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Washington-sponsored budget deal boosts taxes, raises spending by more than $ 5 billion

OLYMPIA – For most of last year, the COVID-19 epidemic and related job losses made Washington’s budget forecast miserable, with billions of projected deficits calling for rapid spending cuts.

The deal reached by Democrat lawmakers in Olympia on Saturday bears little resemblance to those stern predictions.

With a new tax on capital gains boosted by rapid economic recovery, the new operating budget for 2021-23 is about $ 59 billion, about $ 5 billion more than the budget approved two years ago.

The spending bill has funded a number of priorities Democrats have been pursuing for years, including new dollars for child care programs, tax breaks for low-income families, more money for forest health, and firefighting opportunities.

Lawmakers used the opportunity to invest in the state’s public health system, a long-neglected area that was under deep pressure during the epidemic.

In addition, lawmakers are providing an additional $ 10 billion in federal aid to help families, businesses recover from the epidemic and its economic consequences.

That’s going to fund $ 1.7 billion to make up for the reopening of K-12 schools in Washington, and և $ 658 million in rent.

Lawmakers are also allocating $ 1.1 billion for federal vaccines, testing, recruiting for public health workers.

It also includes $ 500 million in unemployment insurance for employers affected by COVID-19 restrictions and $ 340 million in epidemiological assistance to residents who are unable to receive assistance through other programs because of their citizenship status.

Lawmakers are expected to vote on the budget package on Sunday, the last day of this year’s regular 105-day legislative session.

Washington’s operating budget is the state’s main expenditure project. It funds K-12 schools, higher education, parks, prisons, as well as mental health, care and other social services.

Budget Democrats welcomed the spending plan, a bold investment that would pay dividends. They said they did not want to repeat the drastic, counterproductive spending cuts that followed the Great Depression a decade ago.

“Many of us remember the devastating cuts in the recent recession. “We were mostly saying we were not interested in that,” Mia’s spokeswoman Mia Gregerson, one of the budget negotiators, told a news conference Saturday. “This investment is about reconstruction and rehabilitation together.”

To this end, the budget includes $ 261 million for a long-term tax credit for low-income families. It also provides $ 50 million to expand subsidized health care premiums for qualified individuals involved in programs through the State Benefits Exchange. And that provides $ 147 million in long-term state-funded public-local health care systems in Washington.

The Republicans criticized the spending plan, which they had little power to form with the majority Democrats, both in the House and in Governor Aysley Insly, who had complete control over them.

Introducing new taxes, even as regular tax increases increase, is “a choice, not a necessity,” said Drew Stokesbury, a state spokesman for R-Auburn, who called the Democrat-led budget process “unnecessary partisan.”

New tax on capital gains

Realizing Inslee’s long-held desire by other Democrats to force the state’s richest residents to pay higher taxes, Democrats pushed for a new 7% tax on equity gains from the sale of shares or other investments of more than $ 250,000.

The new tax, which is expected to raise more than $ 400 million a year, is likely to face legal challenges. But the Democrats included a provision aimed at blocking the tax referendum.

At a news conference on Saturday, Democratic budget leaders danced around their intention to include the item. “We are not banning public voting,” said state Sen. June Un Robinson, D-Everett, noting that it is possible to initiate the tax abolition.

But a nationwide initiative campaign requires twice as many signatures to vote as a referendum, and the deadline for signatures could make it difficult to launch such a campaign this year.

Democrats defended their general approach to tax policy in terms of justice.

Senate Chancellor Christine Rolfs said capital gains tax, coupled with a $ 1,200 tax cut for low-income families, would begin to regulate the retreat tax system.

“It’s a historic rebalancing of how things work in Washington state,” said Rolfes, of D-Bainbridge Island.

Washington House lawmakers approved the final version of the tax by a vote of 52-44 on Saturday night. The Senate is expected to address it on Sunday.

In addition to the capital gains tax, Democrats demanded a $ 100 increase in registration fees, documents such as real estate deeds, payment for housing, rent assistance, and eviction prevention.

Increase in costs

For Democrat և progressive groups, higher taxes and spending represent a welcome turn from the state’s approach during the Great Recession.

“When we impoverish public investment for the sake of fiscal responsibility, those costs do not go away, they just go to local governments or households,” said Misha Oerskul, left-wing head of the Washington Center for Budget and Policy. relying on a research center.

The new deal is spent on other long-awaited priorities, such as $ 130 million for forest health programs and firefighting opportunities for the State Department of Natural Resources.

And it provides $ 517 million in federal state funding for new behavioral health, based on the efforts legislators have made in recent years to address the state’s mental health problem. That includes new dollars around the state for six additional mobile crisis teams և higher interest rates for caregivers.

Mental health funding also provides dollars to ensure that the new University of Washington Behavioral Health Training Hospital is ready for operation in the coming years.

Elsewhere in the budget, funding is being provided to set up an independent office for paid government employees on the 19th day, to set up an independent office to investigate the use of lethal force by law enforcement.

But some have raised questions about the stability of state spending. Lawmakers are creating new programs based in part on federal dollars.

The Washington Research Council’s nonprofit analysis cites the state’s decision to cut the state’s rainy day fund, as well as the use of one-time federal aid to launch ongoing programs.

“Federal money will not be there forever,” said Emily Mackings, a senior analyst at the group.

Under the new spending plan, the total state budget reserves will be $ 1.2 billion by the end of the two-year spending cycle.

In addition, Democratic lawmakers said Saturday that they would reserve about $ 1 billion in federal aid if needed.

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