Schmudget Blog


Slight Boost in Projected Tax Revenues Won’t Fix School Funding Crisis

Posted by Andy Nicholas at Sep 21, 2016 08:20 PM |

Although the newest state revenue projections anticipate a modest increase in available tax resources in the coming years, that uptick is minuscule compared to the billions of additional dollars needed to fund schools in Washington state.

In its September forecast, the Washington State Economic and Revenue Forecast Council projects that state tax revenues will increase, relative to the previous forecast, by $336 million (0.9 percent) for the remainder of the current two-year budget cycle ending in June 2017. In the next budget cycle, for 2017-2019, the council projects that state tax resources will increase by $134 million (0.3 percent). (1) These increases are largely attributable to higher-than-expected revenues from the sales tax and taxes on the sale of real estate.

Despite this boost in tax revenues, the council’s projections show that our state rainy day fund and other reserves will remain dangerously low at the end of the current budget cycle. They also show total budget reserves will be at about $1.8 billion by June 2017. That’s approximately 9.5 percent of annual state spending on public services, far below the 15 percent cushion that many economists and public finance experts recommend to ensure that schools, health care, and other important investments can be maintained when a recession or other state emergency strikes.

Lawmakers can’t depend on modest growth in existing tax resources to build the world-class education system that Washington’s kids will need to compete in this 21st century economy. To fulfill their obligation to our schoolchildren as mandated by the state Supreme Court, lawmakers must focus on raising additional new revenues from equitable sources. 

1. The revenue numbers reflect total state-only Near General Fund + Education Legacy Trust Fund + Opportunity Pathways Account

 

Census Snapshot: Too Many Washingtonians Still Struggling to Make Ends Meet

Posted by Melinda Young-Flynn at Sep 16, 2016 02:35 AM |
By David Hlebain, interim policy analyst
 

The new U.S. Census data shows that the number of Washington residents living below the poverty line declined 1 percent between 2014 and 2015. This welcome news is tempered by the fact that the data shows that hundreds of thousands of Washingtonians remain in poverty, with communities of color struggling the most. Given this, policymakers need to look beyond the immediate headlines touting our progress and make smart investments in creating a thriving economy that works for all of us.

The newly released Census data shows that in Washington state:

  • More than one in eight people (12 percent) live below the poverty line. This is down from 13 percent in 2014. For a family of three, the poverty line is defined as earning less than $20,160 per year.
  • Nearly one in seven children (15 percent) live below the poverty line. This is a decline from 17.5 percent in 2014. 
  • Deep disparities by race and ethnicity persist. More than 24 percent of American Indians and Alaska Natives, 23 percent of Black people, and more than 20 percent of Latinos live below the poverty line.
  • Although median household income continued to increase, when adjusted for inflation, median household income remains at 2007 levels despite the rising costs of meeting basic needs.  

This new data demonstrates how much more work there is to do to create a state economy with real pathways out of poverty and toward economic security. But it still doesn’t tell the whole story. Consider the fact that a single parent raising two kids in the state needs to make at least $59,000 to cover the costs of meeting all basic needs, including housing, food, child care, and transportation. (1) That means, beyond what the Census data tells us, families making three times as much income as those living at the official federal poverty level are also struggling to making ends meet.

Legislators must remember this big picture reality when they consider the policies they will advance in the 2017 legislative session. They must work to not only alleviate and prevent poverty throughout our state, but also to ensure that all Washingtonians can get ahead.

Voters and policymakers have the opportunity to take steps in the November election and the 2017 legislative session to help families get on the road to economic stability. Increasing the statewide minimum wage, ensuring access to paid sick leave, restoring funding to the Temporary Assistance for Needy Families program, and funding the Working Families Tax Rebate can all help provide greater economic security for Washington residents.


(1) Massachusetts Institute for Technology’s “Living Wage Calculator” estimates for Washington state


 

Raising the Minimum Wage Is an Investment in Washington’s Kids

Posted by Melinda Young-Flynn at Sep 14, 2016 07:25 PM |
By David Hlebain, interim policy analyst

In Washington state, a single parent with two kids working full-time at a minimum wage job has an income below the federal poverty level and far below what’s needed to meet the rising costs of basic necessities. (1) Raising the statewide minimum wage to $13.50 through Initiative 1433* on the November ballot will help change this and is an important step toward ensuring that all of Washington’s kids and families have the opportunity to thrive. 

