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Gov. Jay Inslee to seek $1 billion in tax hikes in two-year budget

OLYMPIA – Gov. Jay Inslee’s budget proposal for the next two years will include a request for $1 billion or more in higher taxes along with some program cuts, a delay of some new school spending approved by voters and raises for state employees.

Inslee will unveil the details of his budget plans for the second half of his term over four days next week. But in a discussion Tuesday with reporters, State Budget Director David Schumacher said without some new taxes the cuts to state programs would be “horrible.”

The state’s current two-year general fund budget is $34.4 billion, and the current tax system is projected to bring in another $2.9 billion in the next two years. But most of that would be used up with the projected growth in current programs, not leaving enough for court-mandated improvements to public education, raises negotiated with state employee unions and new programs that Inslee described Tuesday as “reinvesting” in Washington. All told, those extra costs create a gap of about $2.3 billion above the revenue projections.

Inslee will release a budget proposal for the 2015-17 biennium that has no tax increases, using cuts alone to close that gap, Schumacher said.

But he won’t submit that budget to the Legislature. Instead he will submit an alternative spending plan that closes that gap with a combination of cuts to current programs and new or revised taxes. It will propose more tax increases than cuts although a final number hasn’t been determined, Schumacher said. While the proposal may suggest closing some tax preferences or “loopholes,” most such attempts in recent sessions have been unsuccessful because “politically, that seems to break down,” Schumacher added. Instead, the proposals will either be a possible change to the structure of a current tax, or a new tax.

It will propose delaying some costs of smaller class sizes in Initiative 1351, which voters approved last month, and concentrate on smaller classes for kindergarten through third grade.

The full details of the proposed program and tax changes will be announced Dec. 18, after Inslee has outlined plans for education, transportation and the environment earlier in the week. 

A governor’s budget proposal is merely a starting point for the Legislature, where the Democratic-controlled House and Republican-controlled Senate will write separate budgets then work to reconcile the priorities in each spending plan to find something that will pass both chambers and be signed by Inslee.

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