Editorial: Inslee budget honestly addresses costs facing state

By The Herald Editorial Board

Give Gov. Jay Inslee props for persistence and honesty for his recently released budget proposal and the tax package to pay for it.

Two new taxes — a capital gains tax and a carbon tax — were proposed previously to the Legislature and were unsuccessful. But Inslee, a Democrat facing a divided Legislature, may be counting on the deadline that the state now faces to finally fix education funding will provide some leverage: the realization that half-measures, gimmicks and wishful thinking aren’t going to be enough.

Inslee’s $46.7 billion budget proposal, with nearly $8 billion more in spending over the current budget, would fully fund public schools, significantly address the state’s psychiatric care crisis, provide pay increases to State Patrol troopers and other state employees, freeze college tuition following the last budget’s tuition cuts, fund solutions to a growing homelessness problem while providing adequate funding for the state’s other agencies and responsibilities.

Included in Inslee’s tax package are:

A 7.9 percent capital gains tax on assets on the sales of bonds, stocks and other assets above $25,000 for individuals and $50,000 for couples, but exempting retirement accounts, homes, farms and forestry;

A carbon tax of $25 per metric ton of emissions that would apply to a broader group of polluters than in his last proposal;

And a 1 percentage point increase in the Business and Occupation tax to 2.5 percent paid by service providers, such as accountants, attorneys and real estate agents.

Taxpayers can expect to see some of those increases passed on to them; the carbon tax will reach consumers through higher prices for gas, for example. But some taxpayers can expect to see some modest reductions and Inslee’s proposal would begin to address the inequity in what many consider the most regressive tax system in the nation.

Inslee and his budget office estimate that the capital gains tax would affect fewer than 50,000 of the state’s 7 million residents; most of that 50,000 will be among the state’s most affluent citizens.

Inslee’s budget also would substantially increase what the state pays teachers, which would end the practice of school districts using property tax levies to make up the difference in what they pay their teachers and what the state contributes. In return the state’s 295 school districts would see their levies capped at 15 percent, rather than the current 28 percent rate.

The governor’s budget office estimates that 75 percent of homeowners would see a modest reduction, $100 to $250, in their annual property tax assessments. No homeowner would see an increase in the state property tax for schools. That’s been the knock against “levy swap” proposals, which would result in some homeowners paying more and others paying less.

The crux of what’s been called the McCleary mandate, the state Supreme Court decision, was that the state had to meet its constitutional duty to amply fund education and reduce the over-reliance on local property tax levies that had created inequities among rich and poor school districts.

Inslee’s approach to meeting McCleary is at least more honest than that of state Sen. Michael Baumgartner, R-Spokane. Baumgartner’s Senate Joint Resolution 8000 would meet the state’s “paramount duty” to amply fund education by removing those words from the constitution.

Don’t want to spend the money to meet your paramount duty to the state’s schoolchildren? No problem; hand me that eraser.

Inslee’s budget and its tax increases face stiff opposition in the Republican-led Senate and may even hear less-than-full-throated support in the Democratic-controlled House, but his budget recognizes the realities of the costs of fully funding education and allowing the state’s mental health system to turn back from crisis while meeting the rest of the state’s obligations.

Hoonoring all those obligations is not going to happen without new revenue.