represent actual increases relative to economic growth. And even with the additional investments included in the governor’s proposal, state spending remains near historic lows. In today’s dollars, the proposed levels of overall community investments in our state are actually lower than Recession-level spending. As the chart below shows, education spending in the governor’s proposed budget for the 2017-19 budget cycle will not even reach the level it was at a decade ago. And investments in every other value area have dropped significantly since then. This is the big picture that lawmakers must focus on when they meet again in January.

[Click on image to enlarge.]

gov_2018_budget

The governor’s proposal is a measured step forward given the limited good choices available to meet our state’s pressing needs. But the need to resort to drastic measures like tapping the rainy day fund could – and should – have been avoided. Had lawmakers come together and used their many chances to enact long-term reforms to the tax code, the budget picture would be much brighter. To his credit, the governor announced that he will unveil a revised proposal to tax damaging carbon emissions in January 2018. That proposal could help create a more sustainable state budget in the short term while reducing air pollution in the long run. The governor’s previous calls to close the tax break on high-end capital gains would also help bring more balance to our inequitable tax code while generating billions of dollars in additional resources for schools and other priorities in the years ahead. 

Cleaning up the tax code now – including forward-thinking proposals like closing the tax break on capital gains and enacting a carbon tax – would preserve and bolster funding for investments that benefit all Washingtonians. If lawmakers start taking steps to fix the tax code this coming session, it could also save future legislatures from having to drain reserves in order fund the needs of our schools and communities.

*************

Want to receive the latest news, updates, and analyses from the 
Washington State Budget & Policy Center in your inbox? Sign up here.

*************

 

 

 

 

 

 

 

 

Updated State Revenue Projections Show Legislators Need to Do More in 2018 to Fulfill their Obligations to Communities

Posted by Kelli Smith at Nov 20, 2017 02:10 PM |
Filed under: State Revenue

The new Economic and Revenue Forecast Council report shows our state has $319 million more to invest over the current biennium than lawmakers previously expected. This small change will have a negligible effect on lawmakers’ ability to pay for K-12 schools per the Supreme Court’s McCleary mandate and to balance the books in the 2018 legislative session. Revenues are still just barely at Great Recession levels when we account for economic growth (see chart below) – and that’s despite this year’s historic increases in resources. While those increases were a step in the right direction, the Supreme Court still says the legislature’s school funding plan is about $1 billion short of fully funding schools. And legislators also can’t lose sight this session of other critical areas of the budget, such as early learning and behavioral health. 

The revenue growth from the latest revenue forecast won’t come close to filling the $1 billion McCleary gap, let alone ensure other areas of the budget are fully supported. Lawmakers can’t continue to ignore the reality that our tax code still isn’t built to support the needs of our state. They must take action to ensure that we have adequate revenue to fund schools and other community investments, and that starts with cleaning up the tax code.

[Click to enlarge.]

Nov_2017_revenue_forecast

 

The good news is that our legislature has an opportunity in January to make meaningful progress on McCleary in the right way, by its 2018 school-year deadline, in a way that also supports strong investments in our communities into the future. If lawmakers can get real about fixing our upside-down tax code – one in which Washingtonians with low and middle incomes pay up to seven times more in state and local taxes as a share of their income than the wealthiest 1 percent – then our state will not only benefit from a tax code that better reflects our values, but it can also have more resources to support thriving communities.

Lawmakers can take steps next session to start building on the progress they made earlier this year. They should prioritize implementing common-sense, lasting fiscal policies – not short-sighted, one-time fixes. These are a few policies they can begin work on as soon as they get to Olympia in January: 

  • Eliminating the 1 percent property tax revenue cap that threatens resources for our schools; 
  • Making a tax on sales of real estate more equitable by reducing the tax rates on the sale of lower-valued properties and increasing the rates applied to properties that sell for more than $1 million; and
  • Closing the tax break on capital gains, which would both begin to rebalance our tax code and bring in much-needed revenue to close the gap on McCleary

By taking these steps, lawmakers can set up a bright future for Washington state by ensuring that our state can invest in the things we all value: excellent schools, of course, but also things like child care, long-term care for seniors and people with disabilities, and mental health and homelessness supports. Our state’s challenges are surmountable, and solutions are within reach if lawmakers get serious about reforming our tax code so that it provides for the well-being of all Washingtonians.

