Schmudget Blog


State’s strong bump in projected revenue will allow lawmakers to devote more funding to schools

Posted by Kelli Smith at Feb 15, 2018 06:35 PM |

The state Economic and Revenue Forecast Council’s latest revenue forecast shows that lawmakers are within striking distance of meeting the minimum school funding requirements established by the Supreme Court’s McCleary decision. But even with positive projections, building the high-quality schools our kids and grandkids deserve without cutting other important investments will require lawmakers to go beyond the bare minimum. To fund schools – and ensure a brighter future for all Washingtonians – lawmakers still need to focus on fixing the state’s upside-down tax code. 

According to the forecast, revenues are up $628 million for the current budget cycle – a significant increase over past forecasts. And while that amount is not enough on its own to cover the Supreme Court-mandated cost of funding schools by the start of the 2018 school year, it does put a solution within reach for lawmakers. That is as long as they take reasonable steps to clean up the tax code.

In his supplemental budget proposal late last year, Governor Inslee recognized the need for additional resources to meet the McCleary shortfall by proposing to use money from the state’s rainy day fund now and replenishing part of it with revenue from a carbon-pricing proposal. While it’s not ideal to tap into the rainy day fund, this was nevertheless one reasonable way forward under the circumstances. With today’s positive revenue projections, lawmakers have more options on the table to ensure that all of Washington’s kids have access to an excellent education.

They should begin by cleaning up our tax code to generate resources to fund schools and other priorities. That means rejecting new tax giveaways to special interests and closing existing wasteful tax breaks, such as the tax break on capital gains – a $715 million annual giveaway to 2 percent of the wealthiest Washingtonians.

Washington’s school kids and teachers have had to make do with less for years while lawmakers have failed to provide adequate funding for schools. They have three more weeks this legislative session to make good on our state’s promise of an excellent education for every child. It’s past time for them to take meaningful steps to ensure they actually have the revenue to do so.

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President Trump’s budget won’t strengthen the economy. It will harm Washington state

By Misha Werschkul, executive director

President Trump’s 2019 budget does nothing to bolster the economic security of people with middle and low incomes – which is critical to create a thriving economy. Instead, his budget actually threatens the economic security of millions of Washingtonians who rely on federal programs to be able to pay for food on the table, a roof over their head, health care, and other basic needs. Further, it will have profound ripple effects on Washington's local economies. 

While this budget is largely symbolic, since the U.S. Congress just approved a two-year budget deal, these extreme proposals should not be ignored. They are an important signal of the president’s priorities. Many of the specific proposals included in the budget have been introduced before and could be incorporated in future budget proposals or stand-alone legislation this year.  

On the heels of the passage of harmful new federal tax breaks that benefit the wealthy and corporations to the detriment of people with low and middle incomes, President Trump laid out a recipe for increased poverty, homelessness, and inequality. Specifically:

  • He again calls for repealing the Affordable Care Act (ACA) and drastically cutting Medicaid, putting health insurance for millions of Washingtonians at risk.
  • He calls for huge cuts in nutrition, housing, and other basic assistance for millions of Americans below or close to the poverty line, most of whom work for low wages, are elderly or have disabilities, or care for young children. For example, the president cuts nearly 30 percent over 10 years from the Supplemental Nutrition Assistance Program, which currently helps put food on the table for more than 900,000 Washingtonians.
  • He proposes deep cuts to the non-defense discretionary budget that funds education, scientific research, job training, and other core government functions. This would result in massive and unsustainable cost shifts to state governments.  

Instead of pursuing the policies proposed by President Trump, federal leaders should take common-sense steps to support families and grow the economy. They can do this by investing in high-quality job training and apprenticeships; increasing access to safe, affordable, dependable child care and care for family members with disabilities; and advancing policies that create jobs and raise wages for working families. 

For more analysis about this harmful budget proposal, see this statement from Bob Greenstein, president of the Center on Budget and Policy Priorities: "Trump budget offers stark vision."


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Lawmakers must reinvest in WorkFirst to restore the promise of basic support to families facing poverty

Posted by Melinda Young-Flynn at Jan 30, 2018 04:15 PM |
Filed under: Poverty, Economic Security
By Julie Watts, deputy director
 
We all want to live in a state where, when people fall on hard times, they don’t go without the basics – food, shelter, and necessities of daily life that allow them to look for jobs and get back on their feet. WorkFirst, Washington state’s Temporary Assistance for Needy Families (TANF) program, is the main way our state protects children and families from the trauma and debilitating effects of poverty.
 
