In final budget, lawmakers should take the best from House and Senate proposals

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In final budget, lawmakers should take the best from House and Senate proposals

By - February 23, 2018

The state House and Senate, both controlled by Democrats this legislative session, have proposed budgets that contain strong investments that would take steps toward ensuring that all Washingtonians have what they need to prosper. Lawmakers have the chance to enact much-needed new forms of revenue and make our tax code more equitable. There is no reason lawmakers shouldn’t include the best ideas from each proposal in their final budget.

As they create this final budget, they should also take into consideration the fact that state investments in communities have still not reached pre-Recession levels. In fact, overall near general fund spending in each of these budget proposals is still below spending levels in the 2007-09 budget cycle, when adjusted for economic growth. At the end of the day, the state budget must reflect our values and meet the needs of our communities in a real way.

Lawmakers should close the tax break on capital gains, reject new tax breaks

The House’s budget proposal includes a plan to close the tax break on capital gains, which would be a significant step forward in making our tax code more equitable. Washington’s tax code is completely upside-down: low- and middle-income households pay up to seven times more in state and local taxes than the top 1 percent do. A capital gains tax would affect fewer than 2 percent of the wealthiest Washingtonians – and only modestly at that. Further, revenue from a capital gains tax would diversify and strengthen our tax code, putting resources for important community investments within reach. Budget negotiators should include this common-sense proposal in the final budget.

They should also reject new tax breaks that siphon resources out of our communities and turn them into tax giveaways for special interests. A prime example of such a giveaway is the proposed rural manufacturer tax break, which is funded in the House’s budget. It’s a narrowed version of the flawed manufacturer tax break that Governor Inslee smartly vetoed last year. This tax break would cost the state millions of dollars a year that could be used instead to fund schools, help families put food on the table, or provide much-needed senior services. The bottom line is that right now is the time to clean up our tax code to invest in the priorities we all care about – not add more tax breaks.

Lawmakers should not use the rainy day fund to pay for property tax cuts

While the details of the House and Senate proposals differ when it comes to the use of rainy day funds, both plans would raid our state’s emergency savings to pay out statewide, across-the-board property tax cuts. As we wrote when lawmakers raised the state property tax last year to fund schools, any reforms to the property tax should be targeted specifically to making the tax more equitable for low- and middle-income families. Across-the-board cuts just give higher-income households more tax breaks they don’t need.

More importantly, using the state’s emergency savings to pay for tax cuts is incredibly irresponsible under any circumstances – but especially so during good economic times when our state should be building up reserves, not drawing them down. The rainy day fund is an essential safeguard to fund the most critical foundations – such as safe hospitals, functioning schools, and responsive emergency services – when our state endures an economic downturn or a natural disaster.

Instead of paying out property tax cuts to many households who don’t need it, lawmakers should think about the well-being of our entire state. That means ensuring we have the resources we need to invest in our communities now, and that we have reserves to weather emergencies.

The final budget should invest in Washington’s communities

Included below are snapshots of how successful the two budget proposals are at promoting the well-being of Washingtonians, using the Budget & Policy Center’s Progress in Washington framework:

Education & job readiness

Our education system must have the resources to prepare all students – from early learning through higher education – for good jobs and jobs of the future. It should remove barriers to education and employment for communities of color. Here’s how the budgets stack up in terms of:

K-12 schools. One of the most significant differences between the House and Senate proposals is that the Senate increases funding for K-12 teacher salaries by $778 million this budget cycle to comply with our state Supreme Court’s McCleary order by the 2018 school year. House budget writers opted to ignore the Court’s order and instead put off fully funding McCleary until next year, a choice that would leave teachers and students in limbo for yet another year. Budget negotiators should follow the Senate’s approach and fulfill their court mandate to fund schools now. Students – and their teachers – have waited long enough.

Both budgets would also increase funding for special education – a positive step toward ensuring that schools can provide a rich learning environment based on the needs of all of their students.

In addition to meeting the minimal requirements of McCleary, budget writers should ensure that the final budget contains ample funding for services that we know give students the best access to opportunities. These include investments such as Breakfast after the Bell – an essential step toward ensuring that kids who may otherwise show up to school hungry have access to breakfast each school day. The Senate budget contains some funding for the program, but more is needed in the final budget. This is a moral imperative: kids can’t focus on learning when they’re hungry. The final budget should also include additional funding for family involvement coordinators and guidance counselors, as proposed by the House, to ensure that students have the resources they need outside of the classroom.

Early learning and child care. Both the House and Senate propose small but important new investments in the state’s home visiting program, which has proven effective at providing in-home resources related to infant care, child development, and parenting skills. While this is a step in the right direction, state lawmakers should commit to expanding access to affordable child care and fully funding high-quality early learning to serve more kids from low-income families.

Higher education. The House budget proposes a substantial new investment of $158 million over the next four years in the State Need Grant, our statewide financial aid program, which would eliminate the long-standing waitlist of eligible but unserved students by 2021. This would be a remarkable step forward to put higher education within reach for thousands of students from low-income families and ultimately strengthen Washington’s workforce. The final budget should take the House’s approach.

Healthy people & communities

Our state should support vibrant communities that allow Washingtonians to lead healthy lives and better connect to and participate in the economy. Here’s how the budgets stack up in terms of:

Health care. In last year’s budget, lawmakers assumed millions of dollars in unrealistic health care and pharmaceutical cost savings in order to make the budget balance. Those savings predictably did not materialize, so both plans would restore funding to those areas to make up the difference.

Both budgets include an increased reimbursement rate for doctors who provide care for kids from low-income families, as well as increased funding for behavioral rehabilitation service providers who deliver intensive, comprehensive care for kids with high-level behavioral health needs.

Both budget proposals also include important funding that would expand health care access to Washingtonians who are citizens of Compact of Free Association (COFA) nations – the Republic of the Marshall Islands, the Federated States of Micronesia, and the Republic of Palau. Citizens of COFA nations are legal residents of the U.S. who work, pay taxes, and serve in the U.S. military – but are ineligible for Medicaid health care coverage. The final budget should take the Senate’s approach of fully funding this investment.

Behavioral health. Both House and Senate leaders propose increasing funding for Western State Hospital to comply with federal safety and quality requirements, and they both propose additional investments in community behavioral health treatment services. These are steps in the right direction to improve the quality and accessibility of behavioral health care across Washington’s communities.

Effective & accountable government

The state government supports the foundations of our communities. Our public institutions should efficiently and reliably ensure that all Washingtonians can meaningfully participate in our democracy.

Both budgets include funding to help people access essential public services, such as: enhancing our state’s emergency 911 system, streamlining how people access family law courts, and strengthening resources for Washingtonians with low incomes who need civil legal help. In addition, the House plan includes funding for economic development, such as a small business innovation exchange, which would support small businesses owned by women, veterans, and people of color. These are critical services that should remain funded in the final budget. These programs not only have significant impacts on the people who use them, but they also make all of our communities stronger.

Economic security

All Washingtonians should have access to employment opportunities, living-wage jobs, and financial security and stability; and they should be economically secure in the face of a financial emergency.

Both budgets smartly propose to strengthen services for Washingtonians with low incomes by restoring cuts made in recent years to grants for people with lower incomes who participate in WorkFirst, State Food Assistance, and Refugee Cash Assistance programs. The final budget should include those investments, plus proposals by House leaders to expand eligibility for the Housing and Essential Needs program, which provides housing-related assistance to people unable to work because of disabilities. It should also raise asset limits for low-income Washingtonians who receive public assistance, as proposed by the House.

The House and Senate budget writers have until March 8 to finalize their budget. With opportunities for new revenue and a number of good ideas on the table, they should be able to come up with a spending plan that will benefit all of Washington’s communities into the future.