So Far, So (Somewhat) Good: What The Legislative Session’s First Weeks Mean For You

by John Stafford

OBSERVATIONS ON THE 2015 LEGISLATIVE SESSION

The first seven weeks of the 15 week legislative session have been completed, and the first major deadline – the cutoff date for passing bills out of committee —  has passed.  This article will provide a summary of where several key bills stand at this juncture.  It will also provide several observations on the session at large.

BILLS

K-12 Education:  The plan to fund the McCleary decision for K-12 education (requiring roughly $1.5 billion over the upcoming biennium) has not yet been developed, and will be a central part of the budget negotiation process.  Several legislators have expressed concern that the transportation spending plan (see below) is being formulated prior to the McCleary funding plan.  The funding for Initiative 1351 on class size reduction (which will require roughly $2 billion this biennium) has also not been addressed.  Because the pending state budget is in deficit status even without I-1351 spending, there is a movement in Olympia to send I-1351 back to voters asking for either repeal, or for approval with a specified funding source.  Another bill, HB 2048, would require that the Seattle School District be split into two (because it is the state’s largest district).  The bill seeks to create more focus and accountability for underserved communities.  Finally, recent communicable disease outbreaks (e.g., the measles) have raised concerns about childhood vaccination rates and policies.  HB 2009 would make it more difficult for families to refuse to have their children vaccinated, by removing the exemption for personal belief (medical and religious belief exemptions would remain intact).

Higher Education:  During the Great Recession, higher education tuition rates increased dramatically in Washington State, raising concerns about affordability.  SB 5954 would place limits on higher education tuition, by capping it at a specified percentage of state incomes (for example, regional universities would have a tuition cap of 10% of the state’s average wage).  HB 1559 would enable Washington State University to establish a new medical school.  The bill seeks to address the lack of capacity for training medical students in Washington State, as well as the dearth of physicians in rural areas.

Wages:  HB 1355 calls for the state minimum wage to increase to $12/hour over a four- year period, starting in 2016. And HB 1922 would transform the payday lending system in Washington State.  This bill would enact an installment loan system, allowing loans to be repaid within six months and providing rebates for early repayment.

Transportation and Taxes:  SB 5987 calls for an 11.7 cent/gallon increase in the gas tax over the next three years to fund transportation projects.  This will take Washington’s gas tax, which is the seventh highest in the nation at 55.9 cents/gallon (37.5 cents state plus 18.4 cents federal) even higher.  The gas tax is regressive, adding to Washington State’s regressive tax profile.  Importantly, the Republican Caucus has taken several steps to ensure that new categories of taxes are not introduced into Washington State’s tax code.  First, the Republican-controlled Senate passed a measure that requires a 2/3 vote for any bill containing a new type of tax.  Second, the aforementioned transportation package (SB 5987) comes with a “poison pill” provision, stating that if Governor Inslee’s proposal to require low-carbon fuel becomes law, a portion of the transportation bill’s revenue will not go to transit.  Third, the transportation package makes no mention of the cap-and-trade system that Governor Inslee advocates, and which is intended to provide funding for transportation via a carbon tax.  This implies, of course, that Inslee’s carbon tax is not expected to prevail.  Fourth, the use of sales taxes derived from transportation projects will go to the transportation budget rather than the general fund, further exacerbating the general fund deficit.  The capital gains tax is the one new tax that may have a chance of being introduced this session, but even it is facing oppositional rhetoric.

Environment:  Governor Inslee’s cap-and-trade proposal, HB 1314, will move to the House Floor.  As noted above, it faces remote odds of passing given the lack of Republican support (no sponsors in either chamber), the aforementioned 2/3 Senate vote requirement for new taxes, and strong opposition from traditional Republican constituencies.

Marijuana:  Washington State is seeking to harmonize its medical and recreational marijuana systems.  There are a number of important challenges – determining how many stores to license; ensuring that medical users can avoid taxes and that recreational users cannot; raising taxes while keeping the retail price low enough to ensure that the black market remains small; deciding whether to share tax revenues with municipalities; etc.  SB 5052, the Cannabis Patient Protection Act, a controversial bill with Republican backing, emerged from committee mid-month.

Elections and Initiatives:  SB 5978 calls for Washington State to spend $11.5 million to hold a special primary election in early March, 2016 (a presidential election year).  Important issues include whether voters will have to indicate party affiliation on their ballots, and the extent to which the results of the primary will be used to determine party delegates for national conventions.  In addition, the fact that I-1351 calls for major new spending without identifying a funding mechanism has led to a number of proposals to change the overall state initiative process.  For example, SB 5715 would require all major initiatives to include a ballot statement that describes their fiscal impact.

OBSERVATIONS

When evaluating the prospects for this legislative session, it is imperative to consider the tax environment in which budget negotiations are taking place.  It is commonly known that Washington State has become a low-tax state (between 1995 and 2011, it has fallen from 11th to 37th in the nation in state and local taxes as a percentage of personal income), and that it has the most regressive tax system in the nation.  Moreover, as noted above, the Republican Caucus has gone to great lengths in the 2015 session to prevent the introduction of new sources of tax revenue, ensuring a continued emphasis on regressive taxation methods.  This is especially concerning given that Washington State is one of only three states where poverty rates continue to rise in the aftermath of the Great Recession:  Between 2006 and 2013, the percentage of people living in poverty in our state rose from 11.8 to 14.1 percent (source:  Olympian, 2/20/15).

It is essential to understand the motives behind this Republican opposition to new sources of taxation.  There are the two obvious reasons – this approach keeps taxes low, and the regressive structure serves affluent interests.   I believe that another equally powerful motivator is that the regressive tax structure ensures that the progressive agenda is thwarted, by forcing it to work against itself.

This manifests itself in many ways.  For example, by ruling out carbon taxes to fund education, McCleary funding (intended to help the lower and middle classes) will likely have to be paid for largely by regressive taxation that will hurt the lower and middle classes.  Similarly, part of Governor Inslee’s teacher cost-of-living pay increases will have to be borne by local districts, which cannot afford them (and which may be unconstitutional) due to limitations on property tax growth.  Even Chris Vance, former chairman of the state Republican Party, claims that, “State lawmakers need to replace the one percent property-tax cap with a cap limiting revenue growth to a factor of inflation plus the rate of population growth” (source:  Seattle Times, 2/26/15).  And transportation tax increases, intended to develop the state’s infrastructure, will be financed via the regressive gas tax rather than the carbon tax – damaging the very citizens it is intended to help.  In short, in Washington State, progressive policy is only made possible by targeting the lower and middle classes for funding; and this reality limits the advance of progressive policy.

Governor Inslee’s budget proposal (which I support) calls for a cap-and-trade system to reduce carbon emissions, and to use the resulting tax revenue to fund both education (McCleary) and transportation.  In addition, it calls for a new capital gains tax to raise the state tax level and to make the tax structure less regressive.  The constraints placed around new taxation proposals by the Republican Caucus in the first seven weeks of the 2015 session provide a bulwark that will ensure that very little of this agenda will come to pass.  This session may yield some discrete, progressive, legislative victories; but it is not likely to succeed in addressing the structural impediments to a more just political-economic culture in the state.

John Stafford is a substitute teacher for Seattle Public Schools and a former management consultant in corporate strategy.  He recently completed a run for State Senate in the 37th District.  He is writing a monthly article on public policy for the South Seattle Emerald.

 

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