During this year’s legislative session, lawmakers have an opportunity to enhance the already important contributions immigrants make in our state. As the Legislature considers funding for schools, health care and other services, along with other policies, it is important to understand how immigrants play a major role in Washington state’s economy and society.
Immigrants are an important part of the fabric of our society, making our state more culturally rich and economically vibrant. Like so many new Washingtonians before them, they come from all regions of the world in search of opportunity.
The majority of immigrants in our state – who represent one in six workers (17 percent) – are from Mexico, the Philippines, Canada, Vietnam and Korea. (1) Immigrants – whether naturalized citizens, lawfully present, or undocumented – play a significant and growing role in Washington state’s economy. As 13 percent of the total Washington state population, immigrants’ share of total annual economic output is 14 percent. This proportional relationship is driven by three factors (2):
- Eight out of every ten immigrants (80 percent) in Washington state are of prime working age (between 18 and 64), compared to six of every 10 U.S.-born Washingtonians (62 percent). The fact that immigrants are more likely to be of prime working age, positively impacts their contribution to the state economy because they are more likely to be participating in the labor force.
- Nearly half (46 percent) of immigrants in Washington state have white-collar jobs, which include occupations in fields such as education, health, and engineering. These kinds of jobs are more likely to pay well.
- Just over one in seven small businesses (15 percent) in Washington state is owned by an immigrant. Immigrant-owned businesses account for more than $1 billion a year in economic activity for our state.
Clearly, the contributions of immigrants in Washington state are significant. Undocumented immigrants alone contribute nearly $300 million in state and local taxes each year. In order for immigrants to continue to thrive and contribute to the economy, our state Legislature must recognize, support, and pass policies that ensure their ability to do so.
One such policy involves restoring full funding to the state Food Assistance Program (SFA). Over 15,000 lawfully present immigrants in our state benefit from SFA. The current 75 percent funding level is insufficient to support families with growing children. By restoring full funding, legislators will ensure that all families in Washington state have access to nutritious food.
The Family Unity Act (FUA) is another policy decision that will greatly impact the well-being of immigrants in Washington state by changing the policies related to how local law enforcement agents implement federal immigration policy. The passage of the act will enable legislators to reduce detention costs, restore public trust in law enforcement, and keep families together.
The second post of this series will further explore the benefits of the Family Unity Act.
(1) Economic Policy Institute (EPI) analysis of 2009-2011 American Community Survey (ACS).
(2) Based on analysis and research by David Dyssegaard Kallick, Senior Fellow at the Fiscal Policy Institute.
The well-being of our children is the most significant predictor of our long-term economic and social success. So when so many of our kids are experiencing economic hardship, it doesn’t bode well for Washington state. But the good news is that we already have tools to help provide children with the opportunities they need to thrive.
A new KIDS COUNT report uses the U.S. Census Bureau’s Supplemental Poverty Measure (SPM) – a companion to the official poverty measure – to examine the impact that social programs (Box 1) have on the economic well-being of children and families in Washington state. According to the SPM, over 455,000 children in Washington state – one in four (28 percent) – live in families experiencing economic hardship (Figure 1). Social programs, however, lifted 241,000 of these children out of poverty, cutting the rate by more than half (13 percent).
The SPM was created in 2011 the by U.S. Census Bureau to provide a more detailed look at how children and families are faring than the official poverty rate allows. The SPM differs from the official poverty measure in a number of important ways:
- The SPM provides a more accurate reflection of economic hardship by using updated data on what it takes to meet basic needs in each state;
- The SPM calculates expenses by geographic location, recognizing cost-of-living differences across the states;
- The SPM calculates income from all sources (earned income, cash assistance), as well as from non-cash benefits (food assistance), providing a more accurate reflection of family resources. It also shows how taxes and tax credits affect income.
Given the overwhelming evidence documenting the strong relationship between economic security and all other areas of well-being, progress in all of these areas can be accelerated if we meaningfully tackle systemic poverty.
This new data comes at an opportune time, as policymakers begin to put pen to paper in writing the state budget. Washington state can build on the success of social programs and further reduce poverty by making targeted investments in programs we know work well for children and families, including:
- Fully funding the Working Families Tax Rebate, Washington state’s yet-to-be-funded version of the federal Earned Income Tax Credit, which, according to the SPM, is the most effective anti-poverty tool we have for kids and families;
- Restoring the Temporary Assistance for Needy Families (TANF) cash grant to support families in meeting basic needs while parents look for adequate and stable employment;
- Passing the Early Start Act so all kids have access to affordable, high-quality early learning opportunities while their parents work or look for a job; and
- Restoring full funding to the State Food Assistance Program so that all families can have access to nutritious food.
