Freshmen Democrats in the state House just introduced their bill to close tax exemptions to raise $170 million per biennium for K-3 programs in public schools. House Bill 2078 puts new taxes on certain mortgage earnings of big banks and ends sales tax breaks for out-of-state shoppers.
Rep. Chris Reykdal of Tumwater said they expect the bill to get serious consideration in the House Democratic Caucus. He said that is one reason the caucus had 53 votes for passage of an operating budget Saturday, despite its $4.4 billion in cuts that included about $190 million in cuts from K-4 funding.
House Majority Leader Pat Sullivan, D-Covington, told me Saturday he expects several such bills to surface and to get more attention now that the budget is done on the House side. Lawmakers are working against an April 24 deadline to finish work, and the Senate’s budget is due Tuesday evening.
"More individualized attention for kids and roughly 3,000 teachers statewide could be saved," Reykdal said today of the bill prime sponsored by Democratic Rep. Laurie Jinkins of Tacoma. "We heard a lot of debate on both sides that K-12 is a priority. We want to give both sides a shot at filling up critical functions in education If you can't read by the third grade the long-term prospect of success is much less. We want to give everyone a shot and fund that."
Asked if Republicans could join in to help pay for K-3 education, Rep. Gary Alexander of Thurston County was skeptical and said he sure wouldn't vote for it. "I certainly can't speak for everyone But I would not be interested in signing onto that. I believe right now that is counter-productive when our economy is struggling and the number of people on unemployment and the job losses we have."
"Those banks and those shoppers come and shop in Washington and spend their money in retail stores here. Let's do some prioritization. The voters have already indicated they don’t want another tax increase," Alexander added.
Without Republicans offering to provide a two-thirds majority, the bill would have to be amended to make it a referendum – which a bare 50 percent majority of Democrats could pass to the November ballot. But it's just as possible Democrats want to bring it up for a vote – to embarrass Republicans by showing they are not willing to raise funds for public education.
The banking industry is wary and a spokesman said others could take the proposal straight to the ballot as an initiative.
Forty-eight House Democrats signed onto House Bill 2078, including Jinkins, Reykdal and nine other energetic and still idealistic freshmen.
The 11 include: Andy Billig of Spokane, David Frockt of Seattle, Joe Fitzgibbon of Burien, Connie Ladenburg of Tacoma, Kristine Lytton of Anacortes, Luis Moscoso of Mount Lake Terrace, Cindy Ryu of Shoreline, Derek Stanford of Bothell and Steve Tharinger of Sequim.
“Every member of leadership – absent the speaker – is signed on right after us. I think that is an incredibly positive sign,’’ Jinkins said this afternoon. “I think we’re breaking the ice on this. My guess is there will be other (bills like it). To me what that’s going to illustrate is there is a group of tax breaks that are really egregious and are really hard to defend.’’
The bill targets first-mortgage interest earnings of banks that exceed $100 million a year and ends tax breaks for out-of-state shoppers. The bank-tax proposal mirrors a proposal that passed the House but died in the Senate last year under pressure from the state’s banking lobby, which at the time was neutral on other taxes that hit out-of-state banks with a “nexus” of activity in Washington.
That $90 million a year increase already affected small community banks that offer credit cards through partnership with larger out-of-state banks or financial firms, according to Dave Fisher, a spokesman for the Washington bank lobby. Fisher said that limiting the interest exemption could hit two in-state banks and add costs to home loans and that the exemption was meant to promote home ownership.
The bill targets first-mortgage interest earnings of banks that exceed $100 million a year and ends tax breaks for out-of-state shoppers. The bank-tax proposal mirrors a proposal that passed the House but died in the Senate last year under pressure from the state's banking lobby, which at the time was neutral on other taxes that hit out-of-state banks with a “nexus” of activity in Washington.
That $90 million a year increase already affected small community banks that offer credit cards through partnership with larger out-of-state banks or financial firms. Dave Fisher, a spokesman for the Washington bank lobby, said that limiting the exemption as well would add costs to home loans and that the tax exemption was meant to promote home ownership.
But Democrats may be trying to cash in on banks’ bad image of recent years.
"When we're faced with a choice to cut education funding or cut tax breaks for tourists and big Wall Street banks that can afford million-dollar bonuses for their CEOs, it's an easy choice," Jinkins said in a news release. "If JPMorgan Chase can afford to give Jamie Dimon a $19 million raise, they can afford to give up this tax break. This is about making banks pay their fair share, just like they have to do in every other state."
Asked about backing Republicans into a corner, Jinkins said: "I'm sure that can happen. But my point in filing this and the point of the freshmen doing this, especially the Wall Street tax break is the most egregious tax break in the state. We can't find another state that has it."