Some local legislators say strong quarterly state revenue forecast means no new taxes necessary

Wednesday’s quarterly projection of upcoming revenue to state government predicts an additional $3.3 billion in tax collections that wasn’t expected and some local legislators are saying that means there is no need for new taxes this legislative session.

“It’s raining money,” said 19th District Sen. Jeff Wilson, R-Longview. “Our tax system isn’t broken and we don’t need to fix it. Anyone who still thinks we need an income tax must be living on a different planet.”

The Economic and Revenue Forecast Council’s latest numbers predict that through mid-2023, there will be $1.9 billion more than what had been expected previously and for the current biennial budget cycle ending in June, $1.3 billion more than predicted.

Wilson added that the state expects an additional $4.5 billion in one-time money from the federal government as part of the $1.9 trillion COVID stimulus bill that passed Congress last week.

Rep. Jim Walsh, R-Aberdeen, also from the 19th District, took to Facebook Wednesday and said, “… the state government no longer faces any budgetary shortfall resulting from the COVID lockdowns. We have projected surpluses again, as we did before COVID. This is great news. There’s NO need for any new state taxes or increasing the existing taxes in Washington.”

Walsh’s 19th District counterpart, Rep. Joel McEntire, R-Cathlamet, said, “A call for new taxes at a time when our revenue is strong is irresponsible and should receive strong pushback by legislators and taxpayers alike. Surely a government which has more money than ever before can live within its means.”

In the 24th District, Rep. Mike Chapman, D-Port Angeles, said legislative priorities should be focused on pandemic recovery, and new taxes to fund state government are unnecessary at this time.

“I agree no new taxes are needed to fund the operating budget going forward,” said Chapman. “Our focus must be on continuing to reopen our schools and economy, make sure everyone who wants to be vaccinated can be, and increase support for small businesses. Additional tax increases are not necessary at this time to fund state government.”

Wilson said a state capital gains tax is clearly not necessary. He referenced Senate Bill 5096, approved by the Senate March 6 by a vote of 25-24, that would tax capital gains in some cases. Republicans have said it’s the same as an income tax and Wilson said it could be expanded into a broad, general income tax on all taxpayers if it survives court challenges.

“Suddenly the case for an income tax has collapsed,” Wilson said. “Clearly we don’t need the money right now, or at any time in the foreseeable future.”

Sen. Kevin Van De Wege, D-Sequim, of the 24th District, said a capital gains tax would benefit the state.

“While a good forecast can give the appearance of economic recovery, people are still struggling. Not everyone is part of the recovery; in fact, way too many middle-class and lower-income households in our district aren’t part of the recovery at all,” said Van De Wege. “We have some of the highest unemployment in the state, and benefits to our district from a capital gains tax will be meaningful and lasting.”

Wilson said a rebound like this one in the midst of a distressed economic situation is proof the tax system is not broken, rather, it’s “so well balanced that it continued to generate money from sectors that remained vital” even during a time of record unemployment and restrictions on retail, restaurant and other businesses.

“I know an income tax is a matter of religion for many of my Democratic colleagues. But I hope today’s announcement will turn them into doubters,” said Wilson. “It has kicked one of the biggest props out from under their income tax drive. All they are left with are platitudes and a desire to raise taxes for the sake of raising taxes. It’s time for a little common sense. If it ain’t broke, don’t fix it.”

Van De Wege disagrees with Wilson, saying the current tax system in Washington needs an overhaul.

“Using a strong revenue forecast to say we don’t need to fix our upside-down tax code is like using a sunny day to make the case that you don’t need to fix your leaky roof. It’s still broken and it’s still got to be fixed,” said Van De Wege. “The forecast is terrific news, and it will help us recover from the vast damage the pandemic has done and continues to do to our businesses and households and economy. The federal stimulus funds will help, too, but we have to remember that’s one-time money. And we need a tax structure that works for everyday households every year, not just during a good year.”

Van De Wege continued, “We have a chance to make lasting changes to the way we fund things like childcare, and that will make long-term differences for households across our district — differences that will pay off not just this year but for years to come. We’re looking at ways we can ease the tax burden on our working families, not just those at the very top.”