Legislative update: House releases proposed operating budget

By Diana Carlen
WAWG Lobbyist

Yesterday marked the 79th day of the legislative session. The next legislative deadline is March 29 in which all bills must pass out of the opposite chamber’s policy committees to remain alive.

House Democrats Release Their Proposed Operating Budget

On Monday, the House Democrats released their proposed operating budget for the state for 2017-2019. The proposed budget spends a total of $44.6 billion, while the Senate plan passed last week spends a total of $43.0 billion. The House Democrat budget plan proposes raising $3 billion in additional revenue to fund their budget relying in part on the following sources:

  • B&O Tax Increase. The plan includes a 20 percent B&O increase to the state’s highest grossing businesses. Small business which have taxable revenue of less than $250,000 a year would be exempt from the current tax. The proposal also provides a $100,000 tax deduction to businesses with taxable revenue between $250,000 to $500,000.
  • New Capital Gains Tax. The plan imposes a new 7 percent capital gains tax on earnings from the sale of stocks, bonds and other assets above $25,000 for individuals and $50,000 for those who file jointly. Retirement accounts, most primary residences and most agricultural lands and most timber would be exempt from the tax, as well as the sale of cattle, horses or breeding livestock.
  • Real Estate Excise Tax Increase. The plan increases the real estate excise tax to 2 percent for homes that sell for more than $1 million and 2.5 percent for homes that sell for more than $5 million.

Like the Senate budget, the House plan does not rely on a carbon tax. However, House Democrats have said they are still mulling the possibility of unveiling a carbon tax this session.

The House Democrat proposal also brings in additional $137 million from the repeal of the following five tax exemptions:

  • Eliminates the sales and use tax exemption for bottled water;
  • Repeals the preferential B&O tax rate for warehousing and reselling prescription drugs;
  • Narrows the use tax for extracted fuel;
  • Eliminates the preferential B&O tax for international investment management services; and
  • Eliminates the nonresident sales tax for border counties.

Both the Senate and House budgets spend similar amounts on education (House spends $1.9 billion and the Senate spends $1.8 billion) over the next two years. Unlike the Senate, the House budget proposal fully funds collective bargaining agreements with state employees.

The House proposal had a public hearing Monday. It is expected to be voted on by the full chamber on Friday. The revenue raising bills to fund their plan will be heard next Monday and voted on in committee next Tuesday, but House Democrats do not plan on voting on the revenue raising legislation to pay for their plan before completing negotiations with Senate Republicans.

Below are some highlights of the proposal.

  • Fair Fund-The House proposed operating budget zeros out the State Fair Fund. By contrast, the Senate budget appropriates $4 billion for the 2017-2019 biennium for fairs. The Fair Fund supports 70 agricultural fairs and youth shows located in nearly every county in Washington state. Originally created in 1961, the fund has received $4 million per biennium since 1998 with no increase.
  • Food Policy Forum-the House budget includes $100,000 in funding for implementation of the Food Policy Forum legislation (HB 1562). If the bill does not pass, the funding will lapse.
  • Voluntary Stewardship Program-The House also continues funding for the Voluntary Stewardship Program at $7,600,000, the same amount as the Senate budget.
  • Clean Air Act (Ecology’s carbon cap rule)-Ecology is appropriated $4.6 million to implement the Clean Air Rule in the House budget. The Senate budget did not provide a specific appropriation for this activity.
  • Payment In Lieu of Taxes-The House budget provides $1,160,000 in funding for payments in lieu of real property taxes to counties that elect to receive the payments for Fish & Wildlife-owned game lands within the county. The Senate budget provided $3,233,000 in funding for such payments to counties.

Here is a link to the House budget summary. http://leap.leg.wa.gov/leap/Budget/Detail/2017/hoSummary_0327.pdf


Senate Releases Proposed Capital Budget

Yesterday, the Senate released their proposed capital budget for the 2017-2019 biennium. The proposed plan provides $23 million to fund the Global Animal Health Building and $52 million for the Plant Sciences Building. The budget also provides $26 million for Yakima River Basin Water Supply.

WAWG signed in support of the capital budget.

Here is a link to the Senate capital budget proposal. http://leap.leg.wa.gov/leap/budget/detail/2017/sc1719p.asp