A higher wage would help reduce poverty – something that is desperately needed right now. Child poverty in Washington increased nearly 30 percent between 2008 and 2014, with an additional 59,000 children growing up poor, according to KIDS COUNT. Even more troubling, only 31 percent of Black children, 31 percent of Latino children, and 26 percent of American Indian and Alaska Native children live in economically secure households (which is defined as 200 percent of the federal poverty line, or a $40,320 income for a family of three). 

Raising the minimum wage to $13.50 would improve the lives of these struggling Washington families. More than 360,000 Washington kids currently live in families where one or more parents make less than $13.50 per hour. (2) The proposed minimum wage increase would make a big difference for these families, providing an additional $700 per month for the average worker to help make ends meet. 

Further, raising the wage would increase the incomes of tens of thousands of families of color who are disproportionately likely to struggle economically as a result of historically racist policies that have excluded them from opportunities for jobs, education, homeownership, and more. 

By helping hundreds of thousands of Washington families lift themselves out of poverty, a $13.50 minimum wage would strengthen the economic and social well-being of Washington’s kids and families in three key ways:

Helping Kids Do Better In School

Children who experience instability at home because of poverty have a harder time concentrating at school. This can undermine children’s progress in the earliest stages of their education by impeding their cognitive, social, and emotional development. In fact, research demonstrates a significant gap in kindergarten readiness between children who grow up in poverty compared with kids from families with moderate and high incomes. 

If parents are earning higher wages, they have a greater ability to feed their family, pay the bills and rent, and maybe even afford enriching activities for their kids. As a result, their children are more likely to thrive at school. 

Healthier Kids

The economic security of families is critical to the health of kids. The lack of a safe, economically stable home can create toxic levels of stress for parents and kids. In fact, high-stress events experienced in childhood – including sustained economic hardship – are linked to poor health later in life, such as obesity, alcoholism, and depression. 

Because higher wages allow parents to put food on the table, a higher minimum wage can also help combat childhood hunger. Currently, more than 13 percent of Washington kids go hungry because their parents can’t afford to buy enough food, and those rates are even higher among children of color. Additionally, minimum wage increases have been shown to correlate with fewer babies born at low birthweights, one of the earliest indicators of the health of the next generation.

Strong Families and Homes

As mentioned previously, parents living in poverty can have heightened stress levels if they’re worried about paying rent and bills each month or having trouble dealing with unexpected costs, such as car repairs. This stress can detract from the necessary time and mental capacity for parents to fully engage with – and develop strong attachments to – their kids. Compromised parenting influences children in both the short term and the long term. Children who grow up in poverty are more likely to enter the child welfare system. And adversity experienced as kids can make transitioning to adulthood difficult.

Creating environments for kids to thrive requires policies that improve the well-being of parents and children. A higher wage for hardworking parents who make the minimum wage is a great investment in the strength of entire families and households.

The passage of Initiative 1433 would give more families the ability to improve their well-being. Indeed, it would allow more of Washington’s kids to have the chance to succeed in school, to have a healthy start in life, and to have their basic needs met. Raising the wage would help us build a better future for all of us. 

*Authors’ Note: The scope of this analysis focuses solely on the minimum wage component of Initiative 1433. The other component of I-1433, which provides sick and safe leave, also offers significant benefits to kids and families. For analysis on how a sick leave policy would strengthen the well-being of Washington’s families and communities, please see this recent press release published by Children’s Alliance and this report by the Economic Opportunity Institute. 

1. The 2016 federal poverty line for a family of three is $20,160. The Massachusetts Institute of Technology’s “Living Wage Calculator” estimates a single parent with two kids needs to earn $59,550 in order to cover costs of basic needs in Washington state. 

2. Economic Policy Institute analysis of Current Population Survey, Outgoing Rotation Group public use microdata 2014.

 

 

 

Measuring Progress in the Blue Mountain Region: A New Approach to Community-Led Solutions

Posted by Melinda Young-Flynn at Sep 12, 2016 07:10 PM |
Filed under: Progress Index, BPC News
By Lori Pfingst, former research and policy director of the Washington State Budget & Policy Center
 

In the fall of 2015, Community Council of the Blue Mountain Region – in collaboration with Sherwood Trust, Walla Walla County Department of Community Health, and Blue Mountain Community Foundation – partnered with the Budget & Policy Center to launch a community-driven, results-focused process to create a more prosperous region. Now we are proud to release Building a Better Blue Mountain Region, a report summarizing this collaborative effort and highlighting a new, innovative way to support community-driven solutions.

