Washington Democrats are preparing for a legislative session where new taxes will be a major focus to solve a multi-billion dollar state budget hole.House Speaker Laurie Jinkins, D-Tacoma, and Senate Majority Leader Jamie Pedersen, D-Seattle, told the Standard last week that they haven’t settled on which tax legislation might be prioritized, but many ideas revolve around taxing wealthy people and companies.
The leaders say they want to “scrub” the budget for savings first. But they face a gap of around $12 billion or more between the state’s expected income and expenses over the next four years. This means new revenue will likely be necessary to maintain and expand Democrats’ priority programs in areas like education, housing and mental health care.
“We are trying to be as transparent as possible about the fact that this is not likely a budget shortfall that can be solved with cuts alone,” Pedersen said. “We are trying to get ideas out on the table soon, so we can have a discussion about them and try to figure out collectively what’s the best path forward for the state.”
Republicans see the budget situation differently. Senate Minority Leader John Braun, R-Centralia, and House Minority Leader Drew Stokesbary, R-Auburn, want to focus on trimming instead of adding new revenue.
“This is a spending problem. We are not in a recession. There’s no decrease in revenue,” Braun said. And he sharply disagreed with Jinkins past assertion that the defeat in November of a ballot initiative to repeal the state’s capital gains tax “is a mandate to go do new taxes.”
“I don’t think so,” he said.
Tax proposals
Democrats are already discussing a plethora of tax options as the Jan. 13 start date for the session nears.
Those include a “wealth tax.” Outgoing Gov. Jay Inslee’s proposed budget calls for a 1% tax on an individual’s wealth above $100 million. This would cover an array of assets, including cash, bonds and stocks. Inslee estimated the tax could apply to about 3,400 people and bring in about $10.3 billion over the next four years.
Washington’s current two-year operating budget is just shy of $70 billion, Inslee’s plan is around $79.5 billion. These totals do not include transportation programs or construction projects dealt with in separate budgets.
Inslee also proposed some increases in the business and occupation tax which would temporarily impose a surcharge for some bigger businesses through the end of 2026 and then raise the tax for all businesses beginning in 2027.
Those aren’t the only ideas on the table for Democrats, who hold wide majorities in both chambers of the Legislature.
An email that Sen. Noel Frame, D-Seattle, mistakenly sent to Republican lawmakers in late December outlined other possibilities for increasing revenue.
Those included a levy on companies with large payrolls and high-paid employees, modeled on Seattle’s JumpStart tax. There’s also an excise tax on gun and ammunition sales, a lift of the 1% cap on annual property tax increases, and a sales tax on self-storage unit rentals.
Frame is vice chair of finance on the Senate Ways and Means Committee, which handles tax policy. Pedersen emphasized that the ideas shared in the email were put forward by Frame for discussion and are not policies that necessarily have broad support among Senate Democrats.
Jinkins said it’s “way too early” to know which proposals may be the most viable or necessary this session.
“It’s very hard this far out, before we’ve scrubbed the budget, to even say what amount of revenue we think will be necessary,” Jinkins said.
Jinkins also acknowledged that tax legislation often ends up challenged in court.
“I prefer something that is pretty quick litigation, that we know we can move fairly quickly because we need the money now,” she added.
Any new tax idea will get pushback from Republicans and even some Democrats could balk.
Stokesbary said Democrats have failed to exercise “any level of self-control over the past five years” with the state budget and new taxes aren’t going to fix that. The state’s two-year operating budget has climbed from around $52.4 billion in 2019. Stokesbary said the budget is filled with “good ideas” that need to be prioritized so the state can live within its means.
“At one point you have to say ‘no’,” Stokesbary said.
Rent cap bill likely to reemerge
As Democratic leaders grapple with the budget shortfall, they will also be trying to balance new ideas and familiar priorities.
Expanding the supply and affordability of housing in Washington is near the top of this list.
That will likely include a proposal from last year that would have capped yearly rent increases at 7% for existing residential tenants. The push for this “rent stabilization” plan failed twice in the Senate. This year, both caucus leaders recognize many of their members would like to see it revived.
Pedersen said voters have elected a Senate that is prepared and interested in passing some form of rent stabilization. But he added the key to getting that proposal through will be passing other bills to increase housing supply and improve affordability.
Making “as much investment as we can in public schools,” maintaining access to child care and improving access to mental health services are among the other leading issues for Democrats this year, Pedersen said.
Republicans plan to focus on cost of living, public safety and education.
“Food, gas, housing, child care, health care, are all increasingly unaffordable. Nothing about the election changed that so far,” Braun said.
Regarding law enforcement, they expressed hope for a bipartisan push to boost hiring of officers across the state because Washington has the nation’s lowest number of officers per capita. Gov.-elect Bob Ferguson made this a pillar of his campaign platform.
Education is also a priority for Republicans. “We’ve got a ton of work to do. We still haven’t recovered from the [pandemic-era] learning loss. Our kids are performing well below standards and we’re not catching up,” Braun said.
Preparing for Trump
One source of tension between Democrats and Republicans in Olympia could be how the state responds to the next Trump presidency.
