Politics blog

Inslee rolls out plan to close tax exemptions, boost K-12 funding

OlympianJanuary 28, 2014 

Gov. Jay Inslee outlined his $200 million plan Tuesday to raise money for K-12 schools, a proposal that Senate Republicans quickly rebuffed as not yet necessary to answer a state Supreme Court ruling on the underfunding of education.

Inslee’s tax plan, which he’d foreshadowed earlier in the month during his State of the State speech, includes closing seven tax exemptions he’d proposed to end in 2013 but could not win legislative support for, mainly due to objections from the GOP-controlled Senate.

State Schools Superintendent Randy Dorn said that adding $200 million to basic education would help the state get closer to meeting the Supreme Court’s 2018 deadline to adequately fund basic education, but not close enough.

“While I think Gov. Inslee’s proposal is a step forward, it is not the $400 million I think is needed to help us meet the deadline,” Dorn said in a news release. “It is also not the complete plan to fund basic education, which the Supreme Court has mandated by April 30. I look forward to seeing that plan.”

The Democratic governor said he wants to put about $130 million into covering school district costs of operations such as heat, electricity and textbooks and about $74 million into a one-year cost-of-living pay adjustment worth 1.3 percent for teachers and other school employees.

Inslee said past legislative reforms created a framework for improving school funding but that more needs to be done.

“What’s missing is action. What’s missing is follow through in making good on this commitment. What’s missing is money,” Inslee said. “All the good intentions in the world won’t satisfy our clear constitutional imperative to our children. The Supreme Court said it
needs to see immediate concrete action, not promises.’’

Inslee’s budget office put a chart on an easel next to him during his press conference that showed how much the state needs to raise if it is to meet the requirements of school improvements already outlined in law.

The amounts are nearly $1.9 billion more in 2015-17 and $3.57 billion more in 2017-19. Those figures grow by about $400 million each if the state doesn’t make the $200 million down payment that Inslee proposed Tuesday, according to state budget director David Schumacher.

Republican Sen. Andy Hill of Redmond didn’t dispute that more funding is needed for schools but he did question whether it needs to be done this year – a supplemental budget year with only a 60-day legislative session. He said Senate lawmakers are working on the funding plan ordered by the state Supreme Court, and he said the Senate has not yet
decided whether it even needs to pass a supplemental budget.

Hill also said that Inslee’s proposal creates a deficit in the next biennium that starts in July 2015.

The new proposal is on top of roughly $200 million in new spending – $150 million of it due to increased costs from existing programs – that Inslee requested in December in his 2014 supplemental budget proposal.

In the House, Majority Leader Pat Sullivan, D-Covington, said it is still too early to say if Inslee’s $200 million is a realistic amount to seek this year, but he noted that the original House budget approved last year was in line with what the Supreme Court outlined in its recent order for funding.

“If we can also add investments in programs for kids we should do that,” Sullivan said.

Getting new revenue could be a heavy political lift in an election year, but Inslee argued that voting for taxes for kids would be seen favorably by voters.

Among the targeted tax exemptions are: a use-tax break that benefits oil companies for their use of waste fuels from refineries; taxes on sales of bottled water; a tax break for out-of-state shoppers; a tax break on used-car trade-ins worth more than $10,000; a public-utility tax deduction for the in-state share of interstate transportation; a tax break on sales of janitorial services; and a preferential business-tax rate for resellers of prescription drugs.

Hill said Democrats had been unable to close many tax exemptions when they controlled both legislative chambers and the governor’s office, and it would be even harder to do with a divided Legislature.

Supporters of the targeted tax exemptions are prepared to fight to keep them. Frank Holmes, the Western States Petroleum Association’s Northwest director, said the industry all along knew Inslee’s proposal was possible.

“Like last year, we’ll be opposed,” Holmes said. “Adding taxes particularly on this recycled fuel does not seem like a good idea or consistent with the conservation values the state has.’’

Brad Shannon: 360-753-1688

bshannon@theolympian.com

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