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Spokane, Washington  Est. May 19, 1883

Washington Democrats announce state budget plans to spend excess tax revenue

The Washington Legislature released proposed supplemental budgets Monday.  (Rachel La Corte/Associated Press)

OLYMPIA – House and Senate Democrats released budget proposals Monday that would spend billions of dollars of extra revenue on schools and poverty programs rather than return the surplus to taxpayers.

The Senate’s more than $63 billion proposal focuses on making new investments in K-12 schools, reducing poverty and homelessness and addressing the climate crisis. The House’s $65 billion proposal focuses on education, public health and long-term care programs and services.

Supplemental budgets are adjustments to the two-year $59 billion budget passed last year. This year, the state had more than $5 billion more to spend than it did when passing the two-year budget last April.

Senate Ways and Means Committee Chair Christine Rolfes, D-Bainbridge Island, called the size of this year’s supplemental budget “unprecedented” in terms of revenue available and what is spent.

Both budgets will be debated in their respective chamber. The Legislature must pass a budget by the end of the session on March 10.

Both the House and Senate proposals use the remaining $1.3 billion in federal COVID-19 relief funds to pay for specific, COVID-19 related needs, such as testing, outbreak response and utility assistance. Both proposals allocate about $2 billion from the state’s general fund to a new transportation package being discussed in the Legislature. They also allocate more than $350 million for the state’s paid family leave program, which is in danger of becoming insolvent in the near future.

Neither plan proposes any new taxes. Much of the additional money came from better-than-expected revenue collections and federal COVID-19 relief funds that have yet to be allocated.

And neither plan proposes any general tax breaks. Rolfes said the Senate proposal instead focuses on targeted tax breaks, such as some tax exemptions for buying solar panels or electric vehicles.

Rolfes said at this point “all creative ideas are on the table” regarding tax breaks, but she said she wants to remain cautious of large tax cuts that could threaten the sustainability of future budgets.

“I want to be extremely careful about the path that we go,” she said.

The House plan funds a sales tax holiday, which would cost the state about $173 million. That proposal, currently making its way through the House, would provide a three-day sales tax exemption holiday during Labor Day weekend of this year.

House budget writers say the sales tax holiday is an “interim step” until next year when the state bipartisan tax structure work group is set to release recommendations for how to reform the state’s tax code.

Rep. Noel Frame, D-Seattle, said a sales tax holiday is the “fastest, most direct way to get money into the pockets of Washington families.”

Republicans criticized the lack of tax relief in the Democrats’ proposals.

Sen. Lynda Wilson, top Republican on the Ways and Means Committee, said concerns for the sustainability of the budget is “no excuse” for not providing tax relief, and Republicans have proposed different ideas to do so while making it sustainable.

“How can they possibly justify this to people who are finding it unaffordable to live in our state, between the rising prices for gas, food, housing, and electricity, the economic struggles brought on by the pandemic, and all the new taxes and fees they have adopted – and are pursuing again this session, with no end in sight?” Wilson, of Vancouver, said in a statement.

The Senate’s proposal adds about $5.8 billion in new spending for a total budget of about $64 billion. It makes new investments in K-12 schools, aims to reduce poverty and homelessness and attempts further moves to address the climate crisis.

More than $600 million would support new affordable housing and shelter needs. Another $600 million would increase investments in schools, including $172 million the next two years to add more counselors and nurses in schools.

Many schools have lost students throughout the pandemic, Rolfes said, and many schools are funded based on how many students they have. Some were in danger of having to make cuts to staffing because of these scenarios, she said. The Senate proposal would provide $345 million for schools to make up for the losses in students rather than shrink spending for schools teaching fewer students.

It would help “stabilize the system,” Rolfes said.

Additionally, the Senate proposal would use the remaining more than $1 billion in federal COVID-19 relief funds to pay for specific, COVID-19 needs such as testing, outbreak response and other public health needs. It also includes $100 million in utility assistance for residents who may need help paying for heat and electricity.

Senate Democrats’ plan would leave more than $3 billion in savings at the end of 2023.

House Appropriations Committee chair Rep. Timm Ormsby, D-Spokane, said their proposal focuses on “the basics”: food, shelter, health and cash assistance.

“We made historic investments based on what we learned, lessons learned and experiences that we had,” Ormsby said.

The House’s proposal adds about $6.2 billion in new spending for a total budget of about $65 billion. More than $2 billion would go toward K-12 schools, including for enrollment stabilization, salary increases, additional counselors and nurses and school nutrition. More than $600 million would fund long-term care and developmental disabilities programs.

It has about $373 million in housing and homelessness programs and services, including $150 million in utility assistance. It also has more than $100 million for food assistance.

Unlike the Senate proposal, the House proposal does not use most of the federal relief funds. That money needs to be spent by the end of 2024, and in the House version, it will remain in reserves until it is spent.

The House plan would leave about $2.6 billion left in savings at the end of 2023.

Both budgets are larger than normal supplemental budgets, both in spending and the amount of revenue the state has to use. Budget writers tried to focus on using that money to address issues people are concerned about, Rolfes said.

“While it’s a supplemental budget, it is a large supplemental budget,” Sen. June Robinson, D-Everett, said.

Laurel Demkovich's reporting for The Spokesman-Review is funded in part by Report for America and by members of the Spokane community. This story can be republished by other organizations for free under a Creative Commons license. For more information on this, please contact our newspaper’s managing editor.