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Sales tax hike, income tax? Not likely

Rep. Ross Hunter Credit: Photo: John Stang

A state sales tax increase and a state income tax were floated as trial balloons at a forum Friday. And both were instantly deflated, at least for the time being.

The Washington State Budget & Policy Center hosted a legislative forum in Seattle on Friday, exactly one month ahead of the 2015 session of the Legislature. The forum included Gov. Jay Inslee, Rep Ross Hunter, D-Medina and chairman of the House Appropriations Committee, Sen. Michael Baumgartner, R-Spokane and chairman of the Senate Labor & Commerce Committee, and David Schumacher, director of the Washington Office of Financial Management.

"The budget math this (2015-2017) session is more difficult than the last time," Schumacher said. Hunter said a budget with no cuts will never pass the Republican-controlled Senate, while an all-cut budget with no new revenues will never pass the Democrat-controlled House.

Baumgartner said: "The process to get to a bipartisan budget will be a long, rocky road."

That's because the Legislature and Inslee will have to find an extra $3.2 billion in mandated education funding increases, plus $583 million for negotiated increased pay for state employees. They also face court-required improvements in mental health programs, inflation and conflicting pressures on keeping or cutting social and corrections programs.

The education funding troubles come from a 2012 Washington Supreme Court ruling requiring improved teacher-student ratios in grades K-3 and voter-approved Initiative 1351, which requires similar teacher-student ratio improvements in the rest of the grades. Preliminary estimates show that the Legislature will need to find an extra $1.2 billion for the K-3 improvements in 2015-107, and a little over $2 billion for the I-1351 work.

Inslee has scheduled announcements of his education package next Monday, of his transportation package next Tuesday, of his climate change package next Wednesday, and of his overall state operating budget proposal next Thursday. Inslee did not give any specifics Friday on what to expect from next week's plans. The 2013-2015 biennial operating budget appears to be ending up at roughly $33.8 billion. Inslee's staff has said to expect a yet-to-be-detailed $1 billion worth of new taxes and budget cuts in the governor’s 2015-2017 budget proposals. A $1 billion figure is, to be sure, significantly less than $3.28 billion worth of mandated education improvements.

Baumgartner speculated that the Legislature conceivably could take I-1351 back to the voters by proposing a 2 cents to 3 cents sales tax increase specifically to pay for that initiative's mandated improvements. Such as move would require two-thirds approval each by the House and Senate; voters would then decide by a majority vote whether to pass or reject a sales tax increase. "We're maxed out,” protested Sarajane Siegfriedt of Seattle from the forum's audience. Baumgartner and Hunter said getting two-thirds approval from each chamber is almost impossible.

Hunter, Baumgartner and Schumacher all agreed that Washington's tax system is poorly designed. An idea — repeatedly proposed and always rejected — has been to substitute an income tax for part or all of the state's sales tax.

Baumgartner said "I think an income tax is a bad idea." But the Spokane Republican pointed to the Seattle forum's overwhelmingly Democratic audience, saying Democratic legislators and Inslee are needed to make consideration of the concept even feasible to begin with. He said, "You've got to talk to your own side to make that argument."

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