*************

Want to receive the latest news, updates, and analyses from the 
Washington State Budget & Policy Center in your inbox? Sign up here.

*************

Supreme Court’s McCleary Decision Shows that Lawmakers Should Clean Up Tax Code to Invest in Schools

Posted by Kelli Smith at Nov 15, 2017 03:55 PM |
Filed under: State Revenue, Education
Statement by Misha Werschkul, executive director:
 
The Washington State Supreme Court has made it clear that the legislature must take more steps to fulfill its McCleary mandate to amply fund schools. Although lawmakers did smartly enact some new investments as part of their school funding plan this past session, the court has determined that the legislature must do more to set up every kid and every classroom for success by the 2018-19 school year. The way to strengthen investments in K-12 schools while supporting investments in other priorities that strengthen our communities – like behavioral health, health care, and early childhood education – is to clean up our tax code, not rely on more short-sighted, one-time fixes.

The Budget & Policy Center continues to recommend common-sense reforms that would clean up the tax code, such as: eliminating a harmful property tax limit that arbitrarily restricts resources available for schools (see our amicus brief to the Supreme Court on the topic); making the real estate excise tax more equitable; and closing the tax break on capital gains.
 

Ultimately, lawmakers must take steps to invest in our schools and our communities during the 2018 legislative session. The court has given the legislature until the end of the session to ensure that students, classrooms, and teachers have what they need on the first day of classes in 2018. The solutions are within reach if lawmakers get serious about cleaning up the tax code.

Three Reasons Why the House GOP Tax Plan is Bad for Washington State

Posted by Kelli Smith at Oct 30, 2017 03:20 PM |
Filed under: Federal Issues

Republican leaders in Washington, D.C. have introduced a harmful plan to give large tax cuts to the wealthiest few while jeopardizing funding for health care, education, and other investments that benefit working families. Take a look at our latest fact sheet to see how the plan would negatively impact Washingtonians with low and middle incomes.

This fact sheet was updated on November 15, 2017.

[Click the image to enlarge.]

 House GOP tax plan 11 15 2017

Trump-GOP’s Tax Plan Will Give Wealthiest 1 Percent of Washingtonians Even More Preferential Treatment

Posted by Kelli Smith at Oct 11, 2017 05:15 PM |
Filed under: Federal Issues
By Kelli Smith, policy analyst, and Andy Nicholas, associate director of fiscal policy

The numbers on the Trump-GOP federal tax plan make one thing abundantly clear: The plan would be an enormous boon to the wealthiest 1 percent of Washingtonians. The numbers also make it clear that it is not a plan built to expand opportunities for working families. The average tax break for those in the top 1 percent would be 1,000 times higher than for those in the bottom fifth of Washington’s households. These tax cuts would drain federal coffers by trillions of dollars over the next decade. This could result in immense cuts to education, health care, infrastructure, child care, and other essential public investments that benefit us all.


In Washington state in particular, people should be especially concerned about the proposal to gut the federal tax code. That’s because our state tax code is already heavily rigged in favor of the wealthiest and most powerful, and it disproportionately harms people of color. People with low and middle incomes already pay up to seven times more in state and local taxes as a share of their income than the top 1 percent. And this takes a heavier toll on many Black, American Indian, and Latino Washingtonians, who make up a disproportionately larger share of those income groups than whites do – because of historically racist policies that have denied them equitable access to opportunity. 