For more information about the Supplemental Poverty Measure and the impact of the social programs on child poverty nationwide, take a look at Measuring Access to Opportunity in the United States.
This morning, members of the Washington State House Finance Committee heard public testimony on a measure that would give the public access to much-needed information about state tax breaks and the businesses and corporations that benefit from them. If approved, House Bill 2134 would allow policymakers and the public to have more-informed discussions about our state budget and how we can best use our scarce state tax revenues.
HB 2134 is similar to a tax break transparency measure (HB 2201) that passed out of the House in the 2014 legislative session, but failed to receive a hearing in the Senate. The similarities between last year’s bill and HB 2134 are as follows:
- HB 2134 would give the public access to information on businesses that receive tax breaks: The Department of Revenue (DOR) would be required to publicly disclose the name of any business that receives more than $10,000 per year in a tax break – as well as disclosing the total amount the business claims in preferential business and occupation (B&O) tax rates, B&O tax credits, and most major B&O tax deductions. This information would be made available to the public via a searchable online database on DOR’s website.
- It would improve the quality of tax break information available to policymakers and state auditors: The current business tax return allows businesses to obscure details about their use of tax breaks by lumping multiple tax breaks into a small number of broad categories instead of reporting detailed information on each tax break. HB 2134 would prevent this by requiring businesses to itemize their use of each preferential B&O tax rate, B&O deduction, B&O credit, and sales tax exemption. Doing so would give policymakers and state auditors more detailed information needed to conduct thorough performance evaluations of state tax breaks. More background details are available in this schmudget post.
- It would improve and streamline reporting requirements for certain tax breaks: Under current law, there are public disclosure and reporting requirements attached to only a limited number of state tax breaks. To claim these breaks, businesses are required to file a report or survey with DOR detailing their use of these tax break dollars. However, much of the information mandated in these surveys and reports is of limited use to state auditors and policymakers. And much of it cannot be accessed by the public. HB 2134 would consolidate these surveys and reports into a single report that captures more useful information – including the amount of a tax break claimed, the types of jobs created by the tax break, and average salaries and benefits associated with those jobs. Further, all of the information in the new reports would be available to the public online.
In addition, HB 2134 would reform DOR’s Tax Exemption Study. Under current law, DOR releases a report summarizing most state tax breaks every four years. HB 2134 would now require the report to be released every two years, making the available information more up-to-date and relevant to current budget discussions. It would also require the department to include information on audit recommendations associated with each tax break and other key pieces of information about how the tax system is performing. For various industries in Washington state, the report would detail effective tax rates, employment levels, average wages, and a breakdown of taxes paid.
Although HB 2134 includes important changes to the tax break system, it omits a key provision included in the 2014 bill that would greatly enhance accountability and transparency. Last year’s bill would have required large, publicly traded corporations to disclose to the public their total B&O tax payments in addition to the value of the tax breaks they receive each year. As we’ve highlighted previously, many major corporations, including Boeing and Microsoft, have a long track record of avoiding federal taxes. Requiring them to disclose how much they pay in Washington state taxes would shed light on whether they are dodging taxes here too.
Now more than ever, it is crucial that policymakers rigorously examine all forms of state spending – including spending on special-interest tax breaks – to ensure that those dollars are serving the public interest. If enacted, HB 2134 would be an important step toward creating a more balanced, transparent, and accountable process for measuring how our state invests in important public priorities.
Watch the Budget & Policy Center's testimony on this bill here.
Washington state revenues are continuing their recovery from the depths of the Great Recession, growing by $274 million ($134 million in the 2013-15 biennium and $140 million in the 2015-17 biennium) from the previous forecast, according to new data from the State Economic and Revenue Forecast Council. Even still, the increase in revenue falls woefully short of what is needed to meet the state’s funding obligations in the next two years.
In addition to the revised revenue forecast, lawmakers recently passed a 2015 Supplemental Budget, which included revisions that increase the ending fund balance by $200 million. As the graph shows, even with the increase in the fund balance plus an increase in revenue, resources will still fall $2.5 billion short of what is needed just to fund these required costs:
- Maintaining services ($2.6 billion): Simply maintaining the current level of services the state provides will cost more in the next two years due to inflation, increases in the population, demographic changes, and increased debt and pension costs.
