Inslee's opposition to levy-swap plan puzzling

When she first saw the TV ad from Jay Inslee’s campaign, Lisa Macfarlane of Democrats for Education Reform had a one-word reaction.

“What!?”

The ad attacked Republican Rob McKenna for claiming to oppose increased tax rates while supporting something the Inslee campaign dubbed a budget gimmick from Olympia – shifting some local school levy capacity to the state property tax levy, sometimes called the state school levy.

The ad calls the concept “wrong for Washington,” and Inslee repeated the attack in last week’s debate with McKenna in Yakima.

The problem is, the proposal – termed the levy swap – is one of several means of meeting the state Supreme Court’s opinion in McCleary v. State. That’s the January ruling that Washington violates its own constitution when it comes to ample school funding.

And it is an idea being investigated by both Republicans and Democrats, including some of the Democrats’ top thinkers on school funding. By using it to attack McKenna, Inslee also is criticizing many in his own party.

Whether it amounts to a tax increase is itself debatable. The basic concept is revenue-neutral in that it collects the same amount of total dollars as the current combination of local school levies and state property taxes. And no district would get less money than it does now.

But Inslee hangs his tax-increase charge on the fact that it would likely cause tax increases in districts with higher property values while reducing them in districts with lower values.

Frank Ordway, the director of government relations with the League of Education Voters, said the levy swap or something like it is needed to meet the court’s order to reduce use of local levies. The main reason levies have grown to unconstitutional levels is so local money could cover costs of basic education that past Legislatures failed to pay for. Once the state pays all costs, there are fewer demands on local levy dollars for local enhancements.

“The court said that reliance on local levies is not stable, secure or equitable,” Ordway said. And the proceeds from the levy swap will help the state meet the funding demands of McCleary even though, taken by itself, it won’t provide significant new dollars. But if it is not done, and the local levy is reduced without the revenue being kept in the system, the burden created by McCleary gets even heavier.

Ordway was especially unhappy with the way the ad suggests that the levy swap is some sort of state takeover when it says it will “allow Olympia politicians to set your new tax rate.” But making school funding a state issue rather than a local issue is exactly what the state constitution requires under the paramount duty clause and what the McCleary decision has ordered.

Some Democratic legislators who have been struggling to respond to McCleary had slightly different responses when asked about the ad. House Ways and Means Committee Chairman Ross Hunter said he was reluctant to comment directly on the ad.

“I’m not running for governor,” the Medina Democrat said. But he did say that the levy swap, either one he’s been developing for more than a year or something similar, will be part of the House’s response to McCleary next session.

“It is hard to see that this is not part of the proposal,” he said. And Hunter notes that McKenna supports a less-sweeping levy swap as written by former state Sen. Joe Zarelli, R-Ridgefield.

Seattle Democratic Rep. Reuven Carlyle said the levy swap fixes just one of the three problems identified by the McCleary court – equity of funding among school districts. While he has concerns with some versions because they take too many additional tax dollars from Seattle and return too few, he considers that a detail that doesn’t take away from the positive concept of the levy swap.

The other two funding issues are adequacy and what he terms the “value of the investment.” That is, as more money is put into school districts, how will the Legislature make sure the system gets better.

“The fact that it’s come down to a TV ad and a flippant remark in a debate is incredibly disappointing,” Carlyle said. “It’s certainly a narrow, un-nuanced perspective on the issue of funding.”

The campaign is not backing down, despite criticism from within the Democratic party.

“We reviewed this proposal carefully and we don’t think it’s a good idea,” said Sterling Clifford, communications director for Inslee. He said there is no doubt that it is a tax increase for a large number of property owners. And he rejected suggestions that Inslee doesn’t understand the demands of the McCleary court.

“There’s no misunderstanding about what McCleary says,” Clifford said.

Not that there aren’t Democrats who oppose the levy-swap concept. The Inslee campaign asked House Education Committee Chairwoman Sharon Tomiko-Santos of Seattle to call. She said she thinks it reduces local flexibility and does nothing to increase funding. While she doesn’t dismiss it, she hasn’t heard anything to change her mind.

Clifford also suggested I talk to Sen. Ed Murray of Seattle, among others. Murray passed the call along to Senate Majority Leader Lisa Brown. The Spokane Democrat’s concern, however, isn’t in the concept of the levy swap but its political viability.

“I didn’t think it would get traction politically,” Brown said. Still, she said she wouldn’t rule out “something along these lines” being part of a grand solution to McCleary, a solution she thinks must be led by the next governor.

“By bringing it up in a campaign cycle like this, you’re not going to get very far,” Brown said.

What is more puzzling than the attack itself is that Inslee doesn’t seem to need it. Most polls show him well ahead, perhaps due to the even-stronger showing in Washington by President Obama. Doing something that will make it harder to wrestle with the issues posed by McCleary when it doesn’t seem politically necessary, raises concerns about Inslee’s understanding of the challenges he faces.

“It’s limiting his own options should he become governor,” Ordway said.