Ferguson has already said he’s prepared for showdowns with the incoming Trump administration over issues like immigration, abortion access and LGBTQ rights.
Both Jinkins and Pedersen are also bracing for clashes.
“We’ll be paying a lot more attention to what’s coming down from the federal level and trying to anticipate those things when we can and maybe react to stop bad things from happening in Washington,” Jinkins said.
Republicans argue that Democrats should stick to state-level issues in the next session rather than straying into federal matters.
“We understand that we might have different priorities, different methods of achieving goals,” Stokesbary said. “We’ll be less disappointed if [Democrats] spend their time on Washington problems. We’ll be really frustrated if they insist on solving the nation’s problems when that’s not what they were elected to solve.”
– by Laurel Demkovich and Jerry Cornfield, Washington State Standard
Washington State Standard is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Washington State Standard maintains editorial independence.
There is no revenue problem. As usual in this state under single party (D) rule, it is a “spending” problem. There is a reason democrats are referred to as “the tax & spend” party. They also apparently do not understand that money is “ fungible” , and the wealthy and companies can simply pick up and leave to friendlier financial climates.
When the voters in this state will see the light is unknown, but it has been forty years since any sort of balance existed in the state house or governor’s chair.
Taxaholics now in charge (aka Democrats). They never have enough of your money. Hang onto your wallet. Your in for a bumpy ride.
There is no budget hole. There is a spending hole.
“The problem is not that people are taxed too little, the problem is that government spends too much.”
Ronald Reagan
…Just sayin’
So if we throw all the Democrats out of government and just quit any more spending on anything, all our problems will be solved? Our ferry system is broke, our school system is running on fumes, and our highways are a mess in many places. Most of our cites are running in the Red and the streets are full of homeless people with the police overwhelmed with speeders, distracted drivers and road rage morons shooting at people and running over pedestrians. Oh, if the solutions were as simple as all you folks here are saying. The real problem is too Liberal government is trying to supply the people with all the wants they demand, often ignoring or under funding the real needs, and we are taxing our dwindling middle class out of existence in the process. Yes, most of the Democrats are educated idiots (college degrees along with no street smarts or common sense) but the Republicans’ solution of tossing out Democracy and rule of law and putting rich oligarchs in charge of all of us is going to do nothing but bring about another great Depression. We’ve just lost the common sense political middle ground with fair taxation of all; meeting real governmental needs; and it isn’t going to be easy to fix, or fixed at all where we are heading now.
Well at least Republicans aren’t trying to raise your taxes federal and in this state we have no say. We have some of the highest amounts of homeless here in this state you certainly can’t blame that on Republicans, our schools rank poorly against our peers around the world and have been largely controlled by Democrats for decades and we spend more than most countries on education. I don’t expect if we elected Republicans that things would get better immediately maybe they would get worse but we will never know if people here keep voting for the same people and policies that got us here. Oh and encase you didn’t notice they are Democrats.
Jim, you cannot be serious. The national Republicans led by the extremist MAGA anti-Democracy faction are going to try to lower Corporate taxes to 15% or less while renewing the Trump tax cut of his first term that did nothing for the average working stiff. They also plan to mess with Social Security by raising the retirement age as much as possible and also trying to privatize it, just like Bush Jr. wanted to do when he claimed he had some sort of mandate. They want to gut the IRS so they don’t have any ability to hold wealthy tax dodgers accountable. All these proposed programs are going to do is pass more taxation onto the people least able to pay. In terms of local Dem.s no one has called them out anymore than I have for creating dumb money wasting legislation. Neither of our major parties gives a damn about the average working stiff in America but they both claim to. Everyone in this country making less than $300,000 per year is being conned by both major parties in both the Red and Blue States of America and women and children are the biggest victims of both their big lies. Trump and Biden are both major liars who have committed punishable financial crimes.
I would like to add that both sides are guilty of simplistic thinking re one-size-fits-all “solutions.” Republicans think that cutting taxes and banning a lot of things is a fixit-all, while Democrats want to fix things by throwing money at the problem. Both sides seem to think they have all the right and all the virtue. But the only realistic way forward is conscientious, principled listening and compromise. One-party systems seldom work well for very long.
On the whole though, it seems to me that the D’s at least predicate policies on a leaning in the direction of healing and generosity, while the R’s lean toward exclusion, reaction and oligarchy. And heaven alone knows where the revenge, absolutist, profit and repression mania of the incoming regime will take us.
On the Right it’s, “now, now don’t talk back; you know father always knows best.” On the Left it’s, “now, now don’t fret, Nanny will take care of you and protect you no matter what happens (wink, wink, now let me at the political loot and benefits of public office).” It’s all just big money controlled corruption and dishonesty from both barrels of the gun; aimed at the wage slave working class. We had a system that was fairly honest with lots of business and environmental regulation in the public interest until first Reagon and then Clinton took a wrecking ball to it all. It’s been downhill ever since those two fraud peddlers came on the scene. An equal opportunity hit job on the shrinking middle class. We are getting another hit job with this local RFA nonsense.
