Fresh ideas for Washington's future

 

A group of 13 House Democratic freshmen kicked off a conversation this morning to discuss plans for the long-term fiscal health of Washington and bringing fairness to the state tax code. These lawmakers are bringing a number of issues to the table such as simplifying the B&O tax, requiring periodic legislative review of tax preferences, and adopting a capital gains tax.

Washington is the only state exempting out-of-state residents from paying sales tax. Rep. Kris Lytton has plans to end this loophole and, by redirecting the estimated $52 million/biennium, is pushing to fully fund all-day kindergarten.

Rep. Steve Tharinger stressed the need for careful analysis of the tax giveaways that have been in the books for almost a century, to see if those funds could be used in better ways to help rural communities that have not been spared from budget cuts.

A measure to re-balance the tax burden was put forth by Rep.Laurie Jinkins, which would apply a five percent excise tax on capital gains in excess of $10,000/year. This would generate approximately $1.4 billion per biennium that would be used to protect education and health care from further devastating cuts. 

The House Democratic freshmen realize these aren’t solutions to the state’s immediate budget problems, but rather emphasized this new approach to funding our state’s most vital services, ensuring long-term stability for Washington residents.

The legislators are planning a summer ‘listening tour’ in their home and neighboring districts to discuss these proposals with their constituents.

To read the press release about this morning’s news conference, click here.

To read this post in Spanish, click here.

Watch the press conference below:

The Op-Ed by Rep. Chris Reykdal The Olympian Won’t Print

In his latest column-turned-open-letter, Rep. Chris Reykdal challenges the local McClatchy papers, which have been devoting large amounts of ink and bytes to legislators who have - and haven't - voluntarily reduced their salary by 3 percent, to perhaps focus on real budget solutions, and possibly ask more of themselves in return.

Here's an excerpt:

A salary cut is symbolically important to be sure, but not a viable answer to our budget woes. The state tax exemption your corporation and other newspapers in Washington enjoy is worth $32 million biennially. That is 170 times more than the money saved by a 3 percent cut in all legislators’ salaries (estimated at $190,000 or 0.00122 percent of the Near General Fund budget).

Taken a step further, if we could recoup just 3 percent of all the tax preferences under the direct control of the Legislature (not those subject to federal commerce restrictions and other constitutional limitations), we would add $360 million biennially to the State budget. Our kids, our college students, our elderly, our most vulnerable, our environment, and most of our small businesses would all be a little better off with that sacrifice.

Read the full column here

To read this blog post in Spanish, please go here.

In the House today

We will convene on the floor this morning at 10:00 am. The plan for the floor is undetermined right now, but there is some interesting committee activity scheduled for this afternoon.

3:30 pm Ways and Means
Public Hearing:
1. HB 2078 - Funding K-3 class size reductions by narrowing and repealing certain tax exemptions.
2. HB 2087 - Funding mental health services by repealing the nonresident sales tax exemption.
3. HB 2102 - Restoring funding to in-home care services.

Rep. Andy Billig talks closing loopholes

Rep. Andy Billig sat down with TVW's Niki Reading today, to talk about the bill introduced by the 11 House freshman Democrats to close certain tax exemptions to fund smaller class sizes for Kindergarten-3rd grade classes.

Here's an excerpt:

Billig: Banks have revenue from different sources. One of the sources is from mortgage interest. So when you pay your mortgage, part of what you’re paying is interest and that is revenue. So all businesses – I have a business, and I pay B&O tax on all of our income, and the banks don’t. They don’t pay B&O tax on the interest that they get on first mortgages. So this would basically cap that exemption so that they would be paying B&O tax just like any other business.

Q: And where would that money go?

Billig: It’s about $160 million would be generated and that would be enough to fund smaller class size – basically buy back smaller class sizes in K-3 across the state. And we know that class size matters, class size makes a difference.

Check out the rest of the interview here.

Freshman Dems: Ready to trade tax breaks for education

It appears there's one thing the newest class of Democratic legislators agree on in the House - session isn't going to end without talk of ending some tax exemptions that could otherwise fund education.

The "11 in 2011" introduced a bill today to end two tax breaks worth $170 million and direct the funding for smaller class sizes in kindergarten through third grade. The legislation would reduce the B&O tax break for Wall Street banks and the sales tax exemption for out-of-state tourists.

With 48 co-sponsors already signed on, it appears their proposal may have some legs. You can read more about it here.

Op-ed: More than 500 tax breaks cost state treasury at least $6.5 billion each year

Rep. Chris Reykdal makes the case for closing some of our state's 500 tax exemptions before shuttering some of our state's invaluable services for needy citizens.

An excerpt from The Olympian column:

I am one of only two House members who voted against the three new tax exemptions that have been proposed this session. All three of these exemptions represent great causes, but in the absence of a clear strategy for dealing with current and future tax exemptions, we must draw the line.

As a state, we give out more than 500 “tax breaks” that cost us over $6.5 billion each year, with more added every year. Most of them were borne out of a belief that they would save jobs or lower costs for consumers. There is little evidence that tax breaks accomplish their stated purpose.

To date, only 17 percent of our state’s tax exemptions have ever even been reviewed. We have no idea if these tax breaks to narrow interests outweigh the impact of lost revenue to our schools and the most needy.

Before we consider kicking thousands of people off the Basic Health Plan, stuffing more kids into classrooms, and drastically reducing critical services for seniors, we need to scrutinize every dollar we dole out on tax exemptions and ensure the benefits outweigh the costs to education and health care services we are proposing to cut.

Read the entire op-ed here.