House Democrats unveil their 2015-17 operating budget plan -- Will add $3.2 billion to K-12 investments

OLYMPIA – House Democrats unveiled their 2015-17 operating budget plan on Friday – a budget that will add $3.2 billion in additional K-12 investments over the next two years compared to the 2013-15 budget. The HDC proposal is the first budget proposal on the table that puts the state in full compliance with the Supreme Court’s McCleary ruling, which mandates the state adequately fund basic education by 2018.

“After seven years of cuts totaling more than $12 billion, we have to take an honest look at the state of our state,” said House Majority Leader Rep. Pat Sullivan (D-Covington). “We have to ask: ‘Is this really what we want?’ This budget is a stand against mediocrity. Just being ‘Okay’ is not acceptable.”
“This budget keeps our promises to Washington’s one million kids,” said Rep. Ross Hunter (D-Medina), House Appropriations Chair. “We’re making the biggest investment in student success, mental health, and middle-class families that our state has seen in decades. It’s a responsible budget that meets the needs of our state and balances over four years.”Highlights included in the House Democratic Budget Proposal:  Read More >>

• $3.2 billion – Additional K-12 spending, a 21% increase in funding over last biennium
  • $1.4 billion in K-12 policy adds that will count towards that state’s McCleary obligation including:
    • K-3 class size reduction
    • Full funding for all-day kindergarten for every child in the state
    • Materials, supplies and operating costs
    • Supports to prepare students for college and careers
  • The remaining $1.8 billion investment pays for the policy decisions made towards fully funding education in the 2013-15 budget.
• $385 million – Restore cost-of-living adjustments for school employees.
• $227 million – Expansion of quality early learning and childhood education.
• $256 million – Investments in higher education including two years of tuition freezes, student financial aid, and high-demand, high-salary degrees.
• $100 million – New mental health capacity to ensure that people get the help they need in their time of crisis.
• $9.6 million – Restore previous cuts to the state’s Food Assistance program that feeds hungry children, families, and seniors in the state.

As a result of an unfair and outdated tax structure, state revenues are becoming increasingly inadequate to pay for essential state services like basic education, health care, and prisons. The state doesn’t have adequate resources despite a growing economy. After seven years and $12 billion in budget cuts stemming from the Great Recession, many lawmakers believe now is time to act on revenue reform.

“We have the most unfair tax structure in the nation,” said Rep. Reuven Carlyle (D-Seattle), House Finance committee chair. “Our tax system hurts working families, the middle class, and small businesses, while the wealthiest individuals and corporations don’t pay their fair share. It’s time to build fairness in the system so that we can make critical investments in our state’s economy.”

The budget proposal includes a revenue package that takes a step toward restoring fairness in the system and generates the revenue needed to pay for essential state services. Those proposals include:

• Ask the wealthy to pay their fair share by imposing a 5% excise tax on capital gains profits.
  • Revenues from the capital gains tax would go into a new “Student Investment Fund” to be used for K-12 and higher education investments.
• Reinstate the increase on the B&O service tax rate by .3%.
  • A similar policy was enacted temporarily during the Great Recession.
  • The proposal also increases the Small Business B&O Tax Credit for service businesses by nearly double, eliminating B&O tax for an additional 15,000 businesses each year. Services businesses making up to $100,000 in taxable income would pay no B&O taxes at all.
• Bring fairness to our home-grown online retailers by taxing transactions from out-of-state online retailers.
• Repeal and narrow seven of the 650 tax exemptions that have proven to be outdated, costly, and inefficient.

The total amount of revenue raised though this proposal is $1.5 billion. Additional details of the revenue package can be found here.

• K-12 and Teachers
• Early Learning and Higher Education
• Mental Health & Safety Net
• The Fair Share Tax
• Back to Business Plan
• Close Costly Tax Breaks

The operating budget, HB 1106, is scheduled for a public hearing on Monday, March 30 at 1:30 p.m.
Budget documents can be viewed at: http://fiscal.wa.gov/BudgetOBillsHouse.aspx