In this March 12 photo, Washington state Senators work on the Senate floor at the Capitol in Olympia. The Senate released its budget Friday. (AP Photo/Ted S. Warren, file)

In this March 12 photo, Washington state Senators work on the Senate floor at the Capitol in Olympia. The Senate released its budget Friday. (AP Photo/Ted S. Warren, file)

Less spending and fewer new taxes in Senate Democrats’ budget

The $51.9 billion plan avoids capital gains and business tax hike that House Democrats proposed.

OLYMPIA — Conversations on a new state budget picked up steam Friday as majority Democrats in the Senate rolled out a plan that would spend and tax less than their House counterparts in the next two years.

Senate Democrats put forth a $52.2 billion spending blueprint to bolster behavioral health services, transform the mental health system, boost special education funding and provide pay hikes for state workers.

It counts on $518 million of added revenue, most of it from a new way of taxing property sales and ending the ability of nonresidents to avoid paying sales tax on their purchases.

Overall, Senate Democrats propose to spend $400 million less than their House counterparts.

And, unlike their House colleagues, they do not include a controversial capital gains tax or increase in business taxes as part of the budget.

However, Senate Democrats are proposing a capital gains tax and want to use the money to provide a tax break for low-income families, tax relief for small businesses and cover the cost of eliminating sales tax on diapers, feminine hygiene products and over-the-counter medications. None of those programs are tied to the two-year budget.

“This is a smart budget that reflects our shared values and fulfills commitments to quality education and a more effective behavioral health system,” said Sen. Christine Rolfes, D-Bainbridge Island, the lead Senate budget writer and chairwoman of the Ways & Means Committee.

She said the two chambers are now “in a good overall place” for negotiating and reconciling the differences by the scheduled end of session April 28.

The lead Republican on the Senate Ways and Means Committee said it is “a much better start than what we’re seeing from the House.”

“The tax increases in the proposed Senate budget are still unnecessary, and the spending is higher than necessary, but there is no question it’s much more respectful of taxpayers than the House approach,” Sen. John Braun, R-Centralia, said in a statement.

Meanwhile, on Friday, House Democrats brought their $52.6 billion budget to the floor for a vote. It counts on $1.4 billion from new and higher taxes — including a capital gains tax — a higher business tax rate and a rejiggering of the real estate excise tax rates. But those tax bills were not to be voted on.

There are differences in the two budgets.

For example, the Senate plan pushes nearly $283 million into behavioral health. That includes adding staff and improving safety at Western State Hospital, one of two state psychiatric hospitals. Some of those dollars will go to increasing the number of beds in treatment facilities in communities around the state. The House budget puts almost $340 million into behavioral health programs, with a little bigger investment in changes related to current and future operations of the state hospital.

The Senate plan increases spending on special education in public schools by $156 million, more than double the House amount. But it contains roughly $125 million less for the expenses of a new statewide health insurance program for school employees.

In higher education, the Senate allots $75 million more for the state need grant program. However, the House would wind up at a much higher mark if its business tax hike is passed.

In early learning, the Senate approach funds 760 additional slots in the Early Childhood Assistance and Education Program in the next two years, half as many as the House plan.

The major component of the revenue proposal put forth by Senate Democrats is a restructure of the state’s real estate excise tax that would bring in a projected $421 million in the biennium.

They want to replace the flat rate of 1.28 percent imposed on each sale of property with a four-tier graduated rate that starts with a lower mark of 0.75 percent on any sale of property valued at less than $250,000.

The current rate of 1.28 percent would continue to be imposed on properties valued between $250,000 and $999,999. A new 2 percent rate would be levied on sales of properties valued between $1 million and $5 million, and 2.5 percent on properties valued above $5 million.

Under state law, sellers are responsible for the tax. In practical terms, it gets passed on, thus buyers of expensive properties would pay a little more and buyers of cheaper properties a little less under this approach.

For example, on a $200,000 home, the current rate results in $2,560 owed in real estate excise taxes. That sum would drop to $1,500 under the proposal. On an $8 million home — like one sold in Woodway in 2016 — the excise tax due would climb from $102,400 to $160,000.

Senate Democrats also count on gaining $54 million from ending the sales tax exemption for nonresidents and $38.5 million from axing a tax break for prescription drug resellers.

And there would be $91 million raised for a new wildfire protection account from an increase on insurance premiums.

Hearings on the Senate budget is slated for early next week.

Jerry Cornfield: 360-352-8623; jcornfield@herald Twitter: @dospueblos

Talk to us

More in Local News

Owners of Feedme Hospitality get together with Edmonds Chamber of Commerce staff to hand off a check that helped with costs of putting on the Edmonds Kind of 4th annual Independence Day celebration. The money came from lemonade stand sales. In the photo are Andrew Leckie, Shubert Ho, Greg Urban, Erica Sugg and Alicia Moreno.  (Edmonds Chamber of Commerce)
Way to go

Lemonade stand raised $2,350 for An Edmonds Kind of 4th The Feedme… Continue reading

Mukilteo Council candidates (top L-R): Louis Harris, Peter Zieve, Tina Over, Ayesha Riaz Khan, Kevin Stoltz; (bottom L-R): Caitlein Ryan, Tom Jordal, Steve Schmalz, Tim Ellis, Carolyn “Dode” Carlson, Alex Crocco.
11 candidates in races for 3 seats on Mukilteo City Council

New and familiar names will face off in the primary to narrow the field to six for the November election.

COVID-19 case reported at crowded Lynnwood council meeting

A person who attended the Monday meeting tested positive for the coronavirus just days later.

Carlo Ponte (Rebecca Ponte) 20210729
‘Endangered’ Marysville toddler missing for almost 3 weeks

Jorge Ponte picked up his son for a scheduled visit July 10. Then they disappeared.

Abuse claims settled; Catholic principal worked in Everett

The allegations are from Sister Dolores Crosby’s time at a Seattle school from 1979 to 1992.

Laura Smith, with husband Tom, makes Danielle Lam laugh after being presented with a check for $10,000 from The Prize Patrol from Publishers Clearing House on Wednesday, July 28, 2021 in Mukilteo, Washington. (Andy Bronson / The Herald)
‘Holy roses!’ It’s the PCH Prize Patrol with a big $10K check

Publishers Clearing House surprised a Mukilteo couple with a sweepstakes prize, flowers and balloons.

Mike Evans, Blue Heron Canoe Family patriarch, asks permission to navigate the Coast Salish waters as paddlers prepare to depart on their two week journey to Lummi Island. (Isabella Breda / The Herald)
Pandemic disrupted tradition, but not their love of the sea

The Blue Heron Canoe family has embarked on a two-week journey, launching from the Edmonds waterfront.

Daniel Scott (center, in green jacket) and Eddie Block (bottom right) are shown in a video before the Proud Boys and other rioters stormed the U.S. Capitol building on Jan. 6 in Washington, D.C.
Arlington Proud Boy ‘Milkshake’ indicted in Capitol siege

Daniel Lyons Scott faces 10 federal charges, including assaulting federal officers.

Ten people were injured in a three-vehicle rollover crash Sunday afternoon that closed both directions of U.S. 2. (Washington State Patrol)
10 people hurt in three-vehicle crash on U.S. 2 near Monroe

A 14-year-old was taken to Harborview Medical Center, plus six more Everett and Monroe hospitals.

Most Read