The most recent legislative session in Olympia ended on time — which was a good thing.
The results were a mixed bag. We were able to knock down some truly terrible bills and budget proposals. A few bad proposals got through and were quickly signed by the governor. Some good proposals got stuck in the legislative process and will have start over again next session.
The conventional wisdom in Olympia is that the session “could have been worse.” I’d give it a grade of C+.
Here are some details.
We defeated some of the worst proposals for creating more needless, job-killing red tape. And we were able to stop a capital gains income tax. But the four partisan tax hikes that did pass won’t help the state’s economy. Or local jobs.
The majorities in the state House and Senate hiked the state’s Business and Occupation (B&O) tax charged against businesses in the professional-services sectors. The B&O is an annual tax, based on a percentage of a company’s gross sales. The new hike applies to doctors, lawyers, accountants, realtors, consultants, software developers, IT firms, graphic designers, etc. Those firms will absorb what they can — perhaps by holding off on new hires — and pass the rest on in higher prices to their customers. In other words, you.
The majority also hiked the state Real Estate Excise Tax, on a graduated basis. The REET is a percentage fee tacked onto the closing costs whenever you buy or sell a house, lot, commercial building or other real estate. Smaller real estate sales will see a slight decrease in the REET — but larger transactions will see a steep increase. This will have a big impact on sales of commercial buildings and apartment buildings. It will likely discourage the development of new apartment buildings all around the state. That will make our affordable housing problems worse.
The majority killed our longstanding policy of allowing out-of-state retail shoppers to avoid paying the state’s sales tax. This may seem like a small thing, but it will hurt Washington retailers in border counties.
And the majority hiked state taxes on gasoline by increasing the wholesale, per-barrel Model Toxics Control Act (MTCA) fee. This will increase the price you pay at the pump by 2 to 5 cents a gallon.
I voted against all of these tax hikes. They weren’t necessary. The state has been collecting more money than projected from existing taxes for several years. We could have funded all of our budget priorities from that surplus. Worse still, all four of these tax hikes started out as “ghost bills” that had a title but no body text and were rushed to middle-of-the-night floor votes without proper public hearings. Their sponsors did these shady things because they feared — rightly, I believe — that the people of Washington don’t support them.
Some of those same legislators used the same shady tactics to sneak through I-1000, a proposal to apply “hard” affirmative action programs and quotas to state contracts, state hiring and admissions to state colleges. This scheme overturns decades of tradition in Washington, where we’ve used “soft” preferences in contracting, hiring and admissions — but have avoided quotas. Legal challenges to I-1000 have already started.
We did some real good for local K-12 schools. Most important: We passed a “hold harmless” program that grants immediate, additional funds to school districts hurt by the state Superintendent of Public Instruction’s terrible “prototypical school” budget model. Local school administrators told me that the “hold harmless” funds were the most urgent support the legislature could give local schools. So, that program became my main priority for this session. It passed with strong bipartisan support.
In another bipartisan vote, we also directed over $150 million to increase funding for special education programs around the state.
Finally, the majorities raised local operating levy limits for school districts. This partisan scheme favors school districts in high real-estate value areas and cuts against our local schools. Also, it’s likely to face court scrutiny because it violates some elements of the state supreme court’s McCleary ruling. If the courts allow it, this scheme will mean another tax hike for homeowners. And legal challenges for years to come.
Mental health services
We’re continuing to change the state’s focus from a few, large mental-health institutions to a decentralized system of smaller community-based facilities. This change requires both Capital Budget and Operating Budget programs. We funded both. And, even though we’re adding more small facilities, we still need to fix the bad management and facility troubles at institutions like Western State Hospital. We’ve committed the money to do so.
While the governor has claimed partisan political “wins” with legislation limiting your constitutional rights, the truth is that most of those are empty gestures. The “ghost gun” law that he and the state Attorney General have hyped to gullible media outlets really just follows federal regulations already in place. Likewise, his various “green economy” and “environmental justice” schemes which claim to restrict property rights are, in fact, mostly toothless signaling to support his grander political ambitions.
One exception: The governor’s “100% clean energy” scheme will definitely raise your PUD bill. A lot. But we have time to reform that badly drafted plan before it takes full effect.