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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 |
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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.

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