Politics & Government

Inslee working on budget with $1 billion in tax hikes, increased school spending, cuts

Gov. Jay Inslee’s aides are putting finishing touches on a two-year budget plan that would raise unspecified taxes by more than $1 billion, aides said Tuesday.

The proposal, which the Democratic leader plans to unveil next week in four stages, also cuts some state spending and puts new money into K-12 schools while delaying funding for most of the class-size reduction initiative approved last month by Washington voters.

“It’ll be more revenue than cuts,” state budget director David Schumacher told reporters in a budget briefing. Schumacher said that after seven years of cutting programs to balance budgets “the ability to get significant amounts of revenue from ‘efficiencies’ is just not there any more.”

The state expects to a growing economy to generate nearly $3 billion more in new tax revenues, but government still faces a potential shortfall of more than $4 billion in the next two-year budget cycle, Schumacher said.

Inslee has talked previously about putting a price on carbon pollution or fossil fuels that could generate funds for schools, transportation and other programs. Details of his tax plan won’t be released until late next week, but Schumacher said Tuesday it will include a carbon pollution tax.

Republicans who control the Senate, including top Senate budget writer Andy Hill of Redmond, have said they want to see how far they can go to fully fund K-12 schools and other programs with projected revenue before looking at new revenues.

Schumacher shared copies of a chart showing the cost of existing state services will rise by about $1.9 billion; teacher pay raises required under the law will cost another $400 million; other collective bargaining costs are about $583 million; and $450 million will be needed to address what Inslee’s team considers high-priority policy needs that include such things as mental health funding and improvements in higher education funding.

Add to those the state Supreme Court’s McCleary ruling, which imposes costs that range from $750 million to $1.5 billion. Initiative 1351 — which calls for more dramatic class-size reductions than the court ruling — demands another $2 billion.

Schumacher said Inslee is looking at paying for just $400 million of I-1351, focusing on the portion improving class sizes in the K-3 grades.

Inslee is scheduled to begin outlining his budget plans in a Monday online town hall that will focus on funds for early learning, the McCleary funding mandate, and higher education.

Tuesday, he’ll outline a transportation proposal, seeking to end the Legislature’s more than two-year impasse. Wednesday he’ll talk about his climate change proposals that could include a cap and trade plan for controlling and reducing greenhouse gas emissions from use of fossil fuels.

“On Thursday we will talk about cuts and revenue,” Schumacher said.

Inslee is preparing a no-new-revenues budget option to meet state requirements for a balanced budget plan. But the governor won’t send that version to lawmakers because it contains cuts too horrible to consider, according to Schumacher.

“By acting responsibly and being innovative we can meet our obligation for a top-notch education system, building an economy that works for all Washingtonians and balancing the budget without gimmicks,” Inslee said in a statement. “And we will do that without cutting the vital state programs that serve the most-vulnerable Washingtonians.”