OLYMPIA – After a year of uncertainty, state lawmakers have released their plans to fund the state’s COVID-19 fight and economic recovery for the next two years, using state money, federal stimulus funds, the rainy day fund and a new capital gains tax.
A day after Senate Democrats announced a similar plan, House Democrats released their two-year budget proposals on Friday. The House proposal will spend slightly less in state money, slightly more in federal money and move rainy day funds into a new account for COVID-19 recovery.
The House’s proposed operating budget would spend about $58 billion for the next two years for schools, public safety and housing, while making new investments in child care, a working families tax exemption, foundational public health and wildfire fighting.
House Appropriations Chair Timm Ormsby, D-Spokane, said the budget helps meet the challenge of uneven economic recovery that the state is currently facing.
“This makes investments in people,” he said.
Additionally, the House plan would spend $2.2 billion of the more than $4 billion in flexible federal money that came directly to the state government on business assistance, rental assistance, food assistance and unemployment insurance, among other areas. Washington has until the end of 2024 to spend all of those one-time funds.
The House plan also allocates additional federal funds given to the state to be used for specific one-time needs, including almost $2 billion for reopening schools, $1 billion for public health and COVID-19 vaccine distribution, and $500 million for child care costs.
Using state funds, the House budget proposal appropriates $100 million every two years for foundational public health, slightly less than the $150 million the Senate proposed. The House proposal also funds wildfire fighting and forest health with $125 million every two years, similar to the Senate.
It also makes additional investments from both state and federal funds for housing assistance, the immigrant relief fund, long-term care facilities, business recovery and public safety.
The House budget would also provide funding for five extra school days next year to help address learning loss in schools.
Unlike the Senate plan, the House plan would appropriate the $1.8 billion in the state’s rainy day fund to a new account specifically to address effects of the COVID-19 pandemic. The money wouldn’t necessarily be used right away but would instead be ready for any one-time costs in the future.
The reasoning behind that decision was to prepare for the volatility of the economy in a post-pandemic world, said House Democratic Majority Leader Pat Sullivan, of Covington.
The Senate budget also drains the rainy day funds but uses them immediately for one-time costs.
Similar to the Senate proposal, the House Democrats’ plan includes a capital gains tax, which passed the Senate last month. It would impose a 7% tax on the sale of stocks and bonds, personal property and businesses that exceed $250,000 annually. The tax, as passed in the Senate, would bring the state about $550 million each year. Of that, both the House and Senate budgets allocate $350 million for child care needs and about $200 million to fund the Working Families Tax Exemption, which gives rebates to low-income working families.
Ranking Republican on the House Appropriations Committee Rep. Drew Stokesbary, of Auburn, expressed his disappointment in Democrats’ plan in a statement.
“I’m stunned the majority party would continue to push a job-crushing capital gains tax at a time when we continue to face high unemployment,” Stokesbary said. “Our economic recovery will depend on private investors and entrepreneurs betting on Washington’s ingenuity and hard work.”
Republicans have released their own budget proposals, which increase spending slightly but not as much as Democrats’. Republicans have also been critical of the capital gains tax, calling it an unconstitutional income tax that is unnecessary with the amount of federal money and additional revenue the state is receiving.
Both the House and Senate proposals spend more money than the state does in its current two-year proposal. Revenue collections in the state are in a better place than a year ago, when the state was forecast to have an $8.8 billion shortfall because of COVID-19. Tax collections have since rebounded, with last week’s forecast showing the state’s projected revenue was back to pre-pandemic levels.
Sullivan said this budget tries to push out money to “every corner of the state.”
“We acknowledged that the economy is uneven,” he said. “Some aren’t recovering like those that are doing very well.”
The House and the Senate budgets will eventually have to be consolidated into one proposal passed by both chambers. The last day of the legislative session is April 25.
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