By The Herald Editorial Board
For an election year in which all state House seats and half of state Senate seats will be on voters’ ballots, one might not expect the subject of additional revenue by the unpopular avenue of new or increased taxes would get much attention as state lawmakers begin their work in Olympia on Monday.
And it likely won’t.
Even as the state Legislature works to close a $2.3 billion funding gap, the Democratic governor has proposed a no-new-taxes supplemental budget. The exception — and its not directed at resolving immediate budget needs — was Gov. Bob Ferguson’s push for consideration to take a proposed constitutional amendment for a “millionaires’ tax” to voters.
Ferguson’s supplemental budget would instead fill the budget hole by cutting some $800 million from state spending, reallocating $880 million from the state’s “rainy day fund” and diverting $570 million from the state’s Climate Commitment Act funds — intended for climate-related and clean energy projects — to cover the state’s working families tax credit.
Republicans, in minorities in both House and Senate, are putting emphasis on their oft-made point, especially following last year’s adoption of a substantial package of taxes, that the Democratic majority has more of a spending problem than a revenue problem.
It’s “second verse, same as the first” as to the party’s message as this session begins, implied Senate Minority Leader John Braun, R-Centralia: “It’s going to be affordability across the board,” he said in an interview this week with the editorial board.
“Food, housing, gas, child care, health care, all are increasingly unaffordable for citizens in our state that we need, in my view — and I think you’ll see proposals from our caucus — to stop digging. We’re spending too much money. We can’t solve this problem with more taxes,” he said.
Even two months before the session, however, the state Senate’s chief budget writer, Sen. June Robinson, D-Everett, was already making clear that she would not be soliciting or accepting lawmaker’s requests for funding from the operating budget in the coming session for new expenditures.
Robinson reiterated that message in an interview with the board at the end of December, pointing to the difficulty just to meet baseline needs to satisfy caseloads for Medicaid and other services and programs, which inflation and federal program cuts by Congress and the Trump administration have made even more difficult to close.
Add to that, Robinson said, a growing liability for the state’s self-insurance fund for payouts for claims and lawsuits against the state, a need lawmakers punted on last year and must address this year.
While there are Democrats still calling for renewed looks at tax proposals from last year, including a “wealth tax” on stocks, bonds and other assets to benefit K-12 education and a payroll tax on large companies, Robinson said significant tax proposals are unlikely this session.
“Honestly, new revenue that will help with the near-term problem is pretty unlikely,” she said.
“We’ve been ringing that bell for years,” said Sen. Keith Wagoner, R-Sedro-Woolley, who joined in the interview with Braun. “But I hope the other side means it. … It’s not an R issue or a D issue; it’s a statewide issue, and it’s a problem we have to be really serious about working together and solving.”
Yet, there can be cases made for a look at limited “pay as you go” opportunities that would use increases — a tax increase for one; fee increases for others — for specific and targeted needs.
Wagoner, himself, admitting it as a “non-Republican” proposal, is floating an option to help local governments meet public safety needs, particularly around issues related to substance abuse and crime.
Noting what he sees as a disparity in the amount of sales tax revenue from retail cannabis sales that the state shares with local governments, Wagoner last year proposed providing local governments a greater share of that funding. That proposal didn’t advance, and Wagoner said it would be difficult to seek such funding this year, making any claim on the state’s general fund.
But another proposal that deserves a second look would allow those local governments that have permitted retail cannabis sales to levy a 2 percent excise tax on those sales, with approval of voters. Cannabis retailers won’t be happy about an additional tax — the state already taxes those products at a hefty 37 percent — and it won’t “fill the buckets” of local governments, but it will better fund local needs, Wagoner said, with a minimal impact on most consumers.
Another avenue worth a look; state Rep. Lauren Davis, D-Shoreline, suggested in an interview with the editorial board that there are opportunities to review the amounts that the state collects for a range of permit, license and other fees, many of which have not kept pace with the rate of inflation over decades.
Davis was successful last year in creating a Domestic Violence Co-Responder Account that funds a grant program for local governments to hire victim advocates to accompany law enforcement to the scene of domestic violence calls, providing family support, resource connection and care navigation for victims. That program is being funded by a $100 increase to the state’s marriage license fee; which previously varied depending on county from $36 to $72 per license.
Because of an unintended consequence of legislation in 2023, Davis said, the state has ended collection of what’s called a victim penalty assessment that was paid by convicted criminal defendants and funded victim advocates working with county prosecutor’s offices. Davis suggests restoration of that penalty and adjusting the fee structure that was initially set in 1995, which charged $500 for a felony conviction. Adjusted for inflation, that new fee could collect more than $1,000.
Davis calls such suggestions “looking under the couch cushions” for funding and admits it’s not going to fix the state’s larger budget concerns.
“But I’m trying to protect programs that I really care about,” she said.
Regarding its larger budget concerns, the state at some point will have to look at larger reforms of its tax system. Four years ago a bipartisan work group of lawmakers and others did just that, examining various reform proposals that sought fairer taxes and more sustainable revenue.
Frustratingly, little came of it. Lawmakers and the public ought to take a second look at those suggested reforms.
In the meantime, consideration of some limited yet smart revenue solutions to more focused needs should move forward.
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