Washington lawmakers weigh using legal-weed money to plug school-funding gap

Democrats are quick to point out that there’s not a big pile of marijuana tax money just sitting around.

By David Gutman

The Seattle Times

OLYMPIA — It’s a question that Republican senators have asked during state budget battles from time to time: Why can’t Washington, flush with marijuana tax revenue far outpacing old projections, use that money to help solve the state’s school-funding crisis?

Well, it can. To a small extent it already does. And there is at least surface-level bipartisan agreement that maybe the state should look at pot money as a partial solution to the education-funding gap that the Supreme Court has ordered the Legislature to fill.

But, Democrats are quick to point out, there’s not a big pile of marijuana tax money just sitting around — it’s already being spent in other ways.

And with Democrats and Republicans still unable to agree on how much money they need to satisfy the court’s McCleary decision, the question of where, specifically, that money should come from can feel secondary.

Gov. Jay Inslee, a Democrat, thinks it will cost $2.7 billion, above current funding levels, over the next two-year budget period for the state to fully fund the state’s schools.

Legislative Democrats would bump current levels by $1.6 billion.

Legislative Republicans won’t say what they think it will cost. So far, they won’t say when they’ll release a proposal,although they promise it will be soon.

That’s despite a nearly yearlong bipartisan task force that was supposed to come up with cost estimates by the time the Legislature began, a deadline that came and went this month.

Sen. Ann Rivers, R-La Center, served on that task force, and at a news conference earlier this month was more strident on rededicating marijuana tax money than on when her party would present a full education funding plan.

“Marijuana revenue needs to go to education, I think it should be devoted,” Rivers said. “I think it’s absolutely appropriate to take the money, set it aside, and say this is only education.”

Inslee said he was open to talking about reallocating marijuana money to help with McCleary, but that it wasn’t nearly enough.

“I have had this discussion dozens of times, it doesn’t come close, it doesn’t come within 1,000 yards, it doesn’t come within several billion dollars of needs,” Inslee said. “It’s in the tens of millions rather than the several billions.”

The governor undersold the state’s marijuana money by quite a bit. Washington is estimated to collect more than $730 million in marijuana tax revenue over the next two budget years.

That’s not “tens of millions,” but it’s also not enough to fund Inslee’s or the Democrats’ McCleary proposals. And, until Republicans release a plan of their own, there’s no way to know whether it could fund their proposal.

Plus, the majority of that money is currently spoken for — specified by the ballot initiative that legalized recreational marijuana to go toward health-care and substance-abuse programs.

“If you dedicate marijuana money to education, you’d have to see where you’re going to cut from the things that are currently being funded by that marijuana money,” House Majority Leader Pat Sullivan, D-Covington, said.

Where does the marijuana money go?

The bulk of Washington’s marijuana tax money comes from a 37 percent tax levied on all retail sales of any marijuana product.

In Colorado, which has a lower rate and collects much less revenue from marijuana, much of the tax money goes to schools, with substantial portions also going to public health, substance abuse and affordable housing programs.

California, which projects as much as $1 billion in annual tax revenue when its new recreational marijuana law goes into effect, will spend the bulk of that on substance-abuse education and treatment programs.

The debate in Washington is a bit of a replay of the last time legislators had to hash out a two-year budget. In 2015, Republicans looked at projected marijuana revenues and essentially said, great, let’s use that money to plug our budget holes.

“At some point you have to say, ‘Holy cow, we have a lot of money,’ ” the late Sen. Andy Hill, then the lead Republican budget writer, said in 2015. “We should be able to get this job done very quickly.”

Democrats, meanwhile, downplayed marijuana money, considering revenue estimates to be far too optimistic.

Marijuana stores “could be the size of a Costco and we wouldn’t be able to sell that much weed,” then-Rep. Ross Hunter, the Democrats’ chief budget writer at the time, said in 2015.

“I don’t buy this for a New York minute,” then-Rep. Reuven Carlyle, now a Democratic Seattle state senator, said of marijuana revenue estimates.

The Democrats underestimated Washington’s appetite for pot.

In 2015, the state forecast $374 million in marijuana tax revenue for the 2016-2017 budget period, which will end this June. According to the latest revenue numbers, the state is on pace to collect nearly $472 million in marijuana taxes over that time period.

The 2015 forecast estimated $695 million in marijuana tax revenue in the 2018-2019 budget period. The latest forecast is for more than $730 million.

Still, even $730 million in marijuana revenue can disappear pretty quickly when you start tallying it up.

There’s about $20 million for the state Liquor and Cannabis Control Board to oversee marijuana sales and collect tax money.

About $20 million for marijuana-education and youth-prevention programs.

There’s $55 million for substance-abuse prevention and treatment.

About $35 million for community health centers, providing primary and dental care.

And then the big chunk: Nearly $360 million to help fund the state’s share of Medicaid, which gives health insurance to nearly 1.8 million low-income Washingtonians.

That’s only a small share of all Medicaid spending in Washington, which totals about $22 billion per two-year budget cycle, with more than 60 percent paid by the federal government.

What’s left over, an estimated $240 million over the next two fiscal years, goes into the state’s general fund.

A big chunk of that general fund money already goes to public education.

What about Lottery money?

Rivers, in her remarks earlier this month, also hinted at using another “sin tax” to help with education funding.

“The Lottery dollars were at one point supposed to go to education,” she said. “How’d that work out for us? Who knows where they go now, maybe some of it goes to education, maybe not.”

Almost all of it goes to education.

Of the $175 million in tax revenue that the Lottery brought in last fiscal year, nearly $129 million went to Washington Opportunity Pathways, which funds college scholarships and financial aid, early learning programs and charter schools. About $32 million went to the general fund. The rest mostly went to repaying the debt on Seattle’s professional football stadium.

“I think a lot of citizens thought when the Washington Lottery was adopted, that this was going to solve all the educational needs in the state of Washington,” Inslee said. “It just doesn’t come close, and marijuana’s in a similar situation.”

With so little agreement on how much money is needed for the state’s schools, Senate Majority Leader Mark Schoesler, R-Ritzville, also downplayed the source of the money.

“Whether the money comes from the tremendous growth in revenue we’ve had, whether it comes from marijuana …” Schoesler said. “I think all money is green in this budget.”