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Showing blog entries tagged as: State Revenue


Yes on I-1631: An inclusive approach to building healthier communities

Washingtonians must take bold action to confront the serious threat that air pollution poses to the health and well-being of communities from Longview to Walla Walla. But meaningful action can only be achieved and sustained if people and communities – especially people of color, rural communities, and other populations that are often overlooked by lawmakers and initiative campaigns – are rightfully included in developing solutions to this threat from the very beginning.

That's why the Washington State Budget & Policy Center is joining Tribal Nations, businesses, climate scientists, public health experts, and organizations representing communities of color, workers, and families with lower incomes in endorsing Initiative 1631.

I-1631 is a smart, inclusive proposal to invest in clean air and water in Washington state. Under the measure, hundreds of millions of dollars would be invested in communities like Yakima, South Seattle, Centralia, and other areas that have been most harmed by air pollution to build clean and efficient transportation and energy infrastructure. And workers in these communities would benefit from new "green collar" jobs that would be created in the process of building and maintaining the new clean infrastructure.

Here’s how it would work: Beginning in 2020, I-1631 would impose a first-in-the-nation pollution fee on the biggest polluters in Washington state that emit large amounts of carbon dioxide into the atmosphere or that import carbon-laden fossil fuels. The fee would initially be set at $15 per ton of carbon dioxide and would increase annually at a rate of $2 per ton, adjusted for inflation, until the state meets specific air pollution reduction goals. It would generate roughly $1.4 billion in new resources for community investments in the upcoming 2019-21 budget cycle and more than $2 billion in the following 2021-23 cycle. (1)  

But the truly remarkable feature of I-1631 is the amount of revenue that would be directly invested into "pollution and health action areas," or areas that have been disproportionately impacted by air pollution. That includes many rural areas. It also includes places with large concentrations of people of color who, due to systemic racism, are much more likely to live in heavily polluted areas and areas with fewer employment opportunities.  

For example, in the 2019-21 budget cycle, the measure would require:

  • Substantial clean energy infrastructure projects located directly within pollution and health action areas ($145 million)
  • Resources to help people with lower incomes upgrade to newer, energy-efficient appliances, transition to low-carbon fuels, weatherize their homes, install solar panels, and offset other costs associated with transitioning to a low-carbon economy ($152 million)
  • Sovereign Indian Tribes receive a just share of resources to help address climate-related dislocation, fight poor health associated with disproportionate exposure to air pollution, build low-carbon energy and transportation infrastructure, and more ($146 million)
  • Assistance for workers employed in the fossil fuel industry to transition to good, clean-energy jobs. Workers near retirement would be eligible to receive wage replacements, health benefits, pension contributions, and other benefits. Younger workers would also be eligible for wage replacement, health benefits, and pension contributions. They would also be granted free access to retraining programs at state technical and community colleges, assistance with relocation costs, and priority placement at jobs in the clean energy sector ($50 million)
  • Resources to help people living in pollution and health action areas participate in the process of developing and monitoring clean energy projects and programs to help their communities transition to a vibrant clean energy economy ($15 million)

The remaining two-thirds of revenue from the pollution fee would be used to fund clean air and energy projects located outside of these targeted areas, and to sustain clean water and healthy forests throughout the state.

It's important to note that residents from pollution and health action areas would have a direct and strong voice in developing, approving, and overseeing projects funded by the pollution fee. That's because the measure would establish a public oversight board of representatives from Tribal governments, labor unions, and people living in pollution and health action areas, alongside agencies and experts in pollution reduction and clean energy. 

I-1631 would also create an environmental and economic justice panel composed of residents from pollution and health action areas, members of Tribal Nations, labor unions, and experts in clean energy and economic dislocation. The panel would be charged with developing and recommending projects to be located directly within the pollution and health action areas. It would also be responsible for developing programs to ensure people with lower incomes have the support they need to adapt and thrive in a low-carbon economy. 

Voters should approve I-1631 on the November ballot. The measure would help jumpstart Washington’s transition to a healthier, low-carbon economy in which all communities will have opportunities to thrive in the coming years. It is also the most inclusive effort ever undertaken to improve the health and well-being of communities in every corner of Washington state. 

