House budget cuts exemptions, extends taxes

OLYMPIA – House Democrats want to spend about $1.9 billion more on education over the next two years, paying for much of it by extending some taxes set to expire in June and eliminating more than a dozen tax breaks now on the books.

As expected, they released a budget Wednesday with significant differences from the plan that passed the Senate last Friday in how it raises, spends and saves money over the two years that start July 1.

It fanned the rhetorical flames over taxing and spending, with the Senate Republican leader saying House Democrats should “put on their big-boy pants” and make tough budget choices, and Democrats saying the Senate plan was akin to a family putting its groceries on the credit card.

“For the last four years, we have relentlessly reduced the size and scope of state responsibilities,” Rep. Ross Hunter, D-Medina, chairman of the House Appropriations Committee said.

House Democrats say they want to reverse that trend and do it without some of the “unrealistic conclusions and unconstitutional transfers” in the Senate budget. They restored some of the programs that would be reduced or eliminated in the other proposal, although Hunter said “we don’t give anybody everything they want.”

But with a state Supreme Court mandate to spend more on public schools, they do add significant amounts to programs for kindergarten through high school and early learning programs.

One advocate for schools told the panel the budget was like “Christmas in April.” Superintendent of Public Instruction Randy Dorn said, “This is the first time I’ve actually thanked an Appropriations Committee.”

Overall, House Democrats would increase the operating budget, which covers many state programs and salaries, to about $34.5 billion from its current level of about $31 billion. That’s about $1.5 billion more than the state expects to collect from current taxes and other sources of revenue.

To make up much of the difference, they propose ending or narrowing 15 special tax rates or preferences. Some match tax changes in Gov. Jay Inslee’s proposal, such as extending the sales tax to bottled water, ending the sales tax exemption residents of some other states can get when shopping in Washington and another exemption for sales tax on landline telephone services.

Like Inslee, House Democrats also would make permanent a business and occupation tax surcharge on some professional services – like doctors, lawyers and architects – that was approved in 2010 as a temporary tax that would expire this June 30. They’d continue a tax on large breweries at a lower rate and extend the tax to microbrewers, who were previously exempt.

House and Senate Republicans were quick to criticize the new budget. Sen. Mark Schoesler, R-Ritzville, said it breaks a promise made three years ago that those temporary taxes would be temporary.

With the state expected to collect about $2 billion more over the next two years, voters want the Legislature to make difficult decisions and prioritize spending, he said. “It’s time that House Democrats put on their big-boy pants and listen.”

Democrats have a comfortable majority in the House and could pass the tax changes without any Republican support. But their plan also calls for using money from the budget stabilization fund, often called the rainy-day fund. That requires a 60 percent supermajority, and Hunter acknowledged he won’t know if he has enough votes until later in the week, when the budget is expected to come to the floor for a vote.

The two chambers will then have to find common ground between the two budgets and produce a plan that Inslee will sign.

That Senate plan passed that chamber Friday with a bipartisan 30-18 vote. But some of the Democrats who voted for it said they expected the House to send back a version that ends some tax breaks and spends more on social services.

Senate Ways and Means Chairman Andy Hill, R-Redmond, said that process of reconciling the different plans will start as soon as that chamber’s budget writers see what the House actually passes. Until then, he said, “I will try to keep the degree of rhetoric down.”