Inlsee Wants to Close Tax Exemptions to Fund Schools: Instant Reaction

This morning during a packed press conference in Olympia, Gov. Jay Inslee outlined his budget proposal for closing the state’s estimated $1.3 billion budget shortfall and funding education as mandated by the state Supreme Court’s McCleary decision. To no one’s great surprise, Inslee’s proposal includes new revenue - all of it to be directed at K-12 education funding, and coming largely by altering existing tax exemptions. Inlee’s proposal also calls for an extension of a 0.3 percent increase to the b&o tax paid by doctors, lawyers and accountants, and an extension of a 50-cent-per-gallon tax on beer.

As Andrew Garber of the Seattle Times notes, Inslee’s proposal for closing the budget shortfall relies on some serious money juggling, including “tapping reserves, shifting money into the general fund from outside accounts, and reducing expenditures.”

As the Times goes on to note, the tax exemptions Inslee wants to close would bring in $565 million, and include things like limiting the trade-in exemption for cars and boats, repealing a sales-tax exemption for residential phone service, and trimming b&o tax exemptions currently enjoyed by 40 industries in our state.

Shortly after Inslee talked money, the reactions started rolling in.

State Superintendent of Public Instruction Randy Dorn issued this statement:

I applaud Gov. Jay Inslee’s efforts to move our state toward fully funding basic education by 2018. Without question, an additional $1.3 billion will do a lot of good for students.

I have been briefed on the proposal, but have not yet seen details. Overall, it shows a good-faith effort on the part of the Governor to get us to where we need to be.

The 2012 McCleary decision by the Supreme Court is clear: Washington state must fully fund basic education by 2018. There is a vast difference between current spending and full funding. Even a $1.3 billion increase is the bare minimum to keep us on that path.

Top funding priorities must be school transportation; maintenance, supplies and operating costs; full-day kindergarten; and lower the class size in grades K-3. This is what was adopted by the legislature in SHB 2776. According to the Quality Education Council, these costs alone will be roughly $3.4 billion.

We have studied this issue long enough. We know what full funding means and what it costs. We have a plan. Now we need the political will to fund it.

The budget leader for House Republicans, Rep. Gary Alexander (R-Olympia), released the following statement:

“There are a few ideas coming from the governor’s list of priorities that I believe my caucus can support. The investments he wants in education are very similar to what House Republicans proposed with our Fund Education First budget that we released two weeks ago. Class-size reductions, full-day kindergarten and investments in early learning are all things in K-12 education that we support. They should be moved to the forefront of any effort to meet the expectations of our state constitution and the state Supreme Court’s McCleary decision. We also recognize the need to invest more into college bound students and the state need grant.

“However, Governor Inslee misses the mark with his desire for 1.2 billion dollars in new and increased taxes, as defined by his own Department of Revenue. Campaign pledges and semantics aside, the fact is, our state economy is extremely fragile. His proposal to raise taxes on families, individuals and small businesses could adversely impact our economic recovery.

“While I applaud the governor and his staff for the difficult task of crafting his first budget proposal, the outline and priorities he’s provided do not fall in line with the message the voters of this state have sent to Olympia time and time again: no new taxes. They want – and deserve – a sustainable, responsible and balanced budget within existing revenues. More taxes is not the answer.

“We’ve been working diligently for months with the Majority Coalition Caucus in the state Senate to create a budget solution that does not take more money away from hardworking taxpayers. We intend to show the citizens of Washington state that we can education our children, take care of the most vulnerable and protect the public without new or increased taxes.”

Not to be outdone, Jeff Johnson, Washington State Labor Council President, issued this statement:

“With the release of his budget priorities and proposed list of tax exemptions/loopholes that should be closed, Governor Jay Inslee is demonstrating the type of bold leadership that won him the support of the labor movement during his campaign. After four years of devastating budget cuts, of Governor is stating loud and clear that it is time to invest in our state’s fundamental values and principles; that it is time to apply common sense to closing tax loopholes that don’t strengthen our educational system, our communities, or our economic vitality. These proposals are a good first step towards moving our state in the direction of shared prosperity.”

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