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Special Session Day 6: ‘People’s Hearing’ calls for tax changes

OLYMPIA – With most legislators away from the Capitol and any budget talks going on behind closed doors, Democrats invited people from around the state to a hearing to support a capital gains tax and several other budget items they’d like to get in the current special session.

The “People's Hearing” – which had the veneer of an official legislative hearing but none of the authority – was an indictment of the state's tax system and a plea for more money for schools and state services. One speaker from each of the state's 49 legislative districts got two minutes to explain something he or she thought lawmakers should do.

The most common theme was to ease the tax burden on the poor and increase it on the wealthy through a capital gains tax. The Legislature has two different proposals for taxing investment income, a House proposal for a 5 percent on gains above $5,000 for an individual taxpayer, and a Senate proposal for 7 percent on gains above $50,000.

“We are united in the call for a fair solution to unfair taxes,” Janie Hauff, a home health care worker from the Spokane Valley, told legislators.

Cheryl Steele, of Spokane, said central Spokane’s 3rd District is the poorest in the state and needs the state’s social programs for children, seniors and other vulnerable citizens. State workers also deserve a raise after years in which their wages were frozen or reduced in the recession.

“I stood proud by the state during tough times and I would appreciate the allegiance in return,” said Steele, who drove to Olympia with fellow Airway Heights Correctional Center worker Connie Kanehailua on their day off., two workers at the Airway Heights Correctional Center, drove over on their day off. They made several trips to the Capitol to lobby during the regular session and think tax changes will gain some traction in the current special session called to finish work on state budgets.

“I feel confident because they’re running out of options,” Steele said.

But while the speakers at the hearing included Democrats, Republicans and independents, their suggestions were mostly an exercise in preaching to a choir of Democratic representatives and senators. There were no Republicans from either chamber at the desks on the dais. 

WaLeg Day 94: Senate Democrats and Republicans unveil teacher pay plans

OLYMPIA – With the end of the legislative session on the horizon, Democrats and Republicans unveiled different plans Wednesday to pump more state money into public schools, something the state Supreme Court has said they must do.

Senate Democrats proposed a capital gains tax on the state's wealthiest residents, those who earn more than $250,000 per year on their investments. It would raise an estimated $1.3 billion and provide the money for the state to take over a responsibility it has been shirking for years, paying the basic salaries of teachers and other school personnel.

“We’re trying to put something on the table,” Sen. Jim Hargrove, D-Hoquiam, said. “This is a doable plan.”

Senate Republicans unveiled a different bill with a similar goal in mind. They want to rearrange the property tax levy system, lowering the amount local school districts collect and raising the amount the state charges for its levy. The average property tax payer wouldn’t see much difference in the annual bill, but the extra money the state collects would go back to the districts for basic teacher pay as part of a larger plan to equalize those salaries across the state.

That would reverse a trend that goes back decades in which the state covered less of school salaries and local districts picked up the difference, and pay disparities grew between districts, Sen. Bruce Dammeier, R-Puyallup, said. “The state has made the easy decision of having everybody else pay our bills.”

Last year the court found the state in contempt of its order to come up with a plan that satisfies a constitutional requirement that education is the state’s “paramount duty”. It didn’t impose a penalty at that time and gave the Legislature this session to develop that plan.

Both plans are scheduled for a hearing in the Senate Ways and Means Committee todaycqThursday, but face significant challenges beyond the need to be approved by two chambers controlled by opposing parties in the 10 days left in the regular session.

The Democrats' plan consists of three interconnected bills, with a six-year phase-in of a new system for school salaries, which would be adjusted every four years, as well as a phase-in for more teachers and smaller class sizes required by an initiative voters approved last year. Local school levies would be reduced by the amount the districts get from the state, so more than 98 percent of residents would get a tax break, Hargrove said.

It also requires a new tax, which is never popular with voters. But sponsor Sen. Kevin Ranker, D-Orcas Island, said it would fall on only about 7,500 people, and the lower limit for investment gains would be set through a constitutional amendment.

“It will never come down without a vote of the people,” said Ranker, and the money would go into a special trust fund that could only be used for basic education expenses. He produced a letter with 100 people who would pay the tax and support it.

Such an amendment requires two-thirds majorities in both houses, and a simple majority of voters in November.

The Republicans' plan would eliminate a law voters approved through initiative, the annual cost-of-living adjustments for teachers and some other school staff. The Legislature would set base salaries and adjust them annually through a different inflation adjustment measurement. Collective bargaining between local school districts and their unions would be limited to working conditions and supplemental pay.

It also involves changes to the state’s complicated levy laws, the levies of its 295 school districts, and the restrictions on the amount a levy can be raised. This plan, too, would phase-in a reduction in local property tax levies as the state property tax levy rises and the state would use the money it collects for teacher salaries.

This would meet a requirement by the Supreme Court that the state reduce its reliance on local levies, Dammeier said. Because the money is already being collected, most taxpayers wouldn’t see an increase in their total bill.

Senate Democrats are basing their plans for paying teachers on a new capital gains tax, which is different from capital gains tax proposals by Gov. Jay Inslee and House Democrats. Dammeier said he doubted there were votes in the Legislature to pass such a tax through both chambers.

Inslee said Wednesday he had not yet studied the plans, but said he remained optimistic the Legislature would produce a bipartisan budget that satisfies the court’s mandate on schools. To do that, he’s told budget negotiators he still believes the state will need some type of tax increase.

“We can’t do this with gimmicks and hopes,” Inslee said.

WA Lege Day 12: Murray floats capital gains tax

OLYMPIA — The Senate's top Democrat will propose asking Washington voters to approve a capital gains tax on the wealthy to help pay for better schools and more affordable college.Senate Minority Leader Ed Murray of Seattle said this morning he will introduce a bill next week for a 5 percent excise tax on capital gains that would hit an estimated 3 percent of the state's population. It's an attempt to get what he called a "grand bargain" on education that would join reforms to the schools and provide the money to pay for it.

But the Republican-dominated coalition that controls the Senate has already denounced Democrats for the range of tax proposals they've introduced, including an income tax, which has been rejected repeatedly by voters.
"There's a steady flow of tax ideas coming out," Senate Republican Leader Mark Schoesler of Ritzville said.
This despite the fact that Gov. Jay Inslee, a Democrat, has said he would veto new taxes if they come to him, Schoesler added.. .
 
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Dem freshmen leap into tax reform

OLYMPIA — Democratic freshmen in the House called this morning for tax reforms ranging from a state capital gains tax to an end to sales tax exemptions for out-of-state shoppers.

At a press conference, a dozen first-term Democratic reps also said they'd like the Office of Financial Management to do a detailed study of the state's revenue picture and the tax burdens its citizens have. They'd also like to swap the Business and Occupation tax for a 1 percent income tax.

Spokane Rep. Andy Billig, one of the 12, said they wanted a tax system that's "fair and stable and adequate."

It's Leap Day, as well as Day 52 of the 60-day session, so a reasonable question might be what's the prospect that any of this will pass before the gavel comes down on the session on March 8?

They're going to try to get proposals out of committees and onto the House floor for a vote, Billig said. But if not, they'll work over the interim to push these ideas. When they pushed for closing a tax exemption the state gives large banks on mortgages last year, they didn't get much support; this year members of both parties in both houses support it, Billig said.

The House is scheduled to vote sometime today on its version of a revised 2011-13 General Fund budget. Are they withholding their votes on their leadership's budget unless they get action on their package?

"We don't leverage votes," Rep. Chris Reykdahl of Tumwater said. "We will vote on our budget today."

Problems with the state's "structural problems" on taxes were a big topic of the House Ways and Means Committee hearing later in the morning, where Rep. Laurie Jinkins of Tacoma, another one of the 12, got a hearing on her proposal for a state capital gains tax. Chairman Ross Hunter of Medina tried to corral testimony by reminding witnesses that the panel consider fiscal issues, not policy matters. That wasn't too successful, so he warned the crowd that anyone who questioned the motives an any legislator, on any side, would have their testimony cut off.