Clinton yes you often criticize the way we are being governed but it seems you have a special disdain for Republicans. The Trump tax cuts may have been nothing to you and crumbs to Nancy Pelosi but it was something if not much to me. One could argue we are over taxed and over regulated, government has its fingers in everything and taxes everything. How do we make things better so those at the bottom have opportunity and the middle can hold its own, does this come from bigger government and higher taxes and more programs? Should a senior who worked and paid taxes their whole life need to go through the hassle of applying for numerous programs that employ thousands of government workers just to stay in their home because of taxation from government? Or should government change its ways.
Jim, I’m amazed that you think a bunch of Billionaires taking over the bloated federal government are going to do anything for you. Have you ever studied the Robber Baron era before there was a progressive income tax and the federal government was financed by tariffs and government jobs were handed out as political rewards for loyalty. It was a hand full of the ultra rich controlling everyone else who were dirt poor and doomed to poverty and dependence on their equally poor children in their old age. That’s where we are headed again at warp speed now. If the Trump cuts saved you some money or made you think they saved you some money then I really am happy for you. What they did for us was take away all our old deductions and make us pay a little more than we would have otherwise. Both parties are screwing us over, just with a different approach, but the same results.
Clinton I am not holding my breath Republicans will make things better for me but I hope the same with the Democrats in this state. What I hear from Democrats in this state is higher taxes that doesn’t help me in anyway. What I hear from Republicans at the federal level is no tax on social security and no raise on income taxes I don’t know if it will happen but I am positive Democrats will be raising taxes in this state. Since most of the taxes I pay are state and local what they do at the federal level probably won’t affect me much but certainly what the Democrats do in this state will so i hope you understand why i have much more ire for Democrats than Republicans because it is the Democrats pushing me over the edge with higher taxation not Republicans. I will end with my agreement that government local all the way up to federal haven’t been serving the citizens very well Republican and Democrat change is needed.
Add what seems to be the prevailing attitude of the right-wing party and I do not believe we are headed towards much that will benefit anyone (all from today’s headlines):
Trump: Canadians Will “LOVE Being The 51st State”
GOP Senator’s Husband Refuses Harris’s Handshake
Bannon: We Will “Torment And Destroy” DOJ Officials
GOP Rep: “On This Day In 2021 Thousands Of Peaceful Grandmothers Took A Self-Guided Tour Of The Capitol”
You make some interesting points, and I’m in sympathy with much of what you see as our needs. But I greatly fear the in-coming cabinet, who are all but one, billionaires. I wonder about their actual understanding – or care – about the rest of us, and I question their integrity as concerns their vast profits vs your and my needs. The yawning wealth gap and the overwhelming power of money in our politics do not promise well for liberty or democracy. And it seems to me that in some – many – cases the bludgeon will be the common tool, and the outspoken support of right-wing religion and open threats of reprisal and vengeance point to a very chaotic and dark immediate future for any who disagree.
One party rule – on either side – is a very dangerous thing, and history is full of examples of what happens when a few amass enormous wealth and power.
Reagan: Government’s view of the economy could be summed up in a few short phrases:
If it moves, tax it.
If it keeps moving, regulate it.
And if it stops moving, subsidize it.
…just sayin’
Excellent!
Reagan was the “great communicator” and said lots of clever things. But, in the end he signed a bill for higher taxes in 1982 because the federal government needed more funds than it was taking in. He later said he should have vetoed the bill; it was his biggest mistake; and blamed Dem.s for sending it up to him, claiming they had some how tricked him into it. Years after his administration his finance advisor who coined and advocated for “trickle down economics” admitted that the concept never worked. We all believe just what we want to believe about politics and political figures and real facts just get in the way of our beliefs.
Clinton, Reagan (and his biographers) actually said that the congressional Democrats had promised in the bipartisan negotiations $3 of spending cuts for every $1 of tax increase in the 1982 bill. Congress did not deliver on the spending cuts. Just like today’s WA Democrats, they had no intention of cutting spending…but promised it anyway.
I think it’s hilarious to hear about all the serious consideration to cutting spending happening right now in Olympia, as if they have any intention of actually doing it. I can’t wait to hear all the justifications for the mega billions if tax increases they are about to douse us with.
John, Reagan and his biographers were hardly unbiased reporters on the subject. What really happened is the Dem.s wanted to make most of those promised cuts in out of control defense spending and Reagan and the R.’s would have no part of that. Classic guns vs. butter. We do know that Reagan went behind Congress and normal intelligence channels backs to illegally fund the Sandinista rebels who were fighting against socialist government that Reagan and fellow arch conservatives found repugnant and anti-American. You are assuming I’m defending WA, Dem.s and I am definitely not. I find most Dem.s and Republicans both locally and nationally to be just dupes for whatever the latest party line group think hokum is. I agree with you that those spending cuts are probably a myth but I also think it’s a myth that a bunch of MAGA billionaires are going to do anything for our Democracy except try to destroy it. I’m just an independent thinker who loves my country and doesn’t want it brought down by partisan baloney from either polarized side.