The Blue Mountain Region includes Walla Walla and Columbia counties in Washington state and the northeastern part of Umatilla County in Oregon. It is home to a diverse and growing population and economy, and it is known for its higher education system, wineries, agriculture, and small-business community.  

Blue Mountain region photos

We used the Budget & Policy Center’s own Progress Index framework as a starting point for identifying local data that could tell a preliminary story about the region’s well-being. The story that emerged from the data revealed areas for improvement in the community as well as bright spots upon which to build. For example:

  • The Blue Mountain Region ranks high for overall quality of life and has a strong healthcare infrastructure;
  • Economic hardship is high throughout the region, especially among the Latino population, which is driving population growth; 
  • Among residents born outside of the United States, those who have obtained citizenship have greater economic security than residents who are non-citizens, and they have lower rates of economic hardship than their peers born in the United States; and 
  • Education outcomes – like kindergarten readiness, reading ability by the end of third grade, and high school graduation rates – vary considerably by race, ethnicity, and district/school, but many schools perform better than the state average on these important indicators, offering the opportunity to learn what is working for students.

Community Council and its partners used Budget & Policy Center data to hold two "data walks" – events where members of the community review and discuss what the data says about them – with Blue Mountain region residents. The attendees of these events were asked to discuss what the data in the infographics meant to them, answering the following questions: Does the data align with their understanding of the community? What conditions in the community explain why the data looks the way it does? How do residents want the story emerging from the data to change? And, what strengths does the community possess to change the story? 

The conversations that took place during the data walks were dynamic and inspiring, giving Community Council insight into the ideas and aspirations of residents. It also gave the project partner organizations a better sense of the network of individuals and organizations they can tap into to achieve community-driven progress. [See pages 22-23 of the report for a summary of the data walk discussions.]

Thanks to feedback from the participants in the first data walk, project partners made the second data walk more accessible. It was held in the evening so people who work during the day could attend. A Spanish interpreter and bilingual materials were offered so more members of the Latino community could be part of the conversation. It also provided free childcare.

The partner organizations are now using the information gathered from the conversations at these two events in strategic planning efforts for the Blue Mountain region. With the data and the initial conversations as a guide, they plan to continue conversations with a growing network of residents to create a community-driven vision for the improvement of the well-being of the region and its people. 

And at the Budget & Policy Center, this collaboration with our partners in eastern Washington marks a new way of doing our work. We recognize that data is much more powerful – and a better tool for developing and advancing effective public policies – when it is shaped by the stories of the people it represents. Building data walks and other community engagement tools into our research ensures that our analysis is informed by and accountable to the people and communities behind the numbers. They are the people and communities whose well-being we seek to ensure in our work to create a just, prosperous, and equitable Washington. 

Funding Schools for Washington’s Kids Can’t Be Done through Property Tax Gimmicks

Posted by Andy Nicholas at Sep 07, 2016 05:10 PM |

This is the first in a series of schmudget blog posts about property taxes in Washington state and the role they play in funding basic K-12 education. 

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

In the upcoming 2017 legislative session, Washington state lawmakers have an important opportunity to help all schoolchildren. In order to provide Washington’s kids with the opportunity for a future that includes better jobs, more civic engagement, and greater economic security, legislators must provide the resources needed to improve basic public education, as defined in the State Supreme Court’s McCleary decision – while also making other key investments that support thriving communities. 

Yes, it’s a tall order, requiring billions of dollars annually in additional resources. But it can and must be done for the sake of Washington’s future. And it must be done in a way that protects investments in priorities that help Washingtonians who are struggling to make ends meet – especially those investments that help ameliorate the effects of systemic racism and other structural barriers to opportunity. 

State and local property tax levies supply a foundation of funding for K-12 education in Washington state. A number of proposals involving changes to property tax levies have been introduced by state policymakers in the last few years. Few of these proposals would tackle the real challenges involved in ensuring we have adequate funding for schools, however.

So-called “revenue-neutral levy swaps” – shell games involving increases to the state property tax levy accompanied by decreases to local school districts’ levies – would generate no additional overall resources for schools. And though some lawmakers argue that a levy swap is necessary for the legislature to fulfill the mandate of the Supreme Court, the reality is that replacing local levies with the state levy won’t provide the funding to address the court’s primary concern – helping every kid in Washington state to get a top-quality education. 

