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Inslee's budget ideas go into a contentious atmosphere

Gov. Jay Inslee unveiled ideas for big increases in education spending, partly financed with elimination of tax breaks. A key Republican says he doesn't see a single move on tax breaks he could support.
Sen. Mark Schoesler, R-Ritzville

Sen. Mark Schoesler, R-Ritzville

Gov. Jay Inslee

Gov. Jay Inslee John Stang

Gov. Jay Inslee believes $1.26 billion is needed for legally mandated education improvements in 2013-2015 — and he proposes $1.26 billion worth of closing tax exemptions and keeping expiring taxes to do that job.

That approach will be dead on arrival in the Washington Senate, retorted Senate Republican Caucus Leader Mark Schoesler, R-Ritzville.

Inslee unveiled his budget priorities and proposed revenue-raising measures Thursday. But he stopped short of announcing a full-fledged budget with detailed expenses for the 2013-15 biennium.

He identified 11 tax exemptions for closing, which would raise $565 million for the upcoming budget. And he wants to keep an otherwise-sunsetting beer tax and business and occupation service charge, which would tally another $661 million.

"I choose, and believe we should all choose, education over tax breaks. .... I know it won't be easy. ... We'll see the evolution in people's thoughts as the numbers sink in," Inslee said.

A beer drinker himself, Inslee compared paying extra for beer with boosting education. "We've enjoyed this (taxed) brown liquid without destroying the economy. ... Everybody who enjoys a beer ought to enjoy early education more," he said.

Meanwhile, Schoesler said, "I didn't see one [tax-exemption closure] I could support today. ...  It's not a choice between kids and tax breaks, but between tax hikes and bureaucrats."

The battle lines are drawing up like this.

The current 2011-2013 state operating budget has $31.29 billion in revenue, $31.13 billion in expenses, and an expected $426 million left over when the biennium ends June 30.

Meanwhile, last week's state revenue forecast predicted $32.86 billion in operating budget income under the status quo. Inslee seeks $34.66 billion in revenue — a $1.8 billion increase. Two-thirds of that increase would come from Inslee's tax-related measures, and the rest would come from transfers to the operating budget from other funds. Inslee campaigned on a promise of no new taxes. But he does not view closing tax exemptions and keeping expiring taxes as tax hikes.

Inslee wants to spend $34.43 billion in 2013-2015. That includes $17.4 billion to keep the education system at its current status, plus the additional $1.26 billion to tackle the Washington Supreme Court's requirements to install full-day kindergartens statewide and to shrink the teacher-student ratios in schools by 2018, plus other measures. Inslee's staff calculated that $531 million would be left by June 30, 2015.

The Senate's 23-Republican-two-Democrat Majority Coalition Caucus is aiming to release its proposed budget next week, but cannot guarantee that. "When we do it, we want to do it right," Schoesler said.

Schoesler declined to say what the expected total figure would be nor how much the majority coalition believes will be needed to meet the Supreme Court's education fix-it requirements. Right now, the House Republicans say $817 million is needed in 2013-2015 to meet that mandate. Inslee now has a $1.26 billion target. House budget guru Ross Hunter, D-Medina, has talked about a $1.4 billion figure.  Rosemary McAuliffe, D-Bothell and ranking Senate Democrat on education matters, has mentioned $1.7 billion. Schoesler said the majority coalition's Supreme-Court-fix-it figure would "be in the range" of the House Republicans' and Inslee's numbers.

The Democratic-controlled House is supposed to unveil its proposed budget a few days after the Senate majority coalition announces its plan.

A major unknown is the Supreme Court, which will be looking over the Legislature's shoulder and can make its own determination whether that branch is following the justices' ruling.

A complicating factor is that Inslee and the Republicans appear to be using different ways to build their budgets.

Inslee built his quasi-budget proposal by taking 2011-2013 dollars figures — and then adding the dollar figures for increased population, university enrollments, medical costs and caseloads to create his baseline. From that, he then ponders whether to add or subtract money and programs.

Meanwhile, Republicans appear to take the 2011-2013 figures as their baseline, not factoring in growths in population, university enrollment, medical costs and caseloads. They appear to be using the original 2011-2013 dollar figures as the launching point to determine whether to add or subtract money and programs.


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Comments:

Posted Fri, Mar 29, 12:05 p.m. Inappropriate

Can't find a SINGLE repeal to support on this entire list? The GOP special-interest protection machine is revealed in its nakedness.

elemental

Posted Fri, Mar 29, 12:13 p.m. Inappropriate

Jay Inslee wants to keep the current B&O; tax that was supposed to be in place for 3 years until the state economy recovered. Now he is talking about extending it. This does not help a small business such as mine. My business is a service business that is linked on the B&O; tax form with gambling - what is up with that? Three years ago, I paid the tax once every quarter. I now pay more in taxes on a monthly basis. I do not get any tax loopholes. The form basically states on line one "How much money did you make? Line two "Send it in." Obviously, I don't send it all in but a good portion of my company's earnings goes to the state in the form of B&O; taxes. This is not helpful to small businesses or our employees. The more we pay in taxes, the less we can pay our employees. The legislature should do the right thing and put the tax back to the rate it was three years ago, as was promised!

annied

Posted Sat, Mar 30, 11:38 p.m. Inappropriate

Trim preferential B&O; tax rates for most industries by 25 percent. This is expected to affect 7,524 businesses and provide $66.2 million in 2013-2015.

That tally of roughly 7,524 businesses affected is wrong. Anyone who makes a purchase will be paying more taxes--businesses will have to pass along the tax increase to their customers. That is, you and me.

ma

Posted Mon, Apr 1, 7:59 p.m. Inappropriate

Tax exemptions are also known as tax expenditures. They are expenditures of money that would otherwise be available to the state to fund education and other public services for a better future. They are usually either a reduction or elimination of a tax that others pay, except they got preferential treatment by the state legislature.
We currently have about 640 tax exemptions. Rather than collecting a tax that others are paying, the State by not collecting it, is returning it to a corporation or other entity. This may not seem like much impact on state finances until you note that in the 2012 Tax Exemption Study they state that in the 2011 - 2013 budget some $21 billion was collected in B&O; taxes and sales/use taxes. At the same time some $20 billion in these same taxes was not collected and was essentially an expenditure of state funds to support those that got the exemption. It's time to close some of those loopholes and prioritize spending for education and other pressing state needs for a better economic future for all. These are investments in our future rather than tax giveways frequently of questionable value.

Posted Mon, Apr 1, 8:21 p.m. Inappropriate

Washington State needs to incorporate tax expenditures into the state budget process so they can be subject to budget cuts the same as other state services can be cut. Tax expenditures need to be prioritized as to meeting state needs. They need to prove that they are creating jobs or meeting some other vital state need. They all need to have sunset provisions, limiting them to five or six years at the most, not be there forever without the need to justify why they should continue. Go to www.taxsanity.org for more information on tax expenditures and the push for an initiative campaign to reform the tax loophole problem we have in Washington State.

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