Politics & Government

Property-tax relief could be on the way thanks to unexpected cash, state leaders say

Spring daffodils are shown emerging from the ground, Wednesday, Feb. 7, 2018, at the Capitol in Olympia, Wash., as pedestrians walk on a sidewalk leading to the Legislative Building during the 2018 regular session of the Washington State Legislature.
Spring daffodils are shown emerging from the ground, Wednesday, Feb. 7, 2018, at the Capitol in Olympia, Wash., as pedestrians walk on a sidewalk leading to the Legislative Building during the 2018 regular session of the Washington State Legislature. AP

Buoyed by a new projection showing the state will bring in $1.3 billion more in taxes than expected through 2021, state lawmakers from both parties said Thursday the 2018 supplemental budget shouldn’t rely on new taxes.

Legislative leaders also said that windfall could be enough to offer a cut in statewide property taxes, which were raised to fund Washington’s plan for meeting the state Supreme Court education order known as McCleary.

Since the last revenue forecast in November, state revenues are projected to go up roughly $628 million in the 2017-19 budget cycle thanks to a strong economy.

House Majority Leader Pat Sullivan, a Covington Democrat, told reporters Thursday that House Democrats expect to release a plan soon to cut property taxes for 2018, which he said have “really impacted communities.”

“We’re hearing from those communities across the state, and we think it’s really important to address that this year,” Sullivan said.

Lawmakers in 2017 boosted property taxes by about 81 cents per $1,000 in assessed value to fund their McCleary plan. The schools plan is expected to shower the K-12 system with $7.3 billion in new state spending over the next four years.

The Legislature also ordered a reduction in local property taxes, but those cuts don’t kick in until 2019, leading to a property tax impact this year of $1.03 per $1,000 assessed value on individual properties in Pierce County.

Democrats in the Senate and Republicans from both chambers also voiced support for cutting property taxes, although they likely will disagree about the size of the cut and how it’s implemented.

Democrats control both the House and Senate with narrow majorities after winning a special Senate election in 2017.

State Sen. Joe Fain, a Republican from Auburn, told reporters that lawmakers “recognize that we did a hard thing last year in passing the McCleary bill,” which he said was necessary at the time.

Now that “more resources” have shown up, Fain said lawmakers should prioritize “things that we need to do like transportation and special education and property-tax relief.”

One GOP tax plan proposed by state Sen. Doug Ericksen, R-Ferndale, would allow taxpayers to defer the 81-cent increase on the 2018 tax bill while later reducing the state’s property-tax levy for schools by 81 cents in 2019.

Democrats in the Senate are expected to release their plans for tax cuts and the 2018 supplemental budget next week.

In the McCleary case, the state Supreme Court ruled in 2012 that Washington was not fully funding public schools. To comply with the high court, lawmakers have poured billions of dollars into the K-12 system over the last half decade and enacted major reforms.

In 2017, the Legislature worked to take on the full cost of teacher and other school staff salaries that have been paid for in part by local property taxes.

While the court said the Legislature’s overhaul of the salary structure was acceptable, they also said it goes into full effect one year late.

Lawmakers have been grappling this year with whether to speed up changes to teacher salaries — a complex task with a roughly $1 billion price tag — or make smaller tweaks to the education system, such as putting more money toward special education.

The Legislature also is hoping to invest in the state’s mental health system, which is facing federal demands to improve.

Sen. Christine Rolfes, the top budget writer for Democrats in her chamber, said the new revenue projection allows lawmakers to accomplish all of those goals while still cutting property taxes.

State officials said the projection “is the largest quarterly increase for the state since before the Great Recession.”

“The extraordinary revenue growth will allow us to meet our legal and moral obligation to our public schools and to mental health care,” said Rolfes of Bainbridge Island.

While Democratic lawmakers pledged to have a budget that isn’t funded by new taxes, they didn’t rule out passing a carbon tax championed by Gov. Jay Inslee.

In December, Inslee proposed speeding up the teacher salary reforms with one-time draw from budget reserves while refilling those reserves later on with a tax on carbon emissions. The carbon tax would later pay for environmental priorities such as clean energy projects.

State Sen. Andy Billig, a Spokane Democrat, told reporters Thursday a carbon tax implemented by the Legislature was never directly about paying for general state obligations such as K-12 education and could now be used to spend money on the environment right away.

Walker Orenstein: 360-786-1826, @walkerorenstein