Lawmakers must address the real barrier to creating the education system our kids deserve: a deeply inequitable state and local tax system that not only overly relies on the people least able to pay taxes, but that also doesn’t provide adequate revenue to support schools and other public priorities.

Before upending the current balance between the state and local levies, lawmakers should adopt more comprehensive solutions and work to make the overall property tax system a more equitable and reliable source of funds for schools and other priorities. The legislature should enact the following common-sense reforms to benefit all schoolchildren:

  • Enact property tax credits specifically designed to reduce taxes for lower-income and middle-income homeowners as well as renters who can’t afford higher property tax bills that get passed down to them through higher rents.
  • Eliminate the damaging law that restricts property tax revenue growth to 1 percent per year (or the rate of inflation, whichever is lower), which saps billions of dollars from schools. 
  • Remove the rigid “ten-dollar limit,” which makes it difficult for some cities and counties to meet needs for emergency services, public safety, parks, and other priorities by arbitrarily limiting the sum of all regular levies (those that do not have to be reauthorized by voters on an ongoing basis) to $10 per $1,000 of assessed property value. 
  • Raise the state property tax levy, which at $2 per $1,000 of assessed value, is near record lows. This would equitably generate additional revenue for schools throughout Washington state. 

Making these changes would be a key step toward fixing our state’s broken and inequitable tax system. And it would provide significant additional funding to help the legislature give Washington’s kids the high-quality schools they deserve. 

Future posts in this series will explain these important property tax reforms in more detail. They will also examine the strengths and weaknesses of Washington state’s property tax system as an instrument for funding basic K-12 education. Our analysis of each proposal will take into account the need for racial and gender equity. 

 

All Income Growth is Going to the Richest 1 Percent of Washingtonians

It’s time for policymakers in Washington state to take steps to reverse decades of widening economic disparities that threaten broad prosperity, now that it has again been shown that all income growth since 2009 continues to flow to the wealthiest Washingtonians.

An updated report from the Economic Policy Institute (EPI) shows that the richest 1 percent of households – those making over $388,000 a year – captured all of the new income generated in Washington state between 2009 and 2013 (see graph). By contrast, and in a stark reversal from past decades, average incomes among the remaining 99 percent of Washingtonians declined during this period, causing far too many hardworking families to fall even further behind.

2016-6_Top_1_Percent_Income_GrowthEPI

The richest 1 percent of Washingtonians didn’t always reap such an outsized share of income gains during periods of economic growth. Prior to 1980, the 99 percent typically captured at least 80 percent of all income gains during economic expansions.

Further, as the EPI report points out, it used to be considered outrageous for executives to receive multimillion dollar salaries and outsized bonuses while laying off workers. Today, as the vast majority of working people and families in Washington state continue to struggle, super-rich CEOs living here are doing better than ever. In fact, in 2015, the CEO of Washington state-based Expedia received the highest pay ($94.6 million) of any corporate chief executive in the county.

It has become abundantly clear in recent years that everyday Americans and Washingtonians are tired of the economic inequality that has become the norm. In our state, we need policies that help all communities thrive by strengthening employment and creating more living-wage jobs. We need to make sure our tax code doesn’t favor the wealthy and the politically connected over the common good.

In fact, our upside-down tax system – where Washingtonians with the lowest incomes pay seven times as much in state and local taxes as a share of their income than the richest 1 percent – makes it even harder for the 99 percent to get ahead.   

Building a stronger Washington economy requires greater economic equality and overall equity. Lawmakers must undo the systemic inequities that have created gaps in opportunity for many people of color to receive good jobs and living-wage salaries.

In Washington state:

  • Voters can help advance economic equality and close the opportunity gap if Initiative 1433, now gathering signatures, makes it on the November ballot and passes. It would incrementally raise the minimum wage to $13.50 over four years, increasing the take-home pay for 730,000 people working across a range of sectors. It would also provide paid sick leave, so parents don’t lose wages when they need to take care of themselves or their children when they’re sick.
  • Lawmakers during the 2017 legislative session must pass the capital gains tax recently proposed by Governor Inslee and leaders in the State House, which has been endorsed by major papers and many community groups throughout our state. And they should use the revenue from capital gains to invest in education, health care, and other services that expand economic opportunities for everyone.

