Washington’s key budget writers started Monday morning in the governor’s office as they tried to hammer out a two-year operating budget. They emerged with the same message that’s echoed through the Capitol’s chambers since January’s start of the regular legislative session: Democrats calling for new taxes, Republicans resisting.
Partisan gridlock has led to a second special legislative session. But Rep. Ross Hunter, D-Medina, the House Democrats’ lead budget writer, assured a room full of reporters on Monday that “We’re not Washington, D.C.” and promised at some point lawmakers will shake hands and balance the budget. This is the first full week of the second 30-day special legislative session. If lawmakers can’t strike a deal by the end of the month, certain state agencies risk being shut down.
On Monday, House Democrats unveiled another budget proposal. Their latest version would close fewer tax loopholes. But it still focuses on a new capital gains tax that would affect about 32,000 Washingtonians. It would tax the capital gains on sale of stocks, bonds or other assets that exceed $50,000, with exemptions included for primary residences and retirement accounts.
“If you are super-wealthy in this state, your tax rate is about 2.4 percent,” said Rep. Reuven Carlyle, D-Seattle. “If you’re really low income, your tax rate is nearly 17 percent. And if you’re middle class, it’s about 9 percent … We’re better than this as a state.”
The capital gains tax would raise a projected $570 million for the final year of the 2015-17 budget. Most of it, $400 million, would fund the state’s public schools, as required by the state Supreme Court’s decision in the McCleary case. The remainder would go toward higher education. The total proposed two-year budget is $38.4 billion.
Democrats hailed their budget as a compromise and said it offered a clear path toward adjournment.
Senate Republicans immediately responded by pointing to the May economic revenue forecast showing an uptick in the state’s revenues without any new taxes.
“I think we’ve shown we can fully fund McCleary, we can cut tuition, we can protect the most vulnerable, that we don’t need (new) taxes,” said Sen. Andy Hill, R-Redmond, the Senate’s key budget writer. “We’re not talking about making cuts or not making cuts … (Republicans) increase statewide spending by 12 percent, (Democrats) want to increase (it) by 15 percent.”
“Unfortunately, the big sticking point is that they are calling for taxes we feel are unnecessary,” Hill said.
Sen. Ann Rivers, R-La Center, said she’s worried a capital gains tax would be put into place now and later lowered to affect more taxpayers.
“Once it’s put in place, it can be manipulated and lowered to charge it on all of us, thereby becoming an income tax,” Rivers said.
“Candidly, I don’t get it. We don’t need the taxes …Increasing taxes when you really need them is important, but when you do it and you don’t really need it, the public is not going to look so favorably on your action,” Rivers said.