Two Spokane City Council members among city officials calling for state to adopt new revenue

OLYMPIA – Two Spokane City Council members are among city and county officials across Washington calling on the Legislature to adopt “progressive” revenue streams to balance the state’s budget.

Council members Paul Dillon and Zack Zappone were among the 68 elected officials who wrote to Gov. Bob Ferguson; Speaker of the House Laurie Jinkins, D-Tacoma; Senate Majority Leader Jaimie Pedersen, D-Seattle; and other legislative leaders to ask that officials “consider all new sources of revenue.”

The letter, which was sent Wednesday, comes as lawmakers continue to craft a plan to close a multibillion budget deficit in the coming weeks.

“As local elected officials from across the state, we know firsthand how our regressive and outdated tax code hampers our ability to serve our constituents,” the letter states. “Our tax code hasn’t been significantly updated in 100 years. While our statewide population has grown significantly, we are not collecting enough revenue for the investments needed to support our communities and economy, including funding for infrastructure, housing and human services, public health, and public safety, to name a few.”

In their letter, the elected officials wrote that “a majority of our budgets are mandated by state or federal law, contracts, or legal agreements.”

“Consequently, potential cuts to make up the budget deficits would be concentrated in programs protecting public health and safety, and services relied upon by our most vulnerable communities,” the letter states.

In an interview, Dillon pointed to an all-cuts budget proposed by former Gov. Jay Inslee, which under state law required the governor to propose a spending plan without new taxes. Before leaving office, Inslee separately released his preferred plan for balancing the budget, which centered on new revenue, including a “wealth tax.”

According to House Democrats, the plan without new taxes calls for slashing a wide array of state programs, including a $3.5 billion cut to health care, a $1.3 billion cut to human services and early learning, $1.1 billion to higher education and a $365 million cut to behavioral health, among others.

“I firmly believe that budgets are moral documents, and it really does matter whose backs those budgets are balanced on,” Dillon said. “And for too long, we’ve had an upside-down tax code, and so, I’m a strong advocate for finding ways to raise new revenue while designating those funds to support working families.”

The letter calls on legislators to consider lifting the 1% cap on property tax increases, allowing city councils to impose a public safety sales and use tax at a rate of up to 0.3 % without voter approval, and authorizing a new local 0.1 % sales and use tax for criminal justice.

“In addition, we support state solutions for a more balanced tax code such as the Intangibles Tax, a Statewide Payroll Tax, and Large Corporation B&O Premium tax, the REET bills, and other more equitable revenue generating options,” the letter states.

Democrats in the House and Senate unveiled their budget proposals on Monday, which call for new taxes on large companies and the state’s wealthiest residents.

Senate Democrats released a two-year, $78.5 billion operating budget, up from the $72.4 billion the state spent between 2023 and 2025. The plan calls for $6.5 billion in cuts over the next four years and $16 billion in new revenue, which would be achieved through a new “financial intangibles tax,” allowing property tax increases to be set by inflation and population growth and removing the cap on employer payroll taxes. The plan also calls on the state to reduce the sales tax by half a percent.

The financial intangibles tax calls for taxing $10 on every $1,000 of the assessed value of certain financial assets, including stocks, bonds, exchange-traded funds, and mutual funds, which Senate Democrats say would apply to around 4,300 people and could raise $4 billion per year when fully implemented in fiscal year 2027.

“That’s funding that can go pay for affordable housing, help schools, and really for working families, that’s something that we should definitely do,” Dillon said.

House Democrats, meanwhile, have proposed a two-year, $77 billion budget partially funded through a financial intangible assets Tax of $8 on every $1,000 of assessed value on certain financial intangible assets, with the first $50 million exempt from the tax.

The plan also calls for a 1% B&O tax on businesses with income of more than $250 million and an increased surcharge on specified financial institutions with a yearly income of $1 billion or more from 1.2% to 1.9%.

“I really do think that with the larger corporate B&O tax it’s imperative to make sure that those who can afford to pay what they truly owe is important,” Dillon said. “We have to develop progressive solutions that really do fix these issues.”

While neither Democrat plan is likely to be fully implemented, the proposals come as both chambers work to adopt a budget by April 27.

Dillon said Friday that “we need to have bigger conversations to really change hearts and minds about taxes and the role of government.”

“And it’s long overdue that we fix our upside-down tax code. And I’m really proud of our third legislative district representatives for fighting the good fight, and I’m happy to be there with them in support,” Dillon said.