Despite an economic downturn and uncertainty created by the lingering coronavirus pandemic, Washington lawmakers have passed an optimistic and ambitious budget for the coming two years.
Democrats approved a $59 billion operating budget for 2021-23 before adjourning on Sunday, concluding a session conducted mostly by remote. While the meetings were virtual, the increase in spending is very real.
It also is questionable, primarily with the inclusion of a new capital gains tax on the selling of assets worth more than $250,000. That tax, strongly opposed by Republicans, raises questions about the entire budget.
Critics have claimed that a capital gains tax amounts to an income tax and, therefore, is unconstitutional in Washington. The new tax, expected to bring in about $415 million a year beginning in 2023, is certain to face court challenges that could delay its implementation or eventually scuttle it. That battle did not need to be fought, particularly at a time when budget stability is crucial for helping the state prepare for a post-pandemic world.
“The fact that this relies on new taxes is a choice,” Rep. Drew Stokesbary, R-Auburn and lead Republican budget writer in the House, said. “It’s not a necessity.”
Sen. Lynda Wilson, R-Vancouver and her party’s lead budget writer in the Senate, said: “If you like a budget that is harder on people with lower incomes and people in marginalized communities, and sneaks a billion dollars out of the rainy-day fund into a slush fund, then the Democrat budget is a winner.”
Any budgeting process is inherently partisan, particularly with Democrats in charge of both legislative chambers and the governor’s office. Republicans have little recourse other than to state their case in the court of public opinion.
And while the capital gains tax and a withdrawal of $1.8 billion from the state’s rainy-day fund will draw scorn from Republicans, Democrats deserve kudos for addressing some pressing needs throughout Washington. Despite some economic insecurity, this is not a time for stark austerity that would limit the state’s ability to recover from the pandemic.
Dedicated funding of $130 million for two years to prevent and suppress wildfires is a wise investment. Allotting $261 million for a tax credit for working families — originally passed in 2008 but never funded — was a bipartisan success. Spending $800 million to reduce unfunded liability in the Teachers Retirement System Plan will help prevent a future budget calamity and adding $300 million for the Fair Start Act to expand child care and early learning is a down payment on a prosperous future.
There also are vast and necessary expenditures on infrastructure and climate initiatives.
Meanwhile, lawmakers earmarked billions of dollars in federal COVID-19 relief that falls outside the $59 billion two-year state budget. That includes $1.7 billion for school reopenings and other education efforts, $1.1 billion for public health efforts and $658 million for rent assistance. The plan also responsibly holds back about $1 billion in federal money in reserves.
Much of that will be overshadowed by public discussion and political hand-wringing over the capital gains tax. With an influx of federal money and with the economic downturn being less severe than initially expected, Republicans argue that new taxes were not necessary to meet the state’s needs.
That is a matter of perspective, but opinions might be rendered moot by a court decision on the capital gains tax.