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1. Washington State Budget & Policy Center estimate based on state carbon dioxide emissions data from the U.S. Energy Information Administration from 2015. Carbon emissions since 2015 were assumed to grow at an annual rate of 2.35 percent, the average annual rate of emission growth from 2012-2015. It is assumed that 10 percent of carbon dioxide emissions would not be covered by the fee due to noncompliance or exclusion. Twenty percent of revenues were assumed to be lost due to credits for emitters, exemptions for Energy Intensive Trade Exposed industries, exemptions for marine and aircraft fuels, and other exemptions included in the measure. This estimate will be updated once the state Office of Financial Management publishes an official estimate in the coming weeks.

Five essential truths about our state tax code

We’re hearing a lot of conversations these days about a topic previously off the table at most social gatherings: our state’s tax code. As an organization that advocates for the important role that taxpayers’ investments play in the well-being of our state, we welcome the interest in this topic of conversation. 

Unfortunately, many myths permeate the public discourse about our state tax code. At the Washington State Budget & Policy Center, we are committed to making sure you know the truth about that tax code – and the real solutions that must be enacted in Olympia to make it work for everyone. Because it is a tax code that doesn’t live up to our values. It isn’t set up to invest in our communities in the short and long term. And it is set up to favor corporations, special interests, and the ultra-wealthy over everyday Washingtonians. As a result, the tax code creates additional barriers to economic opportunity for many communities of color and people with low incomes. 

Here’s the truth about the ways our tax code is failing our state:

1. Yes, Washington state really does have the worst tax code in the nation for working people. Specifically, those with the lowest incomes pay almost 17 percent of their incomes in state and local taxes, while those in the top 1 percent pay less than 3 percent. That’s completely upside down. And this takes a particularly heavy toll on many people of color in our state who have low incomes as a result of generations of systemic racism. 

2. The tax code is too dependent on regressive sources of revenue that aren’t growing with our modern economy. Our tax code relies way too much on the super regressive sales tax. Further, by mostly taxing goods (like household necessities and toiletries) and not high-end services (like many spa services and financial advising services), the tax code also misses out on a major opportunity for growing revenue (see chart below) that primarily comes from higher-income people who already get better deals in the tax code. 
 
Goods vs services 2017

3. The property tax system doesn’t support the needs of people with middle and low incomes. Although our state’s property taxes are an important source of revenue for our schools and community services, they are structured in a way that makes homeowners with middle and low incomes shoulder too much responsibility to support community needs – like schools and public safety. Property owners often pass the cost of increased taxes onto renters through higher rents. Without targeted safeguards or rebates in place to offset some of these taxes for homeowners and renters who cannot afford them, the system stays broken. 

4. Our state has hundreds of harmful and unnecessary tax breaks on the books for corporations and special interests. Those tax breaks are funneling money away from investments that serve all our communities, like our schools, our parks, and our public transportation systems.

5. Overall, our tax code is simply not providing reliable revenue to pay for critical services. As of 2018, our state revenues are still well below the levels from before the Recession, when adjusted for economic growth (see chart below). In a growing state with a strong economy, that is simply unacceptable – especially given the challenges we face with issues like homelessness and unaffordability in our communities. 

Revenue trend 2018

But there are solutions.

We’ve laid out commonsense solutions to these problems. To start turning the tax code right-side up and creating new revenue, our state legislators should:

These policies would also importantly take some steps to help undo some of the racial inequities in our tax code. For example, if the WFTR were enacted, it would strengthen the economic security of many families of color with low incomes throughout our state. And the largest rebates would go to Latinx people, Asians or Native Hawaiian/Pacific Islanders, and American Indians/Alaska Natives.

In the work to clean up our state’s tax code, let’s make sure that accurate information is drowning out the myths and half-truths. With a real understanding of what we want our tax code to look like, we can work to make sure it is equitable and invests in all of us. 

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State legislators should focus on advancing shared prosperity during 2018 legislative session

By Misha Werschkul, executive director

As legislators convene in Olympia for the start of the 60-day state legislative session, the Washington State Budget & Policy Center encourages them to approach every budget-related policy decision this year by answering one critical question: Does this policy help put our state on a path toward an inclusive economy that promotes shared prosperity and advances racial equity?

At the Budget & Policy Center, our 2017-19 legislative agenda aims to meet that goal. We know that in order to build prosperity and to advance equity in our state and our economy, policymakers must keep the well-being and economic security of all Washingtonians top of mind. 

