House passes 2019-21 budget, Senate releases its own plans

OLYMPIA – House Democrats passed a $52.8 billion budget to pay for Washington’s schools and colleges, improve mental health and fight homelessness Friday night, about six hours after their Senate counterparts released a different spending plan designed to do many of the same things.

The Senate budget is slightly smaller at $52.2 billion but both budgets would represent record spending levels for the state and have many similarities. Both require some tax increases and restructuring because revenue projects say the state can expect about $50 billion over the two years they cover.

“This budget is about people,” House Appropriations Committee Chairman Timm Ormsby, D-Spokane, said at the start of debate over the House budget. “It is not pie charts or bar graphs … We’ve made commitments in the past that we’re going to live up to.”

Half the budget would go to public schools, where spending is being increased to cover the changes required after the Washington Supreme Court said the state wasn’t meeting its constitutional duty to education.

House Republicans said the state should forget any tax increase, with some $5.6 billion in more revenue from a strong economy coming in compared to the previous two-year budget. Maybe it should even give some money back.

“They have to pay the bills that we run up,” Rep. Ed Orcutt, R-Kalama, said.

Democrats counter that $5.6 billion is more than spoken for by the increased spending on public schools required by the changes to education lawmakers passed in 2017 and 2018. But they can’t expect to get GOP votes for their tax increases, and will have to rely on their majorities in both houses to pass any compromise they reach.

House and Senate Democrats are both proposing a state capital gains tax designed to hit high-end investors, although they use the money that would come in differently.

The current House proposal starts its tax after $100,000 of proceeds for an individual, or $200,000 for a couple. Although the legislation to create the tax is separate from the budget and hasn’t yet come to a vote, the money would be into the general operating budget, which covers a wide range of expenses from public schools and colleges, to state programs for medical care, mental health and families.

The Senate proposal would start the tax at $250,000 in proceeds for individuals or couples. The money it raises would be used to pay for a tax credit for low-income families; reductions in the business and occupation tax for small businesses; an increased property tax break for seniors and veterans, and the loss of revenue from new exemptions on the sales tax on diapers, medical equipment and feminine hygiene products.

Both tax proposals have certain exemptions for proceeds from retirement accounts, home and farm sales.

“Our tax code is broken,” Senate Majority Leader Andy Billig, D-Spokane, said in releasing the Senate plan. “I don’t want to raise taxes for the sake of raising taxes. If we have to raise taxes, we should do it in a way that improves fairness.”

Billig and other Democrats have long contended that Washington taxes are regressive because poorer people pay a much larger share of their income than the wealthy. Legislative Republicans counter that the current tax system is working so well that it’s bringing in record amounts of unexpected revenue.

Both budget proposals would revamp the state’s real estate excise tax, which is collected on the sale of a home, lowering the current across-the board rate of 1.28 percent for sales below a certain level, and raising it for sales above $1 million.

Both seek to improve the state’s mental health system – which is under federal court orders to reduce the delays for certain services and has lost accreditation for Western State Hospital, its largest facility. They are proposing to spend an extra $253 million.

Both would provide money to the State Need Grant program to increase the size of the state’s largest financial aid program for higher education. Both would also add $11 million to the College of Medicine at Washington State University Spokane to cover the costs of current students moving into the third and fourth year of that program, although neither would add the money to expand the incoming classes by 20 medical students in the next two years as the school had planned.

The two budget proposals, which are both lower than a budget released in December by Gov. Jay Inslee, will have to be reconciled through negotiations over the next month or send the Legislature into an overtime session.