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$30 billion in new taxes get theatrical GOP support in Washington Senate

UPDATED: Mon., Feb. 27, 2017

OLYMPIA – In a sharp reversal of roles, Senate Republicans voted yes on some $30 billion in higher taxes over the next decade to improve schools, while their Democratic counterparts argued raising taxes should come only after scouring the budget for efficiencies and savings.

What might have seemed to a casual observer as a complete flip on tax policy was actually a bit of partisan theater. The taxes in question aren’t supported by either caucus. They were proposed late last year by Gov. Jay Inslee to pay for his comprehensive overhaul of the state’s public schools and the system that pays for them.

The Republicans weren’t voting yes to impose the taxes, they were voting yes to allow the full Senate to consider them, at which time they will almost certainly vote no.

“This is just request legislation that deserves its rightful place on the (Senate) calendar,” said Senate Majority Leader Mark Schoesler, R-Ritzville.

“This is just voting for taxes for the sake of taxes,” Sen. Andy Billig, D-Spokane, countered. The governor proposed the taxes to pay for proposed changes, and the Senate hasn’t voted on that education reform package, he said.

Senate Republicans are skirting normal procedures in an effort to highlight the governor’s tax proposals. Last week, the Senate Ways and Means Committee sent them to the full Senate without a hearing. Republicans didn’t recommend that the Senate pass them, which is the standard practice, and Democrats refused to vote on them. The three bills include:

  • A proposed capital gains tax of 7.9 percent on some investment earnings above $25,000 per person or $50,000 per couple, excluding profits from the sale of single-family residences. The Office of Financial Management estimates it would raise about $9.5 billion over 10 years.
  • A package to close existing tax breaks, including a change to the sales tax exemption some out-of-state residents receive when buying taxable goods in Washington, charging sales tax on bottled water and changes to the business and occupation tax and to real estate excise taxes on foreclosures. OFM estimates if all are approved, it would raise about $2.1 billion over 10 years.
  • A carbon tax of $25 per metric ton of carbon emissions, with half of the money collected going to schools. OFM estimates it would raise about $20.9 billion over 10 years.

“This is just theater. They’re not serious,” Billig said after the Rules Committee, which controls the Senate’s calendar, approved adding all three bills to a long list of proposals on which the Senate might vote in the coming days.

A complete state general fund budget for the next two years, which will include public school spending, isn’t expected to be ready for hearings for about a month in the Senate or the House. Each chamber is expected to pass different spending plans, which are likely to be subject to weeks of negotiations before a final bipartisan budget is crafted that can pass the House and Senate, and get Inslee’s signature.

Some version of a capital gains tax and a carbon tax have been proposed in the past but have received little support in the Legislature. The tax on bottled water passed several years ago but was removed by voters.

Senate Republicans and House Democrats have each passed very different proposals to overhaul public education and the current taxes that pay for it. On Monday, the Ways and Means Committee held a hearing on yet another proposal, from several Senate Democrats, that shifts property tax levies from the school districts to the state and makes them permanent, eliminating the need for regular re-approval by district voters. It would also guarantee schools at least $11,500 per student and set starting teacher salaries at $45,000 a year.

The committee has not scheduled a vote on that proposal.

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