We are pleased that a number of our policy priorities advanced during the 2017 legislative session. In particular, elected leaders rightly strengthened supports for families to meet basic needs, closed outdated tax breaks like the sales tax exemption for bottled water and a tax break that largely benefited oil refineries, and approved paid family and medical leave. This progress is thanks in no small part to the work of community organizations, advocacy groups and everyday Washingtonians from across the state. [See the links at the end of this post for more details about our policy priorities that advanced in the 2017 session.]

Now, in 2018, elected leaders must take additional steps to ensure our state budget delivers on the values of our great state. They can no longer leave undone the important task of cleaning up our upside-down tax code – in which the wealthiest people pay the least state and local taxes as a share of their incomes. Cleaning up the tax code will help ensure our state has the revenue to pay for investments in great schools and strong communities. The stakes are higher than ever given that the U.S. Congress has passed new tax breaks benefiting the wealthy and profitable corporations and hasn’t acted to reauthorize funding for the Children’s Health Insurance Program.

When legislators convene in January, they should:

  • Ensure there is ample and equitable funding to raise the salaries of public K-12 teachers, as required by the state Supreme Court, in time for the 2018-19 school year.
  • Support strong investments in our communities and the well-being of Washingtonians into the future by: helping more kids get access to our successful state preschool program, the Early Childhood Education and Assistance Program, by expanding eligibility; passing “breakfast after the bell” legislation that supports student health and readiness through nutrition; increasing supports for people experiencing economic insecurity, homelessness, and behavioral health challenges; protecting health care funding provided by programs like the Affordable Care Act and Apple Health for Kids; and taking steps to correct the short-sighted fixes and accounting gimmicks from the 2017-19 biennial budget.
  • Enact long-term solutions to fix our upside-down tax code by: closing the tax break on capital gains; making the 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 boosting the incomes of hardworking families through the Working Families Tax Rebate

As a result of the special election in November, the makeup of the legislature, the leadership in the Senate, and the people on the budget-writing committees are different than at the close of the last legislative session. This legislature has a fresh opportunity to set our state on a path toward prosperity and an inclusive economy through our state budget. 

See our Progress in Washington 2018 report, “Building an Inclusive Economy,” for more details on how our state is faring when it comes to building an inclusive economy. And read more about our policy priorities that advanced in the 2017 legislative session in the following schmudget blog posts:

 

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Governor’s initiative on economic security is a big win for Washington’s families

Posted by Julie Watts at Nov 29, 2017 03:15 PM |

Governor Inslee has created a new inter-agency work group on family economic security that is a big step in the right direction to help families move themselves out of poverty in our state. The work group will be tasked with developing a 10-year strategy for poverty reduction in Washington state, based on an intergenerational approach to addressing poverty.

Intergenerational approaches to poverty promote the economic well-being of whole families across generations so that children can thrive and reach their full potential. The approach is centered around coordinated support for families across five key areas: high-quality early childhood education; higher education and career pathways; asset building; health and well-being; and social capital.

Family economic security

Nationally, similar initiatives that focus on economic success of families, as opposed to a focus on children or adults alone or in silos – are gaining momentum and showing very promising results. In Colorado, Utah, Connecticut, Massachusetts, and Oklahoma – to name just a few states – early investment in intergenerational programs are paying off and are leading to living-wage careers for parents, better education outcomes for kids, and a low rate of return to social benefit programs. 

The governor’s directive to create this work group is an important step to help families move out of poverty. It is also an important step to grow the middle class so that more residents can benefit from economic growth. As more families move out of poverty permanently and contribute to economic activity, that will pay dividends for the state economy.

The directive was the result of bipartisan efforts advance intergenerational strategies to address poverty in Washington. The creation of the work group is a sign that Washington’s leaders are turning a new page on how we go about policy development on economic security. The initiative calls for broad participation by state agencies, stakeholders, employers, people who are in poverty, and other communities that have historically not been included in conversations on public policy. 

Advancing poverty reduction policies using an intergenerational approach has long been a priority of the Washington State Budget & Policy Center. We look forward to continuing to work with the governor and his staff as well as with legislators and other key stakeholders to develop specific data-driven policy recommendations to reach poverty-reduction goals. This is a monumental step toward ensuring that every child, parent, and grandparent in Washington is able to reach their full potential and thrive.

 

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.

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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.

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.

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HIGHLIGHTS

Save the date!

Our Budget Matters 2018 policy conference will take place on November 13 at Seattle Center. john a. powell from the Haas Institute for a Fair and Inclusive Society is the keynote. Stay tuned for more details. 

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.

Testimonies in Olympia

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Watch our 2018 legislative session testimonies on TVW: