Inslee wants teacher raises, tax changes in 2016 budget

OLYMPIA – Teachers would get raises, bottled water would be taxed and the state would hire more mental health professionals if Gov. Jay Inslee gets his way in budget negotiations next year.

Those were some of the proposals Inslee offered as he opened the 2016 budget discussions Thursday by releasing his supplemental spending plan for the remainder of the state’s two-year fiscal cycle. He called the plan “a modest adjustment so we can continue following through.”

It immediately drew fire from Republicans. His would-be GOP challenger for next year’s election, Bill Bryant, said Inslee should make changes in the state’s current spending priorities to pay for additional staff or higher salaries, not raise taxes. Senate Ways and Means Chairman Andy Hill, of Redmond, criticized the plan for failing to satisfy state laws requiring budgets to balance over the next four years.

“The governor continues to offer plenty of ways to spend taxpayer dollars but fails to provide a sustainable way to pay for it,” Hill said.

Inslee’s budget expects the state to collect about $245 million more in revenue through taxes and fees than lawmakers thought when they adjourned last summer. It projects the state would need to spend $700 million more for the growth in existing programs, rising health care costs and the improvements Inslee is proposing.

In other words, the budget would be about $500 million out of balance without proposing any big new programs or state initiatives. Part of that imbalance is some $178 million to cover the costs of fighting wildfires in last summer’s record fire season, when more than 1 million acres burned and some 300 homes were destroyed. The state is asking the federal government to reimburse some of those costs, but that money might not show up for another year or two.

Inslee wants to take money for wildfire fighting, and some other increased program costs, out of a reserve fund known as the Budget Stabilization Account, but that needs legislative approval.

In a separate proposal, Inslee also wants to give all teachers a raise, with the largest increases going to beginning teachers. Even with a 4.8 percent raise for next school year in the current budget, the state is facing a shortage of teachers, Inslee said. He wants the state to raise its share of starting pay by $4,300, to $40,000 per year for about 8,800 starting teachers. Other teachers would get smaller raises of at least 1 percent.

Public schools are facing a “critical shortage” of teachers, he said, with older teachers retiring and younger teachers leaving after a few years because beginning pay is too low and they don’t receive enough professional development and support.

To pay for the raises, he proposes closing four tax exemptions the Legislature has considered, but ultimately rejected, in past sessions: Bottled water would lose the sales tax exemption that applies to food. Visitors from other states with a lower sales tax rate than Washington would not get an automatic exemption when shopping here, they’d have to file for a refund with the state. Some tax exemptions on extracted fuel would go away. Banks would pay the real estate excise tax on home sales from foreclosures.

Asked why he thought the Legislature would close those exemptions in the short 60-day session, when it has rejected those changes before, Inslee said he believed lawmakers would act to address the shortage now.

“You can’t tell a first-grader … they’ll just have to wait for a longer session,” he said. “I’m going to ask the Legislature to buckle down.”

If the Legislature won’t close tax exemptions to come up with the money, Inslee said he has no backup plan.

Bryant, a businessman who serves on the Seattle Port Commission, said he agreed that teachers deserve a raise. “I do not agree with how he would pay for it,” he said.

The money should come through reprioritizing current spending, Bryant said, but didn’t offer specific programs he would reduce or eliminate. If elected he promised to use zero-based budgeting, which assumes no funding for any program at the start and requires each department to justify expenditures rather than starting with existing spending and deciding how much to increase or lower it.

Hill said state law requires budgets to balance over four years, but Inslee’s proposal is “so far out of balance … it doesn’t give us much guidance.” The state has a problem with too few teachers, but raising taxes through the closing of some exemptions isn’t the way to solve it. The Legislature needs to look at the teacher shortage in combination with other problems in education as it works to meet a state Supreme Court mandate to improve public schools.

Enough extra revenue is coming in that the state should be able to cover the cost of fighting wildfires and the higher demand for state services within the existing budget, he said.

Senate Majority Leader Mark Schoesler’s reaction to the budget proposal was brief: “The 2012 Jay Inslee that was running for governor said that new taxes are the wrong direction for Washington,” the Ritzville Republican said. “I believe that Jay Inslee, that any new taxes are STILL the wrong direction.”

The 2016 session starts Jan. 11. Legislative budget proposals are typically introduced after the next revenue forecast on Feb. 17.