All 15 Republicans on the Washington House Appropriations Committee voted Tuesday against a bill that would close several tax breaks and raise $356 million, mostly for educational purposes.
The committee’s 18 Democrats voted for the bill, sending it to the full House for likely approval. The measure will serve the Democratic-controlled House as a list of options to use in the deadlocked negotiations with the Republican-controlled Senate.
Tuesday’s vote signaled continuing GOP opposition to the concept of closing tax breaks to reach a compromise on the 2015-2017 main budget.
On Wednesday, the Legislature will have just seven days left to meet a deadline for getting a 2015-2017 main budget to Gov. Jay Inslee’s desk for his signature. If Inslee does not sign the state’s main 2015-2017 budget into law by June 30, the state government will partly shut down on July 1.
Last week, the House Democrats said they would drop a capital gains tax proposal that would have raised $550 million for education and other purposes in 2015-2017. They replaced that idea with the proposal to close several tax breaks worth $356 million over the same biennium, to be dedicated to education.
Rep. Bruce Chandler, R-Granger and ranking Republican on the Appropriations Committee, said of the Democratic plan: “It holds our children hostage to increasing taxes instead of funding them first.”
In the budget negotiations, Republicans and Democrats are both within spitting distance of $38 billion in spending. Precise figures are difficult because of the constantly changing pieces in the budget puzzle.
Democrat have heavily criticized Republicans for how they structured their revenue picture. They contend the GOP’s budget shifts and assumptions on revenue and spending levels are faulty. Democrats portray their own budget proposal as having no accounting gimmicks, suggesting this also means more revenue is needed to make the budget math solid instead of speculative.
Meanwhile, Republicans have so far successfully stuck with a battle cry that no revenue is needed to make the 2015-17 budget work. Democrats began April with proposals for tax break closures and new taxes worth $1.5 billion in a $38.8 billion spending budget. Since then, $480 million in unexpected new revenue has shown up. And Democrats have trimmed roughly $660 million more in sought-after new revenue on top of that $480 million.
Senate Republicans have shifted, however, from a hardcore five-months-long “no-new-revenue” stance to being noncommittal on what they think of the Democrats’ request to trim $356 million in tax breaks. Tuesday’s committee vote showed a general GOP antipathy still exists — at least in the House — toward the idea of closing tax breaks.
The Democrats have proposed closing a sales tax exemption on bottled water, a sales tax exemption for people who don’t reside in Washington, a fuel recycling tax exemption designed for sawmills that was later assumed by Washington’s five oil refineries, and preferential business-and-occupation tax rates for resellers of prescription drugs. There’s also a preferential B&O tax rate for royalty income, and a real-estate excise tax foreclosure exemption. And the Democrats want to address a complex exemption on Internet sales with the idea of making companies with a physical presence in Washington liable for sales taxes.
Also on Tuesday, the committee split 18-15 along party lines to recommend the full House approve a bill to create an 11 person committee — eight legislators, a governor’s representative, the superintendent of public instruction and the state treasurer — to study how to change state teacher salary allocation formulas and school levy and property tax laws. The goal would be create equitable funding for all of Washington’s 295 school districts.
The Republicans opposed the bill because it would create a new bureaucratic group, plus they worried about the Democrats having a 7-4 advantage on the committee since all three non-legislative members would be Democrats.
And the committee voted 23-10 — five Republicans crossing the aisle — to support a Democratic bill that would delay implementation of Initiative 1351, which mandates smaller class sizes in public schools, from 2015-2017 to 2017-2019. Both Democratic and Republican legislators want to nullify I-1351 because it would cost $2 billion per biennium to put into action, and the state does not have that money in its coffers.
Until Monday, the Democratic position had been to try to drum up two-thirds of the votes each in the House and the Senate to nullify I-1351 completely. So far, the Republican position has been to try for a simple majority in both chambers to send the initiative back to a re-vote in November, gambling that voters would reject it the second time around.