According to analysis by the Institute on Taxation and Economic Policy, 63 percent of federal tax cuts for Washingtonians in the Trump-GOP tax plan would go to the top 1 percent. As the chart below shows, people with low and middle incomes would see a very small tax reduction on average. While people in the lowest-income group in Washington state would see an average tax cut of $100 under the plan, people in the wealthiest 1 percent would receive an average tax cut of more than $100,000. (Of note, the average annual income among the top 1 percent of Washingtonians is about $2 million.)

[Click to enlarge.]

avg_tax_cut_by_inc

The enormity of the tax cuts under this plan can’t be rationalized by the top 1 percent's comparatively higher income levels, either. Even when Trump’s proposed tax cuts are calculated as a share of income, the tax cuts at the top would be much higher than those at the bottom. The wealthiest 1 percent would get a tax cut that amounts to a 5.2 percent of their annual income. By contrast, those making the least would see a tax cut that amounts to just 0.6 percent of their incomes. People in the middle don’t fare much better. In fact, every income group in the bottom 95 percent would see an average tax cut that amounts to less than 1 percent of their income. In other words, any lawmakers who are saying this plan is designed to help the middle class are lying. 

[Click to enlarge.]

avg_cut_as_share_of_income

Further, it’s important to note that not all Americans – or Washingtonians – would get a tax cut under this plan. One in six Washingtonians would actually see a tax hike under the plan. Ultimately, many of those in the middle would contribute more while the top 1 percent get a break. That is not sound policy – especially in our state, where working families are already paying more than their fair share while the wealthiest get a special deal. 

[Click to enlarge.]

share_with_increase

Adding insult to injury, this plan does not include other sources of revenue to offset the huge tax cuts for millionaires. As a result, these giveaways will create a gaping hole in the federal budget. Without other revenue to fill that hole, investments that strengthen our economy will be at risk. And it’s a safe assumption, given this presidential administration, that those cuts won’t come at the expense of the top 1 percent. Instead, the shortfall will be used as an excuse, either now or in the future, to undermine investments that help low- and middle-income Americans – by cutting programs like health care, education, job training, and the like. 

This tax plan, the latest in a series of federal proposals designed to benefit the very wealthiest, lacks any foresight about the real needs of everyday Americans now and into the future. Washingtonians need a plan that actually helps all families have the opportunity to thrive – not a plan that only serves to exacerbate our upside-down tax code. 

*************

Want to receive the latest news, updates, and analyses from the 
Washington State Budget & Policy Center in your inbox? Sign up here.

*************

New Forecast: Big Boost in Resources for Schools, But Revenue Still Stuck at Recession Levels

By Andy Nicholas, associate director of fiscal policy, and Kelli Smith, policy analyst

The latest Washington state revenue forecast confirms that the revenue measures enacted during this year’s legislative session, in conjunction with the growing economy, will generate some $6.1 billion in new state resources for schools and other community investments over the next four years. After years of gridlock in Olympia over raising new revenue to fund schools, it is a significant victory for Washingtonians that lawmakers were finally able to come together in 2017 and make needed investments that will benefit all our communities. To ensure the well-being of those communities now and in the future, lawmakers must strengthen and build upon these kinds of gains. If they don’t take steps to clean up Washington’s tax code, these new and much-needed resources for our most important priorities could rapidly evaporate in the coming years.

The Economic and Revenue Forecast Council now projects a boost of $2.4 billion in state revenue over the 2017-19 budget cycle, a nearly 6 percent increase in revenue since the previous forecast in June. Almost $2.1 billion of that revenue growth comes from revenue bills the legislature enacted earlier this year as part of the state’s ongoing effort to fully fund education under the state Supreme Court McCleary case, including: a new state property tax; an extension of the sales tax and business tax to out-of-state online retailers; and the closure of several wasteful tax breaks. 

The Council also projects a $3.7 billion uptick in revenues during the following 2019-21 budget cycle, most of which is also attributable to the new taxes enacted this year.