And as lawmakers work to craft policies that seek to provide economic opportunity to Washingtonians, they must be especially mindful that those policies empower those who have been most harmed by racism and other structural inequalities that fuel the rise in economic inequality.

More Washington Kids Have Health Coverage, but Poverty Still a Roadblock

Excerpted from the KIDS COUNT of Washington press release

June 21, 2016 
 
SEATTLE — Kids and families in Washington state have made some progress in the face of poverty rates that have yet to improve, according to the new national 2016 KIDS COUNT Data Book from the Annie E. Casey Foundation. Washington is ranked 15th among the 50 states in the Data Book, moving up four places in the national rankings of child well-being since 2015.

 

KIDS COUNT Data Book 2016 badgeKey among the positive changes: Since 2008, the number of children growing up without the health coverage they need to see a doctor when they’re sick has improved by 38 percent. What’s at work is the state’s Cover All Kids law, which passed in 2007 and created affordable health coverage called Apple Health for Kids. The Affordable Care Act’s 2014 creation of a flexible market for individual plans has also propelled child coverage in Washington to one of the nation’s highest.

Yet the child poverty rate is nearly 30 percent higher than it was in 2008, with an additional 59,000 children growing up below the federal poverty level. Poverty can impede children’s cognitive, social, and emotional development and contribute to poor health. And poverty disproportionately harms kids and families in communities of color, who face other barriers to economic security in the form of an educational opportunity gap and a high cost burden for housing, food, and other basic needs. These stressors are caused by, and contribute to, the structural racism faced by families of color. This undermines progress for children and the state as a whole.

The two organizations that make up KIDS COUNT in Washington – the Washington State Budget & Policy Center and the Children's Alliance – support two-generation approaches to creating economic security for both children and their parents. One 2016 proposal that would help both kids and families is Initiative 1433, the $13.50 minimum wage initiative now gathering signatures for the state’s November ballot. It would raise the take-home pay for the working parents of thousands of Washington children. And it would also provide up to seven days of paid sick and safe leave per year, helping Washington families by ensuring that workers don’t lose wages when they need to take care of themselves or their children when they’re sick.

The implementation of a higher minimum wage would be an important step toward lifting more Washington kids out of poverty. And, as noted in the 2016 Data Book, it is one of many policy solutions needed to improve the well-being of future generations.

Read the full 2016 KIDS COUNT Data Book. And read the one-page KIDS COUNT Washington state 2016 profile

The Annie E. Casey Foundation creates a brighter future for the nation’s children by developing solutions to strengthen families, build paths to economic opportunity, and transform struggling communities into safer and healthier places to live, work, and grow. For more information, visit www.aecf.org. Visit datacenter.kidscount.org for the most recent national, state, and local data on hundreds of indicators of child well-being. 

Media Contacts: 

  • Melinda Young-Flynn, Budget & Policy Center communications manager, 206.262.0973, ext. 223
  • Adam Hyla, Children's Alliance communications director, 206.324.0340, ext. 18

 

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HIGHLIGHTS

Watch the Budget Matters Plenary 

View the Budget Matters 2016 conference plenary panel, "What's at Stake in the 2017-2019 Budget: Funding McCleary and Beyond," on TVW. Moderated by Ann Dornfeld of KUOW with a budget overview by our own Andy Nicholas, the panel features Nathan Gibbs-Bowling, the 2016 Washington State Teacher of the Year; Lew Moore of the Washington Research Council; Roxana Norouzi of OneAmerica; and Sen. Christine Rolfes. The plenary starts after a brief intro by Executive Director Misha Werschkul and an intro video by Gov. Inslee.

Our Legislative Agenda

Our agenda for the 2015-2017 biennium calls for an equitable, sustainable revenue system in addition to state investments that: promote a world-class education system; sustain a strong middle class; produce living-wage jobs, and ensure that all Washingtonians have equal opportunity to get ahead. 

Testimonies in Olympia

We testified in support of a number of important bills during the 2016 legislative session. Take a look:

  • Our testimony (at the 23:23 minute mark) on the House Bill that would take a two-generation approach to preventing poverty 
  • Our testimony (at the 1:54:09 mark) on the House bill focused on aerospace-related tax breaks
  • Our House testimony (at the 9:25 mark) and Senate testimony (at the 1:44:54 mark) on the two-generation approach to poverty prevention bill 

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