Posted January 13, 2016 by Cooper Point Journal in News

Legislature Faces Budgetary Challenges in 2016 Session

By Asa Kowals-Rose

On January 11, Washington state legislators gathered in Olympia to begin the 2016 legislative session. They will remain in session until March 10, or longer if the session is extended. This will be significantly shorter than the 2015 session; sessions in odd-numbered years are longer to account for the biennial budget-writing process. On top of this, the 2015 session was extended three times due to legislative gridlock.

Though legislators won’t be working on a budget this year, several important issues remain to be discussed. Among the most important is the state’s need to comply with the 2012 McCleary decision, wherein the Washington State Supreme Court decided that the state government was not meeting its constitutional obligation to properly fund basic education. The decision came after budgetary strain, caused by the 2008 recession, led to education cuts statewide. Despite successful efforts to increase funding for basic education, the State Supreme Court decided in August that the legislature had not fulfilled its mandate, and began fining the state $100,000 for each day it remains noncompliant. At the start of the 2016 session, the fines totaled more than $15 million.

As the fines started adding up, many criticized Governor Inslee for not calling a special legislative session to address them. In September, the Governor chose instead to call a bipartisan meeting of eight legislators, in an effort to help Democrats and Republicans agree on new sources of education funding.

Since the 2013 legislative session, the Republican-led Majority Coalition Caucus has controlled the state senate, while the state house and Governor’s office have remained in Democratic hands. This means that viable legislation needs to have bipartisan support, which many feel is becoming increasingly elusive.

Many worry that partisan gridlock will prevent the legislature from stopping the McCleary fines, and addressing Washington’s other budgetary issues. While most seem to agree that the state needs additional revenue to meet its obligations, legislators are divided on how to raise it. Republicans have been steadfast in their opposition to new taxes, arguing that the additional revenue provided by Washington’s economic growth will be sufficient to meet the state’s budgetary challenges. Democrats have argued that new sources of revenue are necessary to adequately fund education without cutting other state services.

The legislature’s existing debate over revenue will be an even bigger issue than usual in the 2016 session, thanks to the passage of Tim Eyman’s Initiative 1366 in November. This measure will lower Washington State’s retail sales tax by one percent, unless state legislators pass a constitutional amendment to require a two-thirds majority vote in the state legislature for future tax increases. This makes legislative inaction extremely costly; the sales tax cut would cost the state more than a billion dollars each year, severely compounding existing budget issues. Some progressives have advocated that the tax cut be allowed to go into effect, and be offset with more equitable taxes, thereby making the state’s tax structure less regressive.

One tax proposal progressives have advocated is the implementation of a statewide capital gains tax. Nationally, capital gains are taxed at a lower rate than regular income, which many criticize as regressive. During the 2015 legislative session, Democrats proposed an additional five percent tax on capital gains, which would have provided the state with an estimated $550 million in revenue the following fiscal year. While the tax was left out of the final budget deal, another could be introduced this year to help the state meet its budgetary challenges.

Some have presented a statewide cap-and-trade system—referred to by some as a carbon tax—as a way of bringing in new revenue. This policy would require certain businesses to pay for their carbon emissions by buying special permits from the state. The state would only sell a certain number of permits, thereby limiting total carbon emissions statewide. Governor Inslee proposed such a plan at the start of the 2015 session, arguing that it would lower carbon emissions while simultaneously bringing in nearly a billion dollars of new revenue each year. Neither Inslee’s plan, nor a similar one proposed by Democrats in the legislature came to fruition, but the issue will be debated in the 2016 session thanks to a carbon-taxing initiative submitted to the legislature at the beginning of the year.

The creation of a carbon tax would represent a political victory for Governor Inslee, who has previously described himself as the country’s “greenest governor.” Inslee is up for reelection in November, and would no doubt benefit from making progress in his signature policy area. In July, following the legislature’s failure to pass a cap-and-trade bill, Inslee took steps to circumvent legislators by directing the State Department of Ecology to impose restrictions on carbon emissions under its authority to enforce the Clean Air Act. In the lead up to the 2016 legislative session, Inslee chose not to designate climate change as a policy priority, focusing instead on funding for mental health and disaster relief efforts.

Despite partisan gridlock and other challenges, lawmakers were able to pass last year’s budget with wide majorities in both the State House and Senate, albeit after severely prolonged deliberation. Though it did not include Inslee’s proposed cap-and-trade legislation, the Governor praised its spending priorities and called it “a great budget for Washington State.” Though budget included an additional $1.3 billion in education funding, allowing the state to hire more teachers and lower class sizes, it proved insufficient to avert the McCleary fines. As a result, legislators will be under even more pressure to increase education funding during the 2016 session.

One much-celebrated accomplishment of the 2015 session was a measure to lower tuition at Washington’s six state-run colleges over two years. As a result, Evergreen students saw their tuition cut by five percent this academic year, and will see a further 15 percent cut in the 2016-17 academic year. The tuition cuts were proposed by Senate Republicans, and passed with bipartisan support. Legislators opted to fund the measure by closing tax loopholes rather than raising taxes, which many view as a victory for the Washington’s tax-averse Republicans. It remains to be seen if they will be equally firm in their opposition to new taxes in the 2016 session.