These critical new resources will help ensure great schools for our kids in the short term. Nevertheless, in order to protect these and other essential resources for our communities over the long term, lawmakers still need to address the fundamental structural problems with our state’s upside-down tax code – in which the people with the least pay the most in state and local taxes as a share of income. As the chart below shows, even after accounting for the impact of the new taxes enacted this year, state tax collections will remain mired at 2009 (the lowest point of the Great Recession) levels for the foreseeable future. After adjusting for economic growth, tax resources in 2021 are projected to remain virtually unchanged from 2009 levels. 

[Click on graphic to enlarge.]

Sept_2017_revenue_forecast

Without action, the gains in funding for schools and other priorities achieved this year will likely erode after 2021. That’s because a damaging law that arbitrarily suppresses state property tax collections, which is suspended for the next four years as part of the legislature’s school funding “fix,” is scheduled to be reinstated in 2022. As we wrote in our amicus brief to the Washington State Supreme Court, and summarized in this recent post, this Tim Eyman-backed revenue restriction systematically starves schools of adequate funding year after year. And once it goes back into effect, it will quickly erase much of what lawmakers achieved this year in making necessary investments in kids and schools.

The bottom line is that lawmakers can – and should – build on the progress they made this year. If they want to ensure sustainable resources that enable our communities to thrive, lawmakers must look to the future and act now to secure our state’s well-being, not just this year or next, but for many years to come. Our Accountable Washington revenue reform proposal offers a common-sense path toward creating an equitable tax code that adequately supports schools and other investments that benefit us all.

*************

Want to receive the latest news, updates, and analyses from the 
Washington State Budget & Policy Center in your inbox? Sign up here.

*************

Final Budget Makes Progress on Community Investments – for Now

Posted by Kelli Smith at Jul 21, 2017 06:20 PM |
Filed under: State Budget, State Revenue

Washington state lawmakers have enacted a two-year budget that makes some strong community investments now, with plans for more of the same in the future. There are definitely some things in this budget to like: the historic paid family and medical leave program that will support families; the approval of collective bargaining agreements for the front-line workers who keep the state running smoothly; and investments in K-12 schools that will put much-needed resources into classrooms. And even though lawmakers failed to make significant progress in some areas of the budget, they did avoid making the draconian, harmful cuts that the Senate Republicans proposed earlier this year.

But because the budget relies on a short-sighted revenue plan and an assortment of one-time actions, like temporary fund shifts and tapping the state rainy day fund, these heightened   investments aren’t guaranteed to survive in the long term. Lawmakers must enact stronger revenue reforms in order to maintain the necessary investments in our state and our communities when they meet again in two, four, or ten years to write future budgets.

The changes to funding levels in the enacted 2017-19 state budget, broken down by the value areas in the Budget & Policy Center’s Progress Index framework, are detailed in the chart and sections that follow.

[Click on graphic to enlarge.] 

Final_budget_change_from_maintenance


COMMUNITY DEVELOPMENT & TRUST

To create thriving communities, Washingtonians should be able to count on having safe neighborhoods, beautiful public spaces to enjoy, and a state government that represents residents fairly and efficiently. The state budget accomplishes these goals by supporting Washington’s essential state workers, investing in our public spaces, and ensuring equal access to public institutions. Lawmakers increased funding in this area by $730 million, an increase of 12.1 percent. The budget: 

  • Values essential public workers. The final budget agreement ensures that the thousands of essential front-line workers in Washington, such as public health nurses, law enforcement officers, and long-term care providers, will be compensated according to the bargaining process established in our state. Lawmakers also maintained health insurance coverage for most public employees, including nurses at state hospitals, social service and public safety workers, and home care workers. It’s crucial that front-line workers have stable jobs that can support them and their families. The fact that lawmakers honored a fair and transparent process for compensating state workers also fosters trust in state government. Funding these agreements was a good move on lawmakers’ part.
  • Increases access to legal aid for Washingtonians with low incomes. The budget includes funding for 15 new civil legal aid attorneys over the next two years. This funding will increase access to legal help for low-income people to deal with issues such as job or housing discrimination claims or consumer finance protection. 