- McCleary education investments (at least $1.2 billion): The state is required by its own constitution to adequately fund K-12 basic education. The State Supreme Court’s McCleary ruling reinforced that obligation, requiring lawmakers to fully fund basic education by 2018. To meet that deadline, at least $1.2 billion is needed in the next budget cycle to pay for school maintenance and curriculum costs as well as to phase in full-day kindergarten and smaller class sizes in kindergarten through third grade.
- Voter initiatives ($1.8 billion): In 2000, voters approved Initiative 732 to provide cost-of-living adjustments (COLAs) for teachers. Lawmakers have voted to suspend this initiative in previous years, including during the current 2013-15 biennium. The suspension is set to expire, making I-732 a legal obligation for the 2015-17 budget cycle. Additionally, Initiative 1351, which passed in November 2014, requires lawmakers to fund smaller class sizes in kindergarten through 12th grade. Within the first two years of passage, lawmakers can only amend or suspend an initiative with a two-thirds vote in both chambers.
On top of these required spending obligations, there are other investments that the state needs to make in order to strengthen our economy and support the health and well-being of Washingtonians:
- Invest in the state’s workforce ($580 million): Lawmakers should approve the collective bargaining agreements that have been reached between workers and the Governor, providing the first general wage increase in seven years for middle-class employees. The Governor has also proposed to align the wage increase for state employees with that of teachers. These are important investments to help retain and attract talented workers who teach our children, protect our safety, and care for seniors and people with disabilities.
- Invest in mental health services (at least $65 million): In August 2014, the State Supreme Court ruled that our mental health system is failing to appropriately treat people with mental illness. A shortage of space in treatment facilities has led to the warehousing of patients in hospital emergency rooms – a practice that cannot continue, according to the court. Increased investments are needed to provide proper care to people with mental illness.
- Restore cuts from recent years: Since 2009, lawmakers have enacted over $10 billion in cuts to health care, food access programs, tuition assistance, child care, services for seniors, and other important investments that support our economy and the well-being of all Washingtonians. Now is the time to rebuild investments that help people find work, make college affordable, and strengthen supports that allow people to live in safe homes and put food on the table.
Solutions exist to increase our resources so that we can invest in education and the quality of life in our state. Enacting a capital gains tax, as the Governor has proposed, is one important tool to significantly boost revenues.
Lawmakers have introduced legislation (HB 1355 and SB 5285) to gradually raise the statewide minimum wage to $12 an hour over the next four years. There is considerable debate about what the impact of raising the minimum wage in Washington state will be. Have questions about what to expect from a $12 minimum wage? We've got answers in this new FAQ.
[Click on the graphic below to see full FAQ]
The Washington state House and Senate have approved $143 million in additional state funding for the 2013-15 budget cycle. The investments address the increased need for firefighting and foster care services as well as the court-mandated need to fund compensation for in-home care workers and treatment services for people with mental illness.
The current budget cycle began on July 1, 2013, and ends June 30, 2015. The 2015 Supplemental Budget, or “second supplemental budget,” allows lawmakers to make adjustments to the originally-enacted spending plan based on changes in revenue or additional funding needs.
Specifically, this budget responds to the following needs that arose in the last several months:
- Wildfires: During the summer of 2014, Washington state saw an increase in the number and size of wildfires, draining existing resources for firefighting efforts. Additional funding is now provided for incurred costs associated with combating the fires and natural disasters, including the Oso landslide.
- Treatment for people with mental illness: In August, the State Supreme Court ruled that it is unconstitutional to detain people in need of mental health services in hospital emergency rooms — a practice that has occurred because there is a shortage of appropriate treatment facilities. Additional funding has been added to provide appropriate treatment for those in need of mental health services.
- In-home care worker compensation: In another court ruling, the state is required to compensate in-home care workers — who provide services for seniors and people with disabilities — for cuts to their pay that occurred between 2003 and 2007.
- Services for children and youth in foster care: Additional investments are included in the budget to serve 18- to 21-year-olds in extended foster care and to provide court-ordered, supervised visits between children in foster care and their families.
To meet these funding needs, lawmakers have invested $66 million from the state’s general fund and $77 million from the Budget Stabilization Account, or “Rainy Day Fund,” for fires and natural disasters. The budget now heads to the Governor's desk
With the budget for the 2013-15 cycle wrapped up, lawmakers now turn their full attention to writing the budget for the 2015-17 budget cycle.
And for more information about capital gains, visit our capital gains webpage.