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 net.com. Twitter: @dospueblos

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Local News

Customers enter and exit the Costco on Dec. 2, 2022, in Lake Stevens. (Olivia Vanni / The Herald)
Costco stores could be impacted by looming truck driver strike threat

Truck drivers who deliver groceries and produce to Costco warehouses… Continue reading

Two Washington State ferries pass along the route between Mukilteo and Clinton as scuba divers swim near the shore Sunday, Oct. 22, 2023, in Mukilteo, Washington. (Ryan Berry / The Herald)
Ferry system increases ridership by a half million in 2024

Edmonds-Kingston route remains second-busiest route in the system.

Firefighters respond to a 911 call on July 16, 2024, in Mill Creek. Firefighters from South County Fire, Tulalip Bay Fire Department and Camano Island Fire and Rescue left Wednesday to help fight the LA fires. (Photo provided by South County Fire)
Help is on the way: Snohomish County firefighters en route to LA fires

The Los Angeles wildfires have caused at least 180,000 evacuations. The crews expect to arrive Friday.

x
Edmonds police shooting investigation includes possibility of gang violence

The 18-year-old victim remains in critical condition as of Friday morning.

The Everett Wastewater Treatment Plant along the Snohomish River. Thursday, June 16, 2022 in Everett. (Olivia Vanni / The Herald)
Everett council approves water, sewer rate increases

The 43% rise in combined water and sewer rates will pay for large infrastructure projects.

Robin Cain with 50 of her marathon medals hanging on a display board she made with her father on Thursday, Jan. 2, 2025 in Lake Stevens, Washington. (Olivia Vanni / The Herald)
Running a marathon is hard. She ran one in every state.

Robin Cain, of Lake Stevens, is one of only a few thousand people to ever achieve the feat.

People line up to grab food at the Everett Recovery Cafe on Wednesday, Dec. 4, 2024 in Everett, Washington. (Olivia Vanni / The Herald)
Coffee, meals and compassion are free at the Everett Recovery Cafe

The free, membership-based day center offers free coffee and meals and more importantly, camaraderie and recovery support.

Devani Padron, left, Daisy Ramos perform during dance class at Mari's Place Monday afternoon in Everett on July 13, 2016. (Kevin Clark / The Herald)
Mari’s Place helps children build confidence and design a better future

The Everett-based nonprofit offers free and low-cost classes in art, music, theater and dance for children ages 5 to 14.

The Everett Wastewater Treatment Plant along the Snohomish River on Thursday, June 16, 2022 in Everett, Washington. (Olivia Vanni / The Herald)
Everett water, sewer rates could jump 43% by 2028

The rate hikes would pay for improvements to the city’s sewer infrastructure.

The bond funded new track and field at Northshore Middle School on Thursday, Oct. 24, 2024 in Bothell, Washington. (Courtesy of Northshore School District)
Northshore School District bond improvements underway

The $425 million bond is funding new track and field complexes, playgrounds and phase one of two school replacements.

The Everett Municipal Building on Thursday, Feb. 29, 2024 in Everett, Washington. (Annie Barker / The Herald)
Everett council approves $111 million construction of sewer project

The Port Gardner Storage Facility, in the works for more than a decade, will help prevent overflows of the city sewer system.

Two students walk along a path through campus Thursday, Aug. 4, 2022, at Everett Community College in Everett, Washington. A group of nearly 20 community groups are planning to study how to make it easier for young people to find jobs. (Ryan Berry / The Herald)
Goal for Everett coalition: Make it easier for young people to find jobs

The organizations hope the months-long process will improve access to resources for young people.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.