Lu Hill: Washington lawmakers can address revenue shortfall without cutting important services

I’ve written extensively about how taxes pay for the services that improve our neighborhoods – from parks to public transportation to roads and bridges. State tax dollars are also critical to help address the kinds of challenges that communities in eastern Washington and across the state are facing, like lack of affordable housing and underfunded schools.

There is enough wealth in our state – given all the millionaires, billionaires and profitable corporations that are here – to provide the revenue needed to fund the state budget. Yet, Washington’s new governor and some legislators are signaling that they want to make major cuts to government programs this legislative session to deal with the state’s revenue shortfall (estimated to be between $10 billion and $16 billion). Cutting programs and services to address the budget problem rather than ensuring the ultra-wealthy and corporations pay what they owe in taxes is baffling.

Our state has a notoriously inequitable and unsustainable tax code, in which people with low and moderate incomes pay a higher tax rate as a share of income than the richest 1%. Voters recently made it clear they support efforts to fix the tax code so rich people pay what they owe. In November, both right- and left-leaning counties overwhelmingly rejected ballot initiatives that would have cut funding for child care, early learning, and clean air initiatives in order to give the ultra-wealthy and corporations a special deal on taxes.

Washington state’s modest capital gains tax on the richest 0.2% of Washingtonians (that voters upheld on November’s ballot by 63%) brought in approximately $1.3 billion in funding for education and child care in its first two years alone. In Spokane County, it has funded more than 1,000 child care and pre-K slots, provided almost $2 million in grants to child care providers, and made construction projects possible in the Great Northern School District.

This session, lawmakers should continue improving our tax code and protect our state budget from drastic cuts. They can pass a wealth tax, close tax loopholes for employers of high earners, and make equitable reforms to the business & occupation tax. From my perspective – and what I’m hearing from neighbors and friends – these are obvious solutions lawmakers should enact to address the budget crisis.

But don’t just take my word for it. In a recent poll sponsored by the University of Washington’s Center for an Informed Public, the Seattle Times, and KING 5, 66% of people who responded to the survey said they’d support a wealth tax on Washington residents with a net worth greater than $250 million.

Massive budget cuts hurt all of us and lead to job losses. Programs like child care funding and services that support people with disabilities lose funding. Construction projects to make roads and bridges safer get put on hold. People going through hard times lose their safety net. This isn’t how to create a thriving state.

Contrary to what some are saying about how our state ended up with this budget shortfall, the reality is that funding for our budget never bounced back to the levels from before the Great Recession of the late 2000s, when lawmakers made massive budget cuts rather than fix our tax code.

Our state continues to grow, but funding for public services has not kept pace. This is largely because the tax code over-relies on sales and property taxes that squeeze people with low and moderate incomes. And sales tax revenue in particular is down. (But let me be clear: Raising inequitable, unsustainable taxes like the sales tax is not a solution).

The reality is that we’re in this situation in part because too many lawmakers weren’t willing to make bold, forward-thinking decisions about revenue in the past. For too long, the legislature was unwilling to make modest fixes to the tax code that would have ensured the ultra-wealthy and corporations pay their share. Fortunately, in 2021, they took the essential and bold step to pass the capital gains tax, and our whole state has benefited.

Lawmakers can be bold again and reject balancing our budget with cuts that will hurt those who are struggling with the skyrocketing cost of living. Instead, they should ensure the wealthiest finally start paying what they owe. If they don’t, it seems all too likely that 10 years from now, we will be talking about missed opportunities, a terrible fallout, and how it has impacted the well-being of us all.

Lacrecia “Lu” Hill is a fourth-generation Spokanite who has long been involved in supporting the community in the nonprofit, philanthropic, and small business sectors. She currently is the community engagement and strategy director at Empire Health Foundation. These thoughts are her own.