ECONOMIC SECURITY

All Washingtonians should have the opportunity to meet their basic needs, to have good jobs that support their families, and to have the chance to get ahead financially. These are the building blocks of thriving communities. When it comes to economic security, this budget made some historic progress. But it also included some disappointing cuts. Overall, the legislature cut investments by $5 million in this area, a decrease of 0.5 percent from current spending levels. The budget: 

  • Creates a historic paid family and medical leave program. This legislative session, Washington became the fifth state in the nation to pass paid family and medical leave, a significant step forward for workers and families across the state. The new program will make it possible for workers to take leave to welcome a new child, or to take care of themselves or a family member with a serious medical condition, without losing all of their income while they’re on leave. Countless Washingtonians will benefit from this historic and forward-thinking move. 
  • Helps families with low incomes make ends meet. Policymakers made improvements to WorkFirst, Washington’s assistance and job training program for families striving to move out of poverty, by partially restoring the program’s cash grant – which was cut by 15 percent in 2011 – with a 2.5 percent increase. That’s an additional $15 a month for a family receiving the maximum grant. Lawmakers also doubled the time – from 12 to 24 months – that parents can receive benefits while they’re getting post-secondary education. These are important advances for strengthening the program. However, the budget also called for cutting $36.2 million from WorkFirst and using it for other areas of the budget.
  • Expands options for child care for families with low incomes. The budget includes small increases for child care providers who serve kids in Working Connections Child Care (WCCC) – Washington’s child care subsidy program for families with low incomes. And it honors the collective bargaining agreement for in-home family child care providers, which will help more providers – many of whom are small business owners – keep their doors open and provide care to children across the state. The budget likewise doubles the amount of time at least one parent in the family receiving WorkFirst can stay home with their young children – from the age of 1 year to 2 years. But based on lawmakers’ expectation that this WorkFirst change will mean more parents stay home longer and fewer children need child care, the budget assumes a certain amount of savings. As a result, they cut nearly $15 million from WCCC. Even if these savings are realized, it would be better to reinvest those dollars in WCCC to strengthen it and ensure high-quality care for more families.
  • Postpones progress on addressing intergenerational poverty. The budget included a provision to create a new initiative to address intergenerational poverty, but the governor vetoed the provision because of a technical concern. He directed the Department of Social and Health Services to form a work group to come up with a plan to advance the initiative nonetheless.
  • Invests in collection of better data on children and families facing food insecurity in Washington state. The budget includes a provision requiring four state agencies to start reporting data on Washingtonians participating in federal nutrition assistance programs. This data will provide important information for policymakers to make more-informed decisions and to develop targeted policies to address hunger and food insecurity throughout the state.

HEALTHY PEOPLE & ENVIRONMENT

Washingtonians value access to clean air and water, as well as programs that support their health and wellbeing. The state budget supports these values by investing in environmental protection measures, broad access to health care services, and improvements to the quality of life of all Washingtonians, especially children and seniors. The proposal would increase funding in this area by $729 million, a 7 percent boost. The budget:

