Politics blog

Inslee rolls out plan to close tax exemptions for K-12 funding

OlympianJanuary 28, 2014 

Gov. Jay Inslee outlined his $200 million plan Tuesday to raise money for K-12 schools. Senate Republicans quickly rebuffed it as not yet necessary to answer a Supreme Court ruling on the under-funding of education.

Inslee’s tax plan, which he'd foreshadowed earlier in the month during his State of the State speech, includes closing seven tax exemptions he’d proposed to end in 2013 but could not win legislative support for – mainly due to objections from the GOP-led coalition that controls the Senate. 

Three of the bigger ones include a tax break for refineries that use waste byproducts as fuel, a sales tax exemption on bottled water, and another break for shoppers from bordering states that don’t levy a large sales tax.

The Democratic governor says he wants to put about $130 million of the money into covering school district costs of operations such as heat, electricity and textbooks and about $74 million into a one-year cost-of-living pay adjustment worth 1.3 percent for teachers and other school employees.

Inslee said past legislative reforms created a framework for improving school funding but that more needs to be done – and a recent Supreme Court added urgency.

“What’s missing is action. What’s missing is follow through in making good on this commitment. What’s missing is money,” Inslee said. “All the good intentions in the world won’t satisfy our clear constitutional imperative to our children. The Supreme Court said it needs to see immediate concrete action, not promises.’’

Republican Sen. Andy Hill of Redmond didn’t dispute that more funding is needed for schools but he did question whether it needs to be done this year – a supplemental budget year with only a 60-day session. He said Senate lawmakers are working on a funding plan that the Supreme Court asked for by April 30, and he said the Senate has not yet decided whether it even needs to pass a supplemental budget.

Hill also said that Inslee’s proposal creates a bow wave or deficit in the next biennium that starts in July 2015. 

The new proposal is on top of roughly $200 million in new spending - $150 million of it due to increased costs from existing programs - that Inslee requested in December in his 2014 supplemental budget proposal.

In the House, Majority Leader Pat Sullivan, D-Covington, said his caucus already is working on a school-funding plan. He said it is still too early to say if Inslee's $200 million is a realistic amount to seek this year, but he noted that the original House budget approved last year was in line with what the Supreme Court outlined in its recent order for funding.

“If we can also add investments in programs for kids we should do that,” Sullivan said.

Getting new revenue could be a heavy political lift in an election year, but Inslee argued that voting for taxes for kids would be seen favorably by voters.

But Hill said Democrats had been unable to close many tax exemptions when they controlled both legislative chambers and the Governor’s Office, so it would be hard to do. He said lawmakers were able to close two exemptions – both created by court rulings – in last year’s session, but “loopholes are very hard to close.”

Among the targeted tax exemptions are: a use-tax break that benefits oil companies for their use of waste fuels from refineries; taxes on sales of bottled water; a tax break for out-of-state shoppers; a tax break on used-car trade-ins worth more than $10,000; a public-utility tax deduction for the in-state share of interstate transportation; a tax break on sales of janitorial services; and a preferential business-tax rate for resellers of prescription drugs.

Inslee’s budget office put a chart on an easel next to him during his press conference that showed just how much the state needs to raise – if it is to meet the requirements of school improvements already outlined in law.

The amount – in addition to the $200 million-plus he is seeking now – is nearly $1.9 billion more in 2015-17 and $3.57 billion more in 2017-19. Each would be $400 million higher if no new revenues are raised and built into the state’s school-spending commitment in 2014, according to state budget director David Schumacher.

With such a steep climb ahead, Inslee said the state should take more steps this year to lessen what has to be done in future years.

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