WA Senate Democrats unveil tax package

Let the tax debate begin in Olympia.

Democrats in the Washington state Senate kicked it off Thursday with a monstrous opening statement, calling for higher property tax collections and new levies on the state’s wealthiest individuals and largest corporations.

They also pitched a half-cent cut in the sales tax to assuage concerns about costs for consumers.

Their proposals, if enacted, would net roughly $17 billion in new state revenue over the next two budget cycles, according to Democrats’ calculations. That would erase the entirety of a budget shortfall estimated as high as $16 billion after accounting for the latest revenue forecast.

“This proposal reflects what we’ve heard from our communities: The wealthiest few should share more of the responsibility of investing in public schools and the services people need,” said Senate Majority Leader Jamie Pedersen, D-Seattle. “This transformative proposal will rebalance our tax code and provide ample funding for public schools, public safety, and the needs of the people of our state.”

House Democrats are expected to release their own tax package Friday morning.

Pedersen and House Speaker Laurie Jinkins said they don’t expect votes on any major tax change until the chambers agree on which ones to pursue.

The plan from Senate Democrats puts them on a potential collision course with Gov. Bob Ferguson. Ferguson, also a Democrat, has expressed skepticism about at least one of the ideas, the wealth tax, and has not yet voiced support for any new taxes.

Ferguson’s office did not respond to a request for comment about the Senate tax proposals.

‘March madness’

Democratic budget writers in the two chambers have indicated since late last year that they would propose taxes to help erase the budget gap.

Even so, the breadth of the Senate plan stunned Republicans.

“My first reaction was wow – this is a new kind of March madness,” Sen. Chris Gildon, R-Puyallup, the lead GOP budget writer.

While Senate Democrats say they want the wealthiest residents to pay more, Gildon said, “the property tax increase they want is regressive. It would fall directly on the backs of families who are far from wealthy and also become a pass-through cost to renters across our state. To me, that’s talking out of both sides of your mouth.”

In the past, Republican lawmakers have argued that the wealth tax may not survive a court challenge. And if it does go into effect, individuals subject to the tax will move out of state, they have asserted.

Sen. Noel Frame, D-Seattle, the author of the proposed legislation, disagreed Thursday.

“I believe that they will stay here and continue to engage in our community,” she told reporters. “I believe and I hope that there is shared value around shared responsibility of funding our public schools and other key public institutions.”

Pros and cons

The Association of Washington Cities welcomed the proposal to repeal the 1% cap on annual growth in property tax collections. It’s been the group’s request for 20 years.

The Senate approach keeps a cap “but makes it more meaningful by tying it to inflation and population growth,” wrote Candice Bock, the organization’s director of government relations, in an email. “This allows for more flexibility for local elected officials to make decisions about how best to fund critical community public safety needs.”

Progressives and educators applauded the new taxes on the rich and big companies while acknowledging the pressure lawmakers will be under to not pass them.

“The Legislature is finally listening to the voters who are saying that the wealthy few need to come to the table and pay what they owe,” said Treasure Mackley, executive director of Invest in Washington Now, which led the effort to pass the state’s capital gains tax.

“We know that the work is not done yet, though,” she continued. “Wealthy corporations are spending millions to try and keep the tax code rigged for themselves. We need to get this across the finish line.”

A quartet of influential business organizations blasted the Senate plan.

“For months, our organizations have urged lawmakers to craft a sustainable budget that corrects a well-worn pattern of overspending. However, it appears they are doing exactly what they have said they intended from the start: raise business taxes as high as they possibly can,” reads the statement from the Association of Washington Business, Bellevue Chamber of Commerce, Seattle Metropolitan Chamber of Commerce, and Washington Roundtable.

“What makes these proposals particularly reckless is that lawmakers are knowingly taking these actions against a backdrop of national policy instability and global tensions,” the statement continued. “The possibility of a national recession and continued tariffs are threatening jobs while simultaneously increasing the cost of everyday goods. That state lawmakers are ignoring these realities, dismissing voter concerns about affordability, and disregarding employer warnings is alarming.”

Budget writers also have vowed to reduce spending. Those details, including the potential for furloughs of state workers, will be known when their draft budgets are released Monday.

The House and Senate are expected to pass their respective budgets by March 31. Then the two chambers must negotiate and agree on a final spending plan by April 27, the last scheduled day of the legislative session.

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