  • Invests in important behavioral health and senior services. The budget funds 96 new beds in walk-in centers for individuals in mental health crisis and provides targeted funding to address safety and capacity issues at Western State Hospital. Lawmakers also made crucial investments to strengthen long-term care services for seniors, including wage increases for home care workers and modest increases in reimbursement rates for long-term care providers. However, in the final enacted budget, legislators passed up some important investments that had been proposed in the House’s budget earlier in the session, such as larger increases to Medicaid reimbursement rates for behavioral health. 
  • Moves forward on a smart, big-picture health reform project. Lawmakers moved forward on the Medicaid Transformation Project, an important state-federal partnership that will bring in $1.5 billion in federal funding to improve health care delivery and lower costs for Medicaid. It will also offer cost-effective support for family caregivers and help individuals find housing and employment. 
  • Rejects a major, ill-conceived cut to family planning services. In their original budget proposal this session, the Senate Republicans had proposed a cut to certain family planning services in Washington state by 10 percent. In the final budget deal, lawmakers wisely avoided that proposed cut, opting instead to preserve access to health care for the women and men who rely on these important services. 
  • Establishes a unified Department of Children, Youth, and Families (DCYF). The DCYF will serve as a central agency to improve a broad array of outcomes for Washington’s children, from ensuring they have a safe family environment in their homes to providing them with high-quality early education. The creation of the new department – grounded in prevention, early learning, principles of racial equity, and accountability to child outcomes – is an important step toward improving the lives of Washington’s children and families. 
  • Makes incremental but inadequate progress on public health investments. The budget provides $12 million for foundational public health services, such as preventing the spread of communicable diseases, which are provided by the state Department of Health and county public health agencies. But this amount falls short of what’s needed to meaningfully address health inequities among Washingtonians and to modernize our state’s public health technology and equipment.
  • Changes the way adults on Medicaid access dental services. Instead of going to the dentist and having their fees paid through Medicaid, patients will now be required to use a managed care plan for their dental services. Because lawmakers anticipate that this switch will result in fewer dental-related emergency room visits for Medicaid patients, the final budget assumes $16 million in savings. But given the untested nature of this change, there is reason to doubt that those savings will be achieved. And if they aren’t, that will result in cuts to the program that will restrict access to dental care for people with low incomes. 
  • Maintains and improves some efforts to keep our air and water clean and free of pollution.  But this is done with the help of more than $20 million in unsustainable transfers to a separate account originally devoted to mitigating the spread of toxic chemicals. Additional funding was allocated to implement a new rule requiring oil refineries, power plants, and other industries to curb carbon dioxide emissions responsible for global warming and other forms of air pollution.

EDUCATION 

Funding education – particularly funding K-12 schools and compensating the educators and staff that keep schools running – was the main focus of this year’s legislative session. On that front, lawmakers made significant strides toward meeting their obligation to the Supreme Court per the McCleary decision. But it remains to be seen whether the court will accept their effort as satisfactory. Overall, lawmakers invested an additional $1.8 billion in education, from early learning to higher education, an increase of 7.6 percent from current spending levels. The budget: 

