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Olympia's tax break wars rage on

An impasse brewing in Olympia over education spending could spell special session.
State lawmakers can't agree on how to pay for education reforms.

State lawmakers can't agree on how to pay for education reforms. Photo: Allyce Andrew

Tax Break Wars: The Sequel is playing in Olympia.

On Wednesday, Washington House Democrats proposed ending the same four tax breaks that Senate Democrats targeted on Tuesday in their supplemental budget proposal. Closing the four loopholes would raise $106 million for 2014-2015 and $203 million for 2015-2017. The targeted exemptions benefit bottled water, five oil refineries, sales tax for out-of-state residents and for re-sellers of prescription drugs.

House Democrats are also on board with the effort by their Senate colleagues to restore teacher cost-of-living raises, which were approved by voters long ago. "We want to invest in early learning rather than in some of our most successful businesses on a global level," said Rep. Reuven Carlyle, D-Seattle, and one of the House's budget writers, on eliminating tax breaks as a way to pay for educational improvements.

House Republicans and the Senate Majority Coalition Caucus don't support either ending tax breaks or reinstating teacher cost-of-living raises idea this year.

Republicans and Democrats both allocate money — in slightly different amounts — in 2014-2015 to start complying with the McCleary decision, that infamous 2012 Washington Supreme Court ruling requiring the state to dramatically improve its "basic education" system. The court ordered the state to lower teacher-student ratios in Grades K-3, among other measures. So far, the Legislature has allocated $982 million for McCleary compliance in 2013-2015. It will need to appropriate $1.5 billion to $1.75 billion in each of the next two budget biennia (2015-2017 and 2017-2019) in order to comply with the court's ruling.

Hovering in the background is a January Supreme Court directive, chiding lawmakers for dragging their feet on education reforms — the court had given lawmakers a mid-2019 deadline — and ordering the Legislature's four caucuses to present a catch-up plan by April 30. Republicans bridled at the order, arguing that the Supreme Court cannot tell the Legislature how to spend its money, and introducing bills — which have gone nowhere so far — to increase the Supreme Court's caseload.

So a big question is this: Can Democrats and Republicans resolve in two-and-a-half weeks what they have been unable to agree on for all of 2013: tax breaks and cost-of-living raises? The Majority Coalition and House Republicans have insisted, repeatedly, that no tax breaks should be abolished. The current legislative session ends March 13. Lawmakers are sending mixed signals about whether a new special session might be needed to resolve their differences.

These education budgets are part of the caucuses' supplemental budget proposals, a routine financial adjustment for the second half of the 2013-2015 biennium. The two Democratic proposals are so similar that they can be thought of as a single position in the upcoming negotiations on the budget, McCleary work and cost-of-living raises.

Here are the three proposals:

1. House Democrats: End four tax breaks. Spend $60 million for McCleary preparation work. Spend $51.2 million for cost-of-living raises for teachers. ($219 million when all of the education and non-education sections are meshed together.) Closing the tax breaks would pay for the education increases; a slight increase in state revenue would pay for the rest.

2. Senate Democrats: End four tax breaks. Spend $101 million for McCleary prep work, plus install some all-day kindergartens and improve teacher-student ratios in some second-grade classes. Spend $51 million for cost-of living raises for teachers. (Education and non-education components combine for a total of $174 million.)

3. Senate Majority Coalition: Don't end tax breaks. Spend $38.5 million for McCleary prep work. No cost-of-living increases for teachers. (Education and non-education components total $96 million.)

So far, the Majority Coalition has not responded to either Democratic proposal. Neither the Coalition nor House Republicans has publicly declared positions in the current talks on an April 30th McCleary catch-up plan, though GOP caucuses have stated their preference to tackle administrative reforms before finding the billions needed to deal with the Supreme Court's orders. (Senate Democrats called for splitting $3.5-$4 billion in extra McCleary and cost-of-living expenses somewhat evenly between the 2015-2017 and 2017-2019 biennia.)


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Comments:

Posted Thu, Feb 27, 7:51 a.m. Inappropriate

If Repuplicans would see tax breaks as spending - which is how they should be seen - I think they would sing a different tune. Or would they? Is all of their talk about controlling spending just bluster? Don't they want flatter taxes? Don't they want the government to stop picking winners and losers? Don't they want a fair playing field? Don't they want the market - rather than the government - to decide how well businesses profit or lose?

coolpapa

Posted Thu, Feb 27, 2:52 p.m. Inappropriate

Somebody should do a study of a segment of education policy and spending.  Less than a decade ago, the state was funding about one educator for every 18 students in kindergarten through third grade.  Now it's about one teacher for every 24 kids in those grades.   Perhaps as a result of the tough choices the legislature had to make during the recession, the legislature cut funding for the lower class sizes and replaced a portion of it with temporary federal stimulus funds .... Which, as temporary funds sometimes do, went bye bye.  During the same years that it was cutting state funding for k-3 teachers, the legislature adopted a new definition of basic ed that included something close to the previously funded class sizes for K-3.  

At the same time our wacky legislative budgeteers were cutting state funds for teachers and kids, they were giving each school district the authority to ask, through special levies, for a higher and higher percentage of its operating budgets from local voters.  This despite the fact that over-reliance on local levies led to the first Doran decision that required the state to fully fund basic education.   The legislature raised the levy lid many times over many years despite the known legal risk it took in doing so.

So now we have McCleary.  The legislature wants to raise taxes and close loopholes to meet the requirements of that decision.  And apparently, rebuild classrooms that we already funded a few years ago for a lower class size in K-3. While the state may well need additional revenue to meet all of its obligations, somebody needs to dig into these interconnected funding decisions and explain them before the state's citizens are asked for 5 billion additional dollars for our children's educations.

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