Instead of creating a budget that enacts much-needed revenue reform, lawmakers have cobbled together a budget that makes progress toward fulfilling a mandate from the state Supreme Court to strengthen our K-12 schools. But the final budget agreement does this by relying too heavily on irresponsible accounting tricks, like drawing down the state rainy day fund and shifting funds between accounts, that will leave the state on shaky ground in future years.
Lawmakers propose to raise new resources for schools with a small increase in the state property tax. But it is disappointing that no actions were taken to offset higher property tax bills for lower- and middle-income homeowners and renters who, under our current tax code, pay up to seven times more in state and local taxes as a share of their incomes than the richest Washingtonians. In addition to the property tax changes, lawmakers agreed to eliminate wasteful tax breaks – including the bottled water sales tax exemption and a sales tax break for oil refineries – and close off legal loopholes that allow out-of-state businesses to avoid paying sales taxes and business taxes. But they also added or extended 13 other tax breaks that will take money out of communities in favor of special interests and leave fewer resources for future investments. Now is the time to clean up the tax code to clear out wasteful tax breaks, not add more.
Central to legislators’ budget negotiations was compliance with the state Supreme Court’s order to fund public schools by the end of this legislative session. The school funding plan included in the final budget deal overhauls the state’s teacher pay system and will invest an additional $7.3 billion in public schools over the next four years. It remains to be seen whether the compromise will be sufficient to satisfy the court’s order to amply fund public education.
It appears that severe cuts to many important priorities that improve the lives of Washingtonians with low incomes may have been largely avoided. If so, that’s a good start. However, the deal doesn’t do enough to strengthen many of the programs that allow people with middle and low incomes to thrive – and in particular many people of color who, because of systemic racism, are denied equal access to opportunity. Unless state lawmakers take significant steps toward reforming our tax code to enact equitable and sustainable revenue sources, meaningful improvements to community investments will continue to be difficult.
If lawmakers can get the budget signed by the governor in time, they may narrowly avoid a state government shutdown; but either way, the result is a makeshift budget that doesn’t address the unsustainability, inequity, and inadequacy of our tax code. Especially with the threat of huge federal cuts on the horizon, state lawmakers must ensure the budget protects the wellbeing of Washingtonians.
In 2018, lawmakers will have another chance to lift up Washington’s communities and build a brighter future for our kids. To do that, they’ll need to get serious about cleaning up our tax code to raise state resources in an equitable and sustainable way.
Stay tuned for more-detailed analysis from the Budget & Policy Center after our full review of the budget.