  • Increased funding for K-12 schools. Through this budget, lawmakers invested an additional $1.8 billion in state resources for K-12 schools as follows:
    • Teacher and staff compensation. The majority of new state K-12 spending will go toward increasing the amount of money the state distributes to compensate teachers and staff, as well as reforming the way our state divvies up those resources. The funding plan also includes a major change to how health insurance is provided for teachers and school employees. Essentially, school employees will now bargain their health care at the state level through a statewide coalition of school unions rather than bargaining at the local level. This change will need to be closely monitored as it is rolled out to ensure that health insurance coverage is not compromised. 
    • Enhancements based on the number of students in particular education programs. Under the current school funding model, additional resources are distributed to school districts based on the educational programs kids in the district need. This budget increases the resources districts will receive based on the number of students in certain programs, such as the learning assistance program, transitional bilingual program, or special education program – and it targets some of these resources to schools with high levels of student poverty. Lawmakers also included funding to expand dual-language learning opportunities in early learning programs and K-12 schools. This is a move in the right direction toward using evidence-based strategies to close the opportunity gap for children who are English-language learners, and it is an important acknowledgement of the benefits of bilingualism in schools.
    • Local levy reform. Finally, the plan restricts how much money school districts can raise through local levies, and what activities those levies can fund. Beginning in the 2019-20 school year, local levies may only be used to pay for certain “enrichment” activities – such as extracurricular activities. One possible consequence of this change is that, in some districts, it may make it difficult for schools to continue to deliver the same level of education to kids in particular programs considered basic education, such as special education. That’s because some districts are currently funding these programs with local levy dollars at levels above what the new state allocation will be. So it remains to be seen whether districts will be able to provide the same level of service under the new funding scheme.
  • Invests in early learning to prepare Washington’s kids for lifelong success. Legislators smartly expanded the Early Childhood Education and Assistance Program (ECEAP) – our state’s preschool program serving families with low incomes – by adding 1,800 new slots and protecting the quality of the program by increasing the rate ECEAP providers are reimbursed. But the budget falls short in some areas. It reduces funding for Early Achievers, which provides professional development for early learning professionals so they can provide the highest-quality care. Lawmakers also pushed out the date by which the state commits to serving all ECEAP-eligible kids – part of the landmark 2015 Early Start Act – from the 2020-21 academic year to the 2022-23 year. To advance the wellbeing of Washington’s kids and families, lawmakers should have kept the promises they made to provide ECEAP to all eligible kids by 2020.
  • Boosts financial aid for college students with low incomes. Lawmakers invested an additional $50 million in the State Need Grant, the chronically underfunded state financial aid program for students whose families make less than 70 percent of the median family income in our state. Estimates show that this increase will serve another 875 students per year, which will make a small dent in the program’s waitlist. 

REVENUE

To make smart, long-term investments in the most critical areas of the budget, lawmakers must enact revenue that is not only equitable, but that is also sustainable over the long term. Lawmakers did not do that with this budget. They decided instead to fund critical investments now with revenue that is unlikely to sustain investments in the future, and they covered the remainder with budget gimmicks. Overall, the revenue plan increases state general fund resources over the next biennium by a little over $2 billion. Lawmakers: 

  • Increased the state property tax and reduced local levies. It’s commendable that lawmakers provided new revenue to fund schools and other priorities, but the new property tax revenues they rely on are likely to diminish again once the damaging 1 percent property tax growth limit is allowed to go back into effect after 2022. 
  • Relied too much on accounting tricks to balance the budget. The other major tactic lawmakers used to balance the budget – a bevy of fund transfers and accounting tricks – will likewise put Washington’s future on shaky ground. To make the budget pencil out, they included gimmicks, like drawing down nearly $1 billion from the state rainy day fund. Funds originally devoted to cleaning up toxic sites, helping local governments improve roads and other physical infrastructure, and helping workers with children find and keep a job were also raided to support other investments. Lawmakers also relied on resources from federal funds that have not yet been secured – and that may be at risk given the massive cuts being proposed in the federal budget. A budget built on these kinds of temporary fixes isn’t built to last in the long term. Some of lawmakers’ laudable progress on community investments will be at risk in the future if they don’t take meaningful steps to reform the state’s flawed tax code. 

*************

Want to receive the latest news, updates, and analyses from the 
Washington State Budget & Policy Center in your inbox? Sign up here.

*************

Document Actions
HIGHLIGHTS

Our Seattle Policy Summit

You can watch our Budget Matters 2017 Seattle Policy Summit, which took place on December 6, online. The first part of the day (watch here) featured Washington State Lt. Governor Cyrus Habib and Race Forward President Glenn Harris. The second part of the day (watch here) featured Budget & Policy Center Senior Policy Analyst Jennifer Tran, and a panel of local leaders moderated by Michael Brown of the Seattle Foundation. 

Our Policy Priorities

Washington state should be a place where all our residents have strong communities, great schools, and the chance for a bright future. Our 2017-2019 Legislative Agenda outlines the priorities we are working to advance to build a better Washington.

Testimonies in Olympia

Misha TVW
We're in Olympia throughout the 2018 legislative session to testify in support of bills that advance our legislative priorities. Watch our testimonies on TVW: