Inslee to stump for school funding, new taxes

OLYMPIA — Gov. Jay Inslee this week will propose raising several billion dollars through new and higher taxes, much of it aimed at public schools and transportation.

Over coming days, the state’s Democratic chief executive will hold events to highlight his spending priorities for the second half of his term.

It will culminate Thursday when he releases a proposal for the next two-year state budget and the revenue-raising measures needed to pay for it. He’s also expected to propose a separate, longer-term transportation package that could mean a higher gas tax and fees.

All of it will be scrutinized during the coming legislative session. The state House and Senate will pass their own plans. Eventually, legislative leaders of the two chambers and the governor will try to reconcile their differences — a process that many lawmakers think will require a special session, or two.

“This is an opportunity for the governor to establish a starting point for the conversation,” said Sandeep Kaushik, a campaign strategist for Democrats and progressive initiatives. “It will be interesting to see how the Republicans react. If they don’t like the proposals the governor puts forward, they need to put forth something they think is better.”

Little of what Inslee will say should surprise leaders of interest groups that lobby in Olympia.

The governor met with most of them this fall. He heard their concerns and emphasized his focus will be meeting school-funding obligations in the so-called McCleary state Supreme Court case, getting a transportation package passed and reducing greenhouse gas emissions — all of which require new revenue.

“There will be a lot of drama involved in the revenue proposal,” said Jan Teague, president and chief executive officer of the Washington Retail Association. “I think he’ll put out his vision, but I think it will be very difficult for it to come to his desk the way that he wants.”

Eric Johnson, executive director of the Washington State Association of Counties, said the governor made clear his agenda. County representatives laid out their message too and want to see how the governor responds.

For them, the operating budget “is an important document. It gives us knowledge of where the executive branch is,” Johnson said. “It will be the starting point for a legitimate discussion with the House and Senate.”

In a meeting with reporters last week, Inslee’s budget director outlined the challenges.

The state expects to collect nearly $3 billion more in taxes and fees in the next budget than the current one. That can cover the rising tab of current state programs, including pension and health care costs and bond payments.

But that’s still $2.3 billion shy of what the governor views as needed, said David Schumacher, director of the state Office of Financial Management.

That sum includes such things as pay hikes for teachers ($400 million) and state workers ($583 million) and funding to end the practice of “boarding” mentally ill patients in non-psychiatric hospital beds.

It also counts on spending $1.2 billion to satisfy the court in the McCleary case, he said. And, finally, there needs to be a down payment on complying with a voter-approved initiative for smaller classes, he said.

Inslee will propose revoking a few tax breaks, but those won’t generate enough money to balance the budget, Schumacher said.

That leaves new or higher taxes, and what those might be is a subject of educated speculation.

A tax on carbon emissions is often mentioned by Inslee as a means of generating sizable sums for education, transportation or both. A capital-gains tax, which is attractive to progressive Democrats, and an increase in the statewide portion of the property tax are other potential sources of money.

Inslee might decide to revisit such ideas as collecting sales tax on bottled water and boosting the business-and-occupation tax on services by doctors, lawyers, accountants and other professionals.

He embraced those ideas in 2013 as part of a $1.3 billion revenue proposal, the majority of which were rejected.

While Republicans view taxes as a last option, they are likely to offer or agree to a few ideas when negotiations between the House, Senate and governor are in the final stages during the legislative session next year.

“I’m pretty sure the Democrats are going to start high and the Republicans are going to start low,” said Rep. J.T. Wilcox, R-Yelm, floor leader for the minority caucus.

Inslee this week is expected to offer a multibillion-dollar plan for maintaining roads, expanding bus service and completing major highway projects around the state.

Agreement on a transportation package has eluded the governor and lawmakers for two years. Recent proposals drafted in the House and Senate have relied on increasing gas taxes by at least a dime and boosting weight fees.

Sen. Curtis King, R-Yakima, chairman of the Senate Transportation Committee, said he’s “anxious” to see what the governor produces.

“I’m looking forward to seeing how he plans to raise new revenue,” King said. “It will give us a basis to start the discussion.”

The legislative session will begin Jan. 12 and is scheduled to last 105 days.

Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com.

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