We hope legislators have cleared their summer calendars and packed accordingly, because we don’t see a quick way to bridge the gap between the House and Senate budgets. We also don’t see much eagerness to dive into negotiations.
The Republican-controlled Senate wants the House to vote on its various tax-raising proposals before talking. The Democratic-controlled House doesn’t plan to do so. On the other hand, the Senate would send its property tax plan to the voters. A “no” vote means starting over.
The politics of taxation has been the underlying hurdle all along, but both sides need to get over it and seek compromise.
At the center of both budgets is the final step to fully funding basic education, which the Legislature is under court order to complete. It’s already in contempt for continually punting the solution from session to session. Both chambers spend similar amounts over the next biennium.
The Senate reforms the state property tax by adopting a flat rate of $1.55 per $1,000 of assessed value and zeroes out local levies until 2020. In general, homeowners in property-rich districts with low rates would see a tax increase. Homeowners in poorer districts with high rates would get a tax break. Funds raised from richer districts would be sent to the poorer districts. Spokane’s rate is $3.99, so homeowners here would get a tax cut. Many Puget Sound homeowners would see a tax increase. Not lost on anyone is that the tax increases are more likely to occur in districts represented by Democrats.
The Senate also cuts services and programs elsewhere in the budget and does not pay for most of the state worker pay increases that have already been negotiated.
The House would cover the salary increases and leave the state property tax alone. Instead, it would raise more revenue by introducing a capital gains tax on higher income households and reform the B&O tax to cut the rate for low-margin businesses and increase it for high-margin businesses. It would also change the real estate excise tax to raise more money off pricey homes.
The House would ratchet back local levies until they reach 24 percent of total district revenues, as opposed to the Senate, which ultimately caps them at 10 percent. The equity of the House’s proposal remains questionable, since the amounts raised statewide vary widely.
The House budget dumps the 1 percent property tax cap on what governments can raise, instead opting to allow local elected officials to seek larger increases. The Senate does not, which ignores the pleas of many officials, including Republicans.
Both budgets make wise investments in the state’s mental health system, which is also under court scrutiny.
After the posturing, both sides will have to give in. House Democrats will probably have to scale back taxation and accept some budget cuts. Senate Republicans might need to allow a new tax. The state’s code is infamously regressive.
A basic education funding solution should not go to the voters, because the issue is too complex. This is a job for legislators. It’s why they’re elected.
Besides, Olympia can be lovely in June.
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