WorkFirst not only provides basic assistance to families in crisis, but it also is supposed to ensure they can move out of poverty through job training, child care, mental health, and support services.(1)

However the program is headed in the wrong direction. As a result of harmful policy changes and budget cuts over the last decade, the program is serving a smaller portion of families in poverty than it was a decade ago. Lawmakers must make investments in WorkFirst to reach more families living in poverty and provide families with more help.

Today, WorkFirst helps only 25 families with children for every 100 living in poverty, down from 50 families for every 100 in 2008. (See graphic below.) The sharp, alarming decline in the number of families being helped by WorkFirst has been driven by dramatic cuts in funding. Since 2008, lawmakers have cut state funding for the program by 47 percent (adjusted for inflation), or $179.6 million, and used those funds to plug holes in other parts of the state budget.

Click on image to enlarge.

 WorkFirst

Further, beginning in 2010, the governor and the state legislature made changes to the program that made it harder for families who were playing by the rules and meeting program requirements to get extensions to time limits. The changes also punished whole families (including children) when a parent failed to meet program requirements and gave families less time to come into compliance before they are cut off the program. Policymakers also cut the amount of cash assistance families could receive even as the cost of living was rising.

These decisions had a far more damaging impact than anyone anticipated. They sent the caseload into a free fall that continues today.

State lawmakers should make sure any new savings in the WorkFirst program that result from fewer families being served are reinvested to serve more families this legislative session. They must make sure that when families fall on hard times in Washington, they don’t go without the basics.

For more detailed recommendations on how to improve WorkFirst, see our policy brief, "Reinvest in WorkFirst: How we can restore the promise of basic support to Washington families facing poverty." 

[1] In addition, a portion of the state’s WorkFirst caseload are “child-only” cases – children who are living with a family member other than their parents or children who are living with parents who are not eligible for TANF.

 

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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 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.

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New report: An inclusive economy is essential for all Washingtonians, our economy, and the future progress of our state

Washington is poised for great economic progress. By many measures, a better future for all people in our state is within our grasp. And yet, economic growth is not reaching all Washingtonians. There are persistent and deep disparities based on race, ethnicity, nativity, class, and geography across every measure of economic progress. Progress is meaningful only if it’s felt by everyone and prosperity is shared by all Washingtonians. To create real progress, our state must have an inclusive economy in which everyone, especially people with low incomes and people of color, can participate in growth and benefit from it. Those are the primary findings of our “Building an Inclusive Economy” report (the first in our Progress in Washington 2018 series of reports).

Inclusive Economy carouselShared economic prosperity is one of the best measures of how our state and country are progressing, but economic growth has not been broadly shared in our state. Gains in income have been concentrated at the top while wages for low- and middle-income people have stagnated or declined. This rise in inequality is the result of many state and federal policy and budget decisions by legislators that have negatively impacted certain Washington state residents. Decades of regressive taxation, deregulation, privatization, cuts to the safety net, as well as the decline of collective bargaining have all played a role in rising inequality.

Washington state’s own upside-down tax code has contributed to the problem. Hardworking families in our state pay as much as seven times more than the wealthiest pay while corporations and the ultra-wealthy benefit from unnecessary tax breaks, making it hard for our state to have the revenue it needs to invest in the foundations that serve us all, such as great schools, quality health care, and other public priorities that make Washington a great place to live. Policymakers must fix our broken tax code. Doing so will allow our state budget to have sustainable sources of revenue to build an inclusive economy and to invest equitably in our communities in the short and long term.

Prosperity should be within reach of all Washingtonians
Making sure all Washingtonians have access to opportunity and resources is essential to ensuring prosperity is within reach of all residents. Across many indicators of economic progress, the data show that people with low incomes and people of color are starting off on unequal footing and are facing greater barriers in large part because of the impact of harmful historical housing, economic development, and financial policies. As Washington grows more racially and ethnically diverse, the future well-being of all of us hinges upon erasing the deep and pervasive racial imbalances that exist across these measures. By 2050, our state population will be majority people of color. Washington state’s young people are already at the forefront of this demographic transformation. Forty-three percent of children are kids of color.

 [Click on graphic to enlarge.]

WA_Demog_1980to2050

In an inclusive economy, all Washingtonians – regardless of race, ethnicity, nativity, income, or community of residence – would be able to access quality jobs and have financial security and stability. Our education system would be preparing students and workers for good jobs and jobs of the future. And all Washingtonians would be able to live healthy lives in vibrant communities so they can better connect to and participate in the economy. However, data trends highlighted in our report indicate economic prosperity is out or reach for many residents in three key areas – economic security; education and job readiness; and healthy people and communities. For example:

  • Economic security: Although economic growth holds the promise of prosperity for working people across the state, rising employment has not reached all communities. While unemployment in Washington state has overall dipped to 4.5 percent, for many communities of color – such as Pacific Islanders, American Indians, and Blacks – unemployment rates remain at or near 10 percent. There are geographic differences as well: the unemployment rate has remained high in many rural counties. In Ferry County, the unemployment rate is the highest in the state at 9.1 percent, and in Pacific and Wahkiakum counties, unemployment remains at just above 6 percent.
  • Education and job readiness: While the state’s Department of Early Learning’s goal is for 90 percent of kids to start kindergarten with the skills they need to succeed, currently only 47 percent of kindergartners are meeting that threshold, and there are significant differences by income and race. Only 33 percent of kids with low incomes, 27 percent of Pacific Islander kids, 30 percent of Latino kids, and 32 percent of American Indian kids were kindergarten ready in 2016.
  • Healthy people and communities: In Washington state, many low-income communities, communities of color, and rural communities experience worse health outcomes when it comes to chronic diseases, life expectancy, obesity, and more. Thirteen percent of households in Washington struggle with food insecurity – the inability to have three meals on the table every day as a result of lack of resources. Among 10th graders, Pacific Islander, Latino, and Black students have the highest likelihood of living in families that had to reduce meal sizes or skip meals compared to overall state average.

 [Click on graphic to enlarge.]

Food_Insecurity_10th_graders

Note about data: Disaggregated data is presented to provide a preliminary understanding of disparities by race, ethnicity, and nativity. On its own, the data throughout the report tells a limited story about the population it represents. We encourage users of this data to engage with communities of color to develop a more accurate and meaningful understanding than the data allows.

These and other trends highlighted in the report point to the fact that much work remains to be done for policymakers and all of us to advance shared prosperity and progress for generations to come. Our state budget and tax code are powerful tools to make this happen and to build an inclusive economy. In the upcoming 2018 legislative session and beyond, policymakers can choose to advance shared prosperity by making sure our state budget and policies increase economic security, promote racial equity, ensure all kids have access to great schools, and build thriving communities for everyone.

Stay tuned for the next publications in the Progress in Washington series, which will explore policy solutions that address the barriers to opportunities described in the “Building an Inclusive Economy” report.

“Building an Inclusive Economy” is the first report in our Progress in Washington 2018 series. The report is intended to offer a framework for understanding the challenges before us. To reach the goal of an inclusive Washington state economy with shared prosperity for everyone, we need to know where we are, where we need to be, and how we can get there.

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Statement: Washington’s Representatives must reject tax bill that would devastate the middle class and our state economy

Posted by Melinda Young-Flynn at Dec 02, 2017 11:28 AM |

From Misha Werschkul, executive director of the Washington State Budget & Policy Center, regarding the U.S. Senate passage of the GOP tax bill:

“Both the Senate and House tax bills are costly new giveaways to the wealthy and major corporations at the expense of working families, including tens of millions of low-income and middle-class Americans who actually would face a tax increase. Senator Patty Murray and Senator Maria Cantwell did the right thing for Washington state by voting against this dangerous bill. We now call on Washington’s 10 Representatives to stand with their constituents, demand a full conference process, and reject the final tax bill.

Both tax bills would explode deficits, strain our state budget, and almost certainly force cuts to everything from nutrition assistance for families to education, Medicare and Medicaid, and infrastructure. The Senate bill goes further, increasing the number of uninsured people by 13 million to pay for even larger corporate tax cuts. Both bills also eliminate the state and local income and sales tax deduction, which would only make matters worse by increasing pressure on our state budget, making it harder for state legislators to make investments in kids and strong communities. 

Small changes won’t fix the bills’ fundamental flaws. And the merged tax bill that comes out of a conference committee will be more of the same – offering nothing to most working families and ultimately hurting many. Instead of tax cuts that help those who need it the least, legislators should work to advance tax policies that invest in working families while ensuring that any tax bill is paid for by closing tax loopholes or other responsible tax changes.”

 

Media Contact: Melinda Young-Flynn, melinday(at)budgetandpolicy(dot)org 

 

                                                                                                               

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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.

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