Democrats have four proposals in play to fix the Washington's Legislature's dilemma on how to find $2.1 billion in 2013-2015 to adequately fix the state's schools. All call for tax increases.
Meanwhile, Republicans plan to wait to see how the Democrat's proposals fare in Olympia early next year before unveiling their plan to deal with the $2.1 billion education funding shortfall without raising taxes.
At a Wednesday meeting in Renton, the chairman of the Legislature's joint education funding task force, businessman Jeff Vincent, told the group's Democrats to sift through their four proposals to come on with one recommendation by Dec. 17. That will likely be the initial framework for how the Legislature tries to deal with a Washington Supreme Court ruling that the state is not meeting its constitutional requirements to fund basic education.
Sen. David Frockt was frustrated by Republicans not putting a budget fix-it plan on the table as a starting point for negotiating a compromise. "We're getting nothing from the other side. There's nothing to gauge (the Democrats' proposals) against. ... They're proposing nothing. So what do we do?" said Frockt, D-Seatte and a task force member.
Republicans will see whether the final Democrat proposal collects enough votes to pass before unveiling their own no-tax-hike proposal, said task force member Rep. Gary Alexander, R-Olympia and the Republicans' chief budget writer in the House. "I don't believe they can get the votes for it," Alexander said.
The House Republicans don't want to budge from their no-tax-increases stance, he said, adding that a Republican proposal now would not fare well against the Democrat majority. "I can count votes," he said.
The current law says that any tax increase, new tax or closure of a tax exemption requires a two-thirds majority in both the Senate and House. Republicans controls more than one-third of the votes in each chamber and have defeated almost every piece of tax legislation since 2010.
Democrats have challenged the two-thirds rule on constitutional grounds before the state Supreme Court with a ruling expected in the near future. A ruling against the two-rhids majority rule would mean that Democrats could pass tax increases with a much-easer-to-achieve simple majority — at least in the House. The Democrats' Senate majority is very shaky with a good chance of party-line crossing.
House Majority Leader Pat Sullivan, D-Covington and a task force member, said the $2.1 billion shortfall can't be fixed without new taxes. "I don't see how you can do it without new revenue," he said.
Sullivan noted that the Legislature has been legally ordered to fix the basic education budget inadequacies, noting that the Supreme Court could get actively involved. One possibility is the court appointing special masters to shepherd both sides to a solution if budget talks stall, he said.
Complicating the $2.1 billion education budget shortfall in 2013-2015 is a predicted $900 million shortfall in non-education programs. Consequently, the Legislature faces a $3 billion shortfall for 2013-2015. That breaks down to $900 million for non-education work and slightly more than $1 billion for education in fiscal 2014 — plus another slightly more than $1 billion for education in fiscal 2015.
In 2013-2015, the Democrats' proposals would tackle needs in transportation, keeping buildings and their supplies up to snuff to meet the constitutional requirements, reducing class sizes in grades K-3, installing full-day kindergarten, plus some other smaller measures. The near-term measures include ensuring that all school teachers' and administrators' salaries are set at "market level"— essentially saying that salaries cannot be trimmed below the state's averages.
The four proposals from Democrats are:
- Task force member Rep. Ross Hunter, D-Medina and the House Democrats' chief budget writer, proposing a a levy swap. In a levy swap, the state would tax property owners an extra amount equal to accompanying cuts in local education levies. This move would not add extra money for school districts, but it would stabilize the current levy money going to them since poorer districts currently have trouble raising sufficient tax money.
In a Seattle Times op-ed piece, Hunter estimated that a state property tax hike of $1.13 per $1,000 assessed value would raise roughly $1 billion annually — leaving another $1 billion to be tackled by tax hikes or non-edcuation budget cuts.
- Frockt and retiring Sen. Lisa Brown, D-Spokane, proposing not allowing a beer tax, a hospital tax and a 0.3 percent business and and occupation service surcharge — all due to sunset soon — to expire. Also $125 million worth of tax exemptions would be closed. And another $125 million in rainy day funds would be tapped in fiscal 2014 and another $150 million in fiscal 2015. No rainy day fund raiding would occur after that.
This proposal also calls for $300 million of education transportation costs to be shifted to the state's transportation budget — forcing the Senate and House's transportation committees to deal with that issue. Plus the proposal calls for $150 million to be trimmed in administrative costs.
This translates to covering $1.157 billion in 2014 and $1.197 billion in 2015, or $2.354 billion for the upcoming budget biennium. Estimates for subsequent years are roughly the same.
- Frockt and Brown offering a second similar proposal with a couple of differences. This proposal does not transfer $300 million to the transportation budget. Meanwhile, it proposes temporarily increasing the state sales tax from 6.5 percent to 6.7 percent — raising $209 million in 2014 and more in subsequent years — until a new tax can be studied and implemented. Frockt speculated that a capital gains tax could be considered as the permanent measure.
This would translate to covering $1.066 billion in 2014 and $1.139 billion in 2015, or $2.205 billion in the upcoming budget biennium. The amounts would be a bit less in subsequent years.
- Sullivan proposing a similar plan.The differences would be putting in $300 million in reductions elswhere in the state's budget,, closing $200 million worth of tax exemptions, finding $100 million in savings due to implementing Obamacare, and transferring up to $450 million annually in education transportation obligations to the transportation budget.
This would translate to covering $2.153 billion in 2013-2015.
Task force member Sen. Christine Rolfes, D-Bainbridge Island and a member of the Senate's transportation committee, was concerned about shifting education transportation matters to the transportation budget. This would be an accounting maneuver that would merely force that committee to make cuts or raise extra revenue in transportation matters, she said.
"I hate to use (the non-education transportation budget) as a straw man and play Russian roulette with it," Rolfes said.
In the big picture, the House and Senate financial staffs calculated that the Supreme Court's ruling will require an extra $2.1 billion in cuts and new revenue in 2013-2015, $2.8 billion for 2015-2017, and $2.1 billion for 2017-2019. And those numbers assume absolutely no growth between now and 2019 in all of the state non-education programs.
The 2013-2015 overall state operating budget is predicted to be roughly $33.3 billion with no growth in non-education programs, compared to $31.2 billion — including $13.65 billion for K-12 edcuation — in 2011-2013.
Here is a rundown of the state's goals driven by the Supreme Court's McCleary decision:
- Reducing the Teacher to student ratios in grades K-3, an age in which experts say fundamental learning needs to take place to produce results rippling into the higher grades. Right now the the ratio is 25.23 students per teacher in those grades. The 2011-13 budget calls for reducing that ratio to 24.1-to-1. The McCleary ruling orders that ratio to be reduced to 17 students in grades K-3 by 2017-2018.
- Poverty-level schools getting priority in that class-size reduction, with "poverty" defined as more than 50 percent of a school's students participate in the free or reduced-price lunch program.
- Washington's current minimum number of credits to graduate high school will be gradually increase from 20 to 24. Right now, school districts have different numbers of credits to graduate, with the state average being 22. Increased costs will be tied to what extra courses are added.
- The amount of instruction in grades 7-12 is supposed to reach 1,080 hours a year per student no sooner than 2014-2015. The state Office of Financial Management believes the state average now is roughly 1,000 instructional hours per student per school year.