Going into the 2015 legislative session next week, it’s clear that Republicans and Democrats will face-off on whether or not a balanced state budget requires an increase in taxes. In fact, during an Associated Press legislative forum yesterday, the tax debate took center stage and—at one point—became rather heated.
Jay Inslee proposed the largest tax increase proposal (using dollar terms) in state history when he presented his $39 billion budget last month. His tax proposal would raise a whopping $3 billion over a full biennia—merely counting the $1.5 billon tax increases in 2015-17 is misleading, because Inslee’s cap-and-tax and capital gains tax only take effect in the second year of the budget cycle. When including Inslee’s transportation budget, the $3 billion in tax increases approaches $4 billion considering the fact that cap-and-tax revenue is split evenly between the operating and transportation budget.
Democrat leaders in the state Legislature appear to agree with Inslee’s push for higher taxes. Democrats argue tax increases are not a choice this year. Rather, they are a necessity.
Democrat Rep. Ross Hunter—someone who will get first crack at writing the state House’s version of the budget this year—said he did not “see a reasonable outcome that doesn’t involve additional revenue.”
Republican leaders appear to have clearer vision. They argued that balancing the state budget is possible without burdening taxpayers with higher taxes. Earlier this week, Sen. Andy Hill explained how—based on the state’s increase in revenue of $3 billion—it was possible. Yesterday, Hill said “lawmakers shouldn’t begin their discussion about the budget with a debate on new taxes.” He re-iterated the Republican position that “taxes should be the last resort, not the first.”
Concerning the left’s push for a state capital gains tax, Hill challenged Democrats’ rhetoric that it “would help make Washington’s tax system less regressive.” Hill said, “When we talk about having a very regressive tax code, that’s code for we want an income tax.”
When confronted with Republicans’ position at the AP forum, Inslee “laughed off the criticism.” He said, “Well, it’s wrong. It’s not true to start with.”
Inslee claimed that he decided taxpayers needed to fork over more of their hard-earned dollars after “modeling 15 percent across-the-board cuts, scrubbing the budget for savings and efficiencies and working to keep health care inflation in check.”
Our green governor doesn’t have a great track record for abiding by facts so it should comes as no surprise that he—once again—engaged in some “deliberate misrepresentation” in his response. For Inslee to suggest that he only decided to break his campaign promise not to raise taxes only after seeing what a 15% cut would look like in this year’s budget ignores the fact that Inslee has proposed raising taxes in each of the last two legislative sessions. It seems his promise not to raise taxes only lasted as long as his campaign.
Given his desire for taxes, it’s no surprise that Inslee’s proposal does not, in fact, contain anywhere close to 15% cuts in any state programs. To make the claim that it was potential cuts that motivated his demand for record-breaking tax increases ignores that he is proposing a whopping $867 million spending increase for states employee pay hikes. Additionally, Inslee’s claim that he scrubbed the budget for savings and efficiencies also fails to stand up to the facts. As the Seattle Times reported, government inefficiency is up 13 percent in 2014, at a cost of $91 million to taxpayers.
Though Republicans and Democrats do not agree on the prospect of tax increases, top legislative leaders do find a small amount of common ground on the lack of transparency involved in Inslee’s cap-and-tax scheme. During a legislative breakfast held by the Eastside Chambers Coalition, Hill responded to a question concerning the lack of transparency. He said,
I looked at the one-pager that the Governor’s Office put out and it was – and even if you look a little deeper, it was, “the agency shall,” “the agency shall.” “We’ll have several carve-outs for highly effective business sectors.” It kind of read like a B&O tax. And I looked at this and I thought, this is just ripe for political maneuvering. And again, if you want taxes to be transparent, to be broadly applied – you know, first glance, I have some concerns.
Hunter, responding to a question concerning Democrat support of Inslee’s cap-and-tax scheme, agreed with Hill on the concerning lack of transparency. He said,
Well, I think that’s harder. It’s more complicated, people haven’t thought about it as much. I would agree with some of Senator Hill’s concerns about transparency. There are lots of ways you could do a carbon charge that has the same economic effect that has less ability to manipulate – to have it look less like the B&O tax. I think we’re going to spend some time talking about this this year. I don’t know enough about it to say I like it, I don’t like it. I think I’d rather do that than sales tax increase, that’s for sure.
In all probability, it is unlikely that Democrats in the House will take Hill’s advise of not starting off budget talks with a debate on new taxes. However, the ranking Republican on the House Appropriations Committee, Rep. Bruce Chandler expressed assurances that “any tax increase that passes the Legislature will go straight to the ballot.” In reference to past state initiatives that focused on repealing taxes passed by the Legislature, Chandler said, “If we don’t put it on the ballot, the voters will.”