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News >  WA Government

Democrats have tentative deal on $52.4 billion budget

UPDATED: Fri., April 26, 2019

Representatives work on the House floor during discussion of a bill to fully fund education in Washington state June 30, 2017, at the Capitol in Olympia, Wash. (Ted S. Warren / AP)
Representatives work on the House floor during discussion of a bill to fully fund education in Washington state June 30, 2017, at the Capitol in Olympia, Wash. (Ted S. Warren / AP)

OLYMPIA – Legislative budget negotiators reached a tentative agreement on a $52.4 billion spending plan that would cover most state services and salaries over the next two years, with votes on the proposal coming this weekend.

As part of their plan, Senate and House Democrats are proposing a series of new or revised taxes to help increase what the state will spend on public schools, higher education, mental health and environmental programs.

“It reflects the priorities and values of our state,” Senate Majority Leader Andy Billig, D-Spokane, said Friday evening in briefing to reporters about the budget shortly after the details were given to legislators.

The proposal contains some help for local school districts like Spokane Public Schools that are facing staff layoffs because of projected shortfalls in their budgets. It would set aside $155 million for special education students – one of the areas in which the districts have been spending some of their levy money on an area they say should be covered by the state.

The proposal would also adjust the formulas for determining that funding and give extra financial aid for incorporating special education students into regular classes.

Still to be determined is whether the Legislature will make changes to the maximum levy rate that school districts can seek from their voters, because that legislation is separate from the budget. But the budget does have more money for local effort assistance, another source districts can use for the programs they have beyond the basic education covered by the state.

Although projected state revenues for the next two years are slightly more than $50 billion, a record, the total Democrats propose to spend is larger, and they’re proposing several new sources of tax money to make up the difference.

They’ve proposed a revision to the real estate excise tax they say will cut the taxes for about 80% of sales in the state, and raise it for others. The current REET is 1.28%, regardless of selling price. They’re proposing a graduated tax, dropping it to 1.1% for the first $500,000 of the sale; 1.28% for the portion between $500,000 and $1.5 million; 2.75% for any portion between $1.5 million and $3 million; and 3% for any amount after $3 million. The change is expected to raise an extra $243 million.

They are also proposing what they call a Windfall Profits tax, directed at large banks they contend are receiving large tax cuts from the legislation championed by President Donald Trump. Financial institutions with $1 billion or more in global net profits would see their business and occupation tax essentially double, to 3%, with a small portion being set aside for higher education

Other businesses that rely on employees with high-demand degrees like computer science, engineering and nursing would also see an increase in their B&O tax rate. Some professional service companies would see their rate go from 1.5% to 1.8%. Advanced computing businesses with a worldwide gross of between $25 billion and $100 billion would have a tax rate of 2% and those with a worldwide gross over $100 billion – that is, Microsoft – would have a rate of 2.5%.

Those taxes, called a Workforce Education Investment Assessment, would create a special dedicated fund of $393 million in the operating budget for higher education. It pays for increased financial aid, higher salaries for certain staff at community and technical colleges, and increased enrollments in high demand areas.

That money would also cover the $17.4 million for the third- and fourth-year students at the Elson Floyd College of Medicine at Washington State University Spokane, and $3.6 million to expand the first-year classes at the new medical school from 60 to 80 medical students this year and next.

Majority Democrats have until midnight Sunday to pass the budget and any taxes and